Alex Hormozi: The first product you must sell in a new business...

Last updated: Jun 15, 2023

The video discusses the importance of simplifying a business's product offering and introducing a second product line to maximize revenue per customer, with a focus on payment terms and upfront payments to increase stickiness and extend contract value.

This video by Alex Hormozi was published on Nov 12, 2021.
Video length: 08:46.

In this video, Alex Hormozi discusses the importance of simplifying a business's product offering in order to maximize revenue per customer.

He suggests that instead of offering a large number of products and services, businesses should focus on selling two things - a front-end and a back-end product - and use payment terms to accommodate different buying thresholds. Hormozi also shares a wealth hack for extending contract value and increasing customer stickiness.

He argues that simplifying a business's product offering can reduce operational complexity and improve employee focus.

  • Maximizing revenue per customer is a goal of any business.
  • Simplifying the product offering can help employees better understand what is being sold and improve customer understanding.
  • Introducing a second product line can help reach the maximum buying threshold per prospect.
  • Upfront payments can increase stickiness and extend contract value.
  • The decision to simplify the product offering was made to improve employee focus and customer understanding.

The first product you must sell in a new business... - YouTube

Alex Hormozi: The first product you must sell in a new business... 001

The Importance of Simplifying Product Offerings

  • Maximizing revenue per customer is a goal of any business.
  • Offering too many products and services can create operational complexity and distract employees.
  • Simplifying the product offering can help employees better understand what is being sold and improve customer understanding.
  • Changing payment terms can help reach the maximum buying threshold per prospect.
  • Monthly expense is more important to customers than total contract value.
Alex Hormozi: The first product you must sell in a new business... 002

The Two-Product Strategy

  • Introducing a second product line can help reach the maximum buying threshold per prospect.
  • Having two products or services simplifies the product offering.
  • A front-end and back-end product can be offered to customers.
  • Payment terms can be changed to increase stickiness and extend contract value.
  • Getting customers to pay upfront can help extend contract value and cover upfront costs.
Alex Hormozi: The first product you must sell in a new business... 004

The Importance of Upfront Payments

  • Upfront payments can increase stickiness and extend contract value.
  • Customers are more likely to focus on monthly expense than total contract value.
  • Using upfront payments can help liquidate ad costs, cover commissions, and cover upfront fulfillment and onboarding costs.
  • Structuring pricing can help get customers to stick longer.
  • High gross margins can allow for lower costs as long as the customer stays for a long time.
Alex Hormozi: The first product you must sell in a new business... 005

The first product you must sell in a new business... - YouTube

The Decision to Simplify Product Offerings

  • A decision was made to simplify the product offering in one of the portfolio companies.
  • Having three products was suggested, but it was decided to stick with two.
  • Offering a low and high product was chosen instead of a low, medium, and high product.
  • The two-product strategy has been successful in other businesses owned by the speaker.
  • The decision to simplify the product offering was made to improve employee focus and customer understanding.
Alex Hormozi: The first product you must sell in a new business... 006

The Importance of Simplifying Your Product Offering

  • Having too many products can confuse salespeople and customers.
  • It's more effective to give salespeople one main product to sell.
  • The product should solve the customer's main problem.
  • Having one product makes it easier for the salesperson to convince the customer.
  • Offering too many options can lead to a confused mind and no purchase.
Alex Hormozi: The first product you must sell in a new business... 008

The Benefits of Offering Multiple Payment Options

  • Offering more payment options increases conversions.
  • More payment options can lead to lower cash flow, but higher overall revenue.
  • Payment plans can be adjusted based on the customer's budget.
  • Focus on selling the product first, then discuss payment options.
  • Structured offers with high gross margins allow for flexibility in payment plans.
  • Prepaid customers can be more easily upsold to a second product.

Watch the video on YouTube:
The first product you must sell in a new business... - YouTube

Related summaries of videos: