How I’d Scale This Business From $1M to $3M

0:00My name is Alex Hormozi, and this is Scale or Fail.

0:11Hi. Mem, what's up? You ready? So, tell me about the business. I help people make stickers. For the last 12 months, I made 1.1 million Australian, which roughly works out to be about 800K. So, I've made multiple seven figures over the past 10 years altogether, but hit my first seven-figure year, which is very exciting. So profit is around the 30 to 35 % mark. And my goal for the next three years is to reach 3 million USD per year. How do you make money? I make money with low ticket digital products. So all of my teaching is online. And my main membership is Secret Sticker Society. Currently, the rates are 27 US dollars per month or 270 per year.

0:53and then loads of other low ticket digital products that can be interchanged for upsells. I have really good upsell game. So that's great. Okay. This is a lot of stuff though. So how many funnels is this? Over the last 10 years, I would be embarrassed to tell you how many funnels How many funnels are you running right now? So right now with the main membership with Secret Sticker Society, the main funnel is a live paid bootcamp that I launched three times per year. But the main thing is it's Secret Secret Society. You've got a bunch of upsells in the funnel to Offset CAC to the greatest degree possible.

1:27Yeah. You go to the launch and then you sell Secret Secret Society in the back. That's right. Okay. Got it. Yeah. What are the numbers you got for acquisition? Okay. The live paid launch is$10. Is it the ticket's$10? That's right. So there's no free? No free. So it's paid. Okay. Yeah. Paid challenges. Cost you$37 to get it. Yes. You have a 22 % conversion rate on... Into the membership. Of people who buy a ticket? That's right. That's huge. Yeah, I'm really happy with that. What's AOV? It would be about$36. So you're almost breaking even. Some of the events, I am slightly in the red, but by the end of the event, I'm always profitable.

2:06And then two of the boot camps that I've run, I've been profitable from day one. So I've been up. They're my favorite ones. Okay. All right. What do you think is stopping you right now? I feel that if I could get more people into the challenge, I feel so strong now that I have that strong conversion of bringing people in. I know what to do. It's really quite tried and tested. If I could get a higher volume of people into the boot camp, I'm safe to convert them. So that has been something that has definitely held me back. And then, you know, I know that I have not reached the cap in any way of being able to lower that CPA.

2:44So I think that even just making the switch with the past launch of pushing the annual membership doubled the average order value. So that made a huge difference, way bigger than I thought it would, and an instant difference. Step one, add the annual, make that the only offer available. I want to be clear, the only offer available is the annual with the bonuses. Okay, so annual only at the next launch. Yes. Someone wise told me to do that, and I did it, and it worked. Shocker. Yeah. Yeah. We'll probably do some more stuff there too. Yeah. Okay. So why is scaling this important to you? Why not just make money and just chill where you're at?

3:21Well, I really want to be able to pay off my home loan. I'm married. I've got two kids. 10 years ago when I set the business up, I was diagnosed with breast cancer. Thankfully, 10 years on, all is really well now, which is great. But at the time, which was obviously a very dark period of my life, I set the business up really as a creative project to do something just for me to take my mind off it. And little did I know that 10 years on, I'd be teaching 20 ,000 plus crafters to make stickers. I'm ex-corporate, so completely different to what I'd done before. But what this has left me with is a really strong desire to be able to set my family up financially.

3:59I'm here to be open and to learn. And I will implement on everything that I'm told to do. I'm a really good student verging on being a bit of a teacher's pet. Like I will just do anything that you know more than me on this. And I constantly tell myself that I only know what I know. You know more about stickers than I do. That's for sure. Well, not too long. Can you pull the numbers slide back up real quick? So you're making over 500-ish in profit, right? So you're very profitable, correct? Why don't you spend up to$100 CPA? See, this is part of the reason I'm here, because I often finish a launch thinking, I should have spent more.

4:39Why didn't I spend more? And then I'll go into the next launch again with that same, I'll cap my ad spend at a certain amount for no good reason. So what do you cap your CPA at normally? I don't even, well, I have capped the CPA, but the CPA has gone as high as maybe 50. I'm not a cautious spender, but for some reason, that's what I've done. You are here. Yeah. Cool, let's rock. Let's do this. Just so I'm clear on the delivery side, if you double the amount of customers you have, does it break anything? No. Okay. So this is a pure demand issue, which is nice. I think I'm going to go, I'm going to try to break this into kind of offer and then we'll go traffic.

