Alex Hormozi: Cash Flow Consulting

Last updated: Jun 14, 2023

The video is about a four-step process to increase the value per customer and improve cash flow in a business.

This video by Alex Hormozi was published on Nov 19, 2020.
Video length: 14:51.

In this video, Alex Hormozi discusses a four-step process for increasing the value per customer in a business.

He explains that if a business cannot pay $100-$200 to acquire a customer, they have a cash flow issue and need to increase the value per customer. The four steps include adding on products, add-on services, offering prepaid or financing options, and offering a discount for prepayment.

Hormozi provides examples of how these steps can be applied in various industries to increase revenue and improve cash flow.

  • Alex Hormozi discusses a cash flow process to increase a business's revenue per customer.
  • A business that cannot pay $100 or $200 to get someone in the door has a business problem, not a marketing problem.
  • The four-step process includes products, add-on services, prepaid or financing, and a referral program.
  • Applying the four steps in a med spa setting involves discount botox, selling products, offering additional services, prescribing a package, and down-selling the upsell.
  • Monetization is important in marketing, including the cash value for the first 30 to 60 days and the lifetime value of the customer.
  • Reverse engineering a business model involves comparing a business that can only pay a hundred dollars per show to one that pays a thousand dollars per show and making an attractive friend and offer.

Cash Flow Consulting (ALEX HORMOZI) - YouTube

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Introduction

  • Alex Hormozi talks about a cash flow process that he has been consistently walking through for the last couple of months.
  • The process is about increasing how much money a business makes per customer that comes into the business.
  • The easiest way to know if a business has an issue is by thinking about a single question.
  • A business that cannot pay $100 or $200 to get someone in the door has a business problem, not a marketing problem.
  • Alex walks through a four-step process that he looks at when he's looking at a customer that's coming in the door.
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Step 1: Products

  • The first thing that Alex looks at is products.
  • Is there something that can be added on in the sales choreography when someone comes in the door?
  • The initial service package could be x period of time, x number of sessions, or a single session done at a discount or even a single session free like an evaluation.
  • The next natural sell for products would be supplements in the gym and fitness space.
  • If you were in a chiropractor's clinic, the next natural sell might be orthotics or a special pillow or some sort of brace.
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Step 2: Add-On Services

  • The second step is to look at add-on services.
  • This might be introducing them to upsells within your core offer.
  • If you were a gym facility, you might have your large group training but you might also have accountability nutrition coaching, semi-private training, etc.
  • All of these will increase the average lifetime value and investment of the new customer that's coming in which allows you to make more money.
  • If you were looking at a med spa, someone comes in for a Botox treatment or whatever, the first thing you're going to do is try and get them to buy a package that's more of the same thing but then also give them a menu close.
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Cash Flow Consulting (ALEX HORMOZI) - YouTube

Step 3: Prepaid or Financing

  • The third step is for somebody who's more capital constrained and wants to make more money per customer up front.
  • You can add on prepaid or financing.
  • If you're in a really established industry, you can get financing companies to do this for you.
  • Care credit is massive in the healthcare industry.
  • The third piece there is just simply asking and offering a 10% discount to get someone to pre-pay.
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Step 4: Referral Program

  • The fourth step is a referral program.
  • It's the easiest way to get new customers.
  • It's the cheapest way to get new customers.
  • It's the most effective way to get new customers.
  • It's the most profitable way to get new customers.
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Four Steps to Increase Value per Customer and Improve Cash Flow

  • Product is number one
  • Add-on services number two
  • Getting people to pre-pay for services that are happening in the future number three
  • Continuity is number four
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Applying the Four Steps in a Med Spa Setting

  • Discount botox as the first transaction
  • Sell products that go along with the service
  • Offer additional services from the menu
  • Prescribe a package that's going to be their total beauty package
  • Down selling the upsell
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Importance of Monetization in Marketing

  • How much can we make up front in the first 30 days?
  • What's the lifetime value of the customer?
  • Cash value for the first 30 to 60 days is important for how you spend money to get them in the door
  • Lifetime value on the back end is going to be how much money you're going to be able to extrapolate and how much revenue you make per month based on your sales volume
  • Back into the number to simplify the process
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Reverse Engineering a Business Model

  • Compare a business that can only pay a hundred dollars per show to one that pays a thousand dollars per show
  • Make an attractive friend and offer
  • Reverse engineer a thousand dollars per show into a business model
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Four-step process to increase value per customer and improve cash flow

  • Offer a low-cost entry point to attract new customers.
  • Close half of those customers onto the next service package.
  • Sell additional products or services to increase lifetime value per customer.
  • Focus on expansion revenue and ascension to maintain long-term customer relationships.
  • Choreograph a seamless sales process to pass the baton from one service to the next.
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The importance of executing the process consistently

  • Expansion revenue is key to maintaining long-term customer relationships.
  • It is the duty of the business to make offers and communicate the value of additional products or services.
  • Choreographing a seamless sales process results in a strong back end and allows for increased spending per customer.
  • Consistently executing the process is what sets successful businesses apart from their competition.
  • Entrepreneurs and business owners must focus on serving their customers in the highest and best degree possible.

Watch the video on YouTube:
Cash Flow Consulting (ALEX HORMOZI) - YouTube

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