5:17Because I don't think there's really much else for your specific business that we need to talk about. Yeah. Okay. So number one, I guess on the traffic side from a spend is how much did you spend last launch? I only spent about 16K. The event went really well. It was not my biggest event, but it was still profitable. So, yeah, happy. Just didn't have enough time to be able to spend more. You just needed a little ramp. Yeah. So, when you say you didn't have enough time to spend more, what do you mean by that? Because I spent$500 ,000 a day at the end of my launch. What made you... This is where my own limitation with meta ads probably comes into play.

5:57So the way that I like to normally do my launches, which I know is much earlier than many others, I launched four weeks out. So four weeks out. Oh, cool. With a smaller spend, the testing, seeing what works. And I didn't feel like I had the runway to be able to do that. I guess it was a bit of mindset stuff too, of being way more conservative than I normally would. But I remember feeling I wasn't happy enough with CPA to keep spending. Okay. So I'm going to walk through spend cadence. Yeah. Okay. And so the way that I do this, I put about 5%, maybe 10 % max of my spend goes in that first week.

6:37And the only purpose is to test creative. Right. Yeah. Then once we have our creative, the next two weeks are pretty much flat. Now we scale it up, obviously, but then we try and spend as much as possible. Like, I mean, if we could spend 75%, that I would, it's just challenging, right? Like call it 60 to 70 % is in this week. And then we're in this call it, you know, 15%, you know, maybe 10 % here and then 15 % here. And so even here, this is where you're probably going to be at 50 % is like literally in the last three days, right? Now that's the cadence of spending. Now from an amount of spending perspective, we do have a decision, which is like, let's obviously be willing to spend more.

7:17All right. But in order to do that, I think there's two things we have to do beforehand. One is we have to fix offered but i also want to approach this from a creative perspective so how many pieces of creative are you making right now for a launch this is my weak spot for sure creatives last launch i think i started with a hook test in that first week with um two images and two videos this time there'll be a few more i want you to think in hundreds uh we won't be talking hundreds we have to how many stickers do people make oh thousands right so let's just think of stickers right previously is not going anywhere near hundreds okay so so let's just just to make this easier for you okay are you familiar with ai stuff or are you like more versed in it okay so there's no reason why you shouldn't have a ton of static ads because these take two seconds to make so from a statics perspective i would look at a couple different sources because i want for sure we can make some and we're gonna make a bunch of them with ai and all that kind of stuff yeah but i think if you can take from your group how many screenshots can i take from the group oh so many right yeah these are all ads right and then you add your little highlights to them to your to the people in your group do you have the people who post videos inside the group of them like making it first okay no so no one does no video udc interesting yeah you want to incentivize people to i've tried before and um i don't know whether it's the demographic or perhaps i didn't set them up for success okay probably both okay well they know how to use a a phone for sure yeah right so i would i would have a super secret sticker set ssss set right which they can unlock yeah if they show themselves making a sticker right okay that's it yeah i love it that's it and then i would use that as my activation for everyone yeah which is that everyone in your first seven days i need you to make a sticker i really like that because that's great for onboarding too yeah exactly quick win so it's a quick win but then every single customer makes you an ad.

9:15Perfect. Then around and around we go. And so if you have 200 customers for every launch on the low side, there's 200 ads. I wish I could love that. Well, there you go. We're here. And then do people post images of the stickers they make? Oh, yeah. There's no stopping them. Right. So then sticker images, I think you'll be surprised that some of these will actually turn into like, what kind of sticker? Like that's the weirdest sticker I've ever seen. It's like brick. And then, so I think sticker ads will win themselves really well. So we have our static ads, we have our videos. This will get more people to do it.

9:40We can put that in the activation sequence in the first seven days. Great. Love that. What touch points do you have with your customers? The only live delivery that I do where I am connecting is during these boot camps because the classes are pre-recorded, but I go live every day. And I also invite my... All lives, I just want you to click because you're already doing it. I've got so many previous... Yeah, so just click them and these can both go as organic and paid. Like Q &A or... Just the small... Exactly. Quick tips, exactly. And then for you specifically, so all of this is just stuff that's happening that we need to capture.

10:17Yeah. But you specifically, I would say like, I would want you to make 20 ads times four. Yeah. So like 80 ads that are just you, but I want the four to be different backgrounds and settings. So take your highest converting ads of all time over the last how many campaigns you've done. Put all 20 in here. Yeah. Do one of each of them in four different settings, different t-shirt, different background, different whatever. Right. And they'll get you kind of 80. So it's like if we're going from four ads to 80 ads, and that's just from this, and we still have all of these. The last thing that I want to think about before you're, I know you have my ads playbook, correct?

10:54My hooks playbook? Yes, exactly. So on the levels of awareness piece. The five levels of awareness is a framework by Eugene Schwartz where every person in a market falls into five categories. So your advertising should speak to them differently. He contends that audiences go from the bottom, which is the warmest and smallest group, to the top, which is the coldest and largest. For Mim's business, in order to continue to scale her ads, she needs to target more pain or problem-aware audiences rather than product or offer-aware audiences. To make sure that you don't get caught in, like, when you scale it up, you scale up your ads, they don't perform, like, they'll stop performing as well.

11:31Now, there's always going to be some rise that goes up when you spend more, that's normal. But if all of a sudden it triples or something like that, typically it's because you have ads that are only really targeted at a very specific audience. Basically, it's like they're product aware or offer aware, but we need to have people who are like more pain aware. So some hooks that you want to experiment with are going to be more pain driven. So like, are you bored? Do you not know what to do? Like you would know the pains better than me, but like those are the pains that I would use as my hooks more than some of these bottom funnel.

11:59It's good to have offers and talk about the bootcamp and all that stuff. Like that's, that's here, right? That's going to be here. But if we want them to scale, you're going to, you'll probably need to have some hooks that are up here. Yeah. Okay. And that'll allow you to really open up the targeting. I love that. Okay. Now, this is the cadence side. And so let's call this as number three, which is the hooks. All right. And I'll say number four is the decision, which is that I want to challenge you to be willing to do$100 check. All right. That's my challenge. Honestly, I feel like there's no challenge because I'll just do it now.

12:31I never go into my lawn capping my total ad spend. if the ads are performing as I want them to. And I just think I haven't been anywhere near enough aware of this before preparing for, you know. So now I know my numbers more than before. In the first month, you have any back. No big deal. And I'll stop picking myself every time. Yes. I want to finish this. Yes. I have two things. Because you already have a model that works a lot. The last thing I want to just break everything, right? But you got this last time. What was the painful offer specifically that you added? So when we spoke before, you'd said sell only annual and really don't sell monthly at all.

13:10So then what percentage of people took annuals? So it went from being normally it's like a 5 % to 15%. So 10 % normally take annual. And then previously, when I switched to pitching really annual, it went to 30%. So that's why we have that 91%. So you got 30%. Okay. I think that on your launch checkout page, let's say you've got your annuals. and you've got your monthly right these are the two options i still think that there should be a bump here like after they select there is a bump right now but it's only to my 47 dollar course which is a little bit like you like this stuff here's some more how does that do that just 30 it's pretty good so the sticker paper is one that i would put because if they need this to do the thing yeah then it's like we might as well just give it to them give it to them right the exact stuff yeah this is my this is my whole kit so just let's just call this the bundle right if we can make this the physical bundle yeah you might be able to get get away with like 99 on something like this and it's going to super high margin right right no no but in the u.s though it'll be more slower right way better so for sure yeah which if you wanted to be wild with it you just put this in here so if you buy the monthly and so then what happens is we can actually make this a bit of a false offer meaning kind of so it's like if we make this 149 or let's just let's just go crazy all right let's say this is 149 for my full physical bundle you'd say but hey guys if you're gonna if you do the annual i'll throw the 149 in i like that loads yeah yeah yeah this is what i'm saying with the i want a physical product premium for annual because we your your ltb is already around 300 so i don't i was thinking because if it was much lower i'd say okay maybe we can lower the annual and then we'll get more takers but if that's not the case and we know that they have have to have this yeah in order to do the thing definitely so if they're like well i'm gonna have to buy this either way i might as well get all the bonuses and get the stuff i need to do the thing and then committing to annual it's like they're making a decision to commit to the hobby for a year because your cost on this is gonna be like 10 bucks maybe plus another 10 dollars in shipping who cares but that might all of a sudden take you to 50 here and that'd be big right wonderful yes okay so the big decision that i have is this this would be a higher risk test but this is like one that I would strongly consider.

15:28I'm not risk of this. Okay. Which is, I would rather just not mention the monthly at all. Yeah. Sell the annual, put the offer in there. Yeah. And then after the launch is over, when you close your cart, then run everyone else to your monthly that doesn't have the bonuses. Because then you can do a mop-up kit. Yeah. Because you'll still get plenty on that. Because if you're doing a full five-day thing, you can sell a$300 ticket. And so people are just taking the cheaper one because you're offering the cheaper one. My goal here was how can I get that spend number? How do you feel comfortable? If you knew all of a sudden your AOV is$300, so maybe conversion cuts in half, but you are at a$300 sale.

16:11It's just a different level of confidence. Yeah. Because now if you're at$150 in the first 30 days and you're like, I'm fine. I can spend more of this. Spending? Yeah. Cool. So I had two wild ideas. wild idea number one is let's just sell the annual put this in there and i think if we add this to that and make that the full offer yeah i think that'll do well the second wild idea that i had and again this is wild this is wild is that we position the boot camp as a seven-day trial of your 27 membership that goes even without you saying anymore it goes so well because the whole point of it is supposed to be like a teaser a taster of this is what you get if you remember yeah because then you've automatically converted 100 of your traffic instead of 22 so they're signing up for the continuity and they have to count it's free yeah and then you're running a seven day or five day whatever that you know whatever you want but then your whole thing is pushing to annual yes yeah so you have 100 conversion and then you push everybody to yeah that's my that's my wild test i really like it i guess my i worry that then i'm going to get to the challenge ends after a couple of weeks and 30 days ends and i and people leave well they will but this is such a good onboarding too like the seven day challenge is also just onboarding for all the members yeah i love i love a test you could arguably test both at the same time which I'm not always the biggest fan of.

17:41Because if we look at the math, right? Let's just do the math. So let's say you've got 100 people who buy your thing, right? Yeah, buy the bootcamp, right? Where you know that we're going to have 22 of them who are going to have a lifetime gross profit of 300, right? So we have, what are the 6 ,600? That's coming in from these people, right? Now on the front end, it's costing you$3 ,700, right? Yeah. So you get these people. Right, yeah. And this is the issue from a cash perspective correct that's the problem yeah now you said that you get 91 now yeah yeah that 91 is only on the buyers correct it's not on these people no okay it's only on the 22 that's the issue yeah so this is the real problem yeah so where this where it gets more interesting is like let's say that you spend 3 ,700 to get 100 and uh you make 3 ,500 whatever, right?

18:34Which could be it, yeah. So then that would mean you have$200 to acquire 22 customers is what the net net actually works out to. Yeah. So that LCB2CAC is crazy. It's like I built my list for free. Yeah, you spent$200 to make 6 ,600. That's great. So the idea with the trial would be if we had those same 100 people, but let's say the trial conversion at the end was, it'll probably be closer to like 55%, like especially if you do like a five-day thing like this. And all of a sudden you're at 55 people and they have the same$300 LTV. Now that doesn't include the fact that we're going to get annuals, but even if no one bought annual and we just had the 300, now we're at, you know, 15 or 16, five.

19:14And so we would, you'd actually make up for the money that you didn't make on the front. Now, obviously we still have upsells. We should still do that. But I'm saying, even if you had no upsells and you just had this, you would make more because you're all in, you're at, you know, 90, whatever that is, you know, 11, or 10 ,000 is what you're making here versus 16. So you get like a 50, 60 % lift. So that would be like, that would be the play if it was trial. But I think you can go trial and then upsell tools, right? Upsell the stuff they're going to need for the challenge, right? And then you'll still be able to get some cash from all those people.

19:53And you can make it a$1 trial. So you wouldn't, so you have a working card or whatever. I would not introduce this. I would do this first. Yeah, I think so too. do this first. I'm up for a challenge, but that feels... Yeah, that's very manageable. Yeah. So this is, I'd say test B. I see that. I have so much confidence that doing this alone is going to hugely change the outcome of the event in terms of members and profit. And then I feel like that's like the explode step. Yes, and you can say this, you only get all the tools if you buy the annual during the event. Right, yeah. Because it costs me a lot of money and I've got to ship it and I've got to figure all this stuff out so I can only do it for the people now.

20:28Yeah, I really like that. I feel good about it. I feel good about it, too. It was a simple plan. A simple plan. This is the spin cadence we follow. I know it works very well. We're going to do way more creative this next round. Yeah, we are. Right? You're going to create more organic as well, which is going to feed the list, too. We're going to have more pain-based hooks, so we can go a little bit upfo. Yeah. We're going to increase our spinning capacity from a CAC perspective. Right. Yeah. and the test that we're going to run on the next one is this one yeah and if that works then all the game is going to be is how do i make 800 ads and spend a hundred thousand dollars on my next lunch done all right let's see where we got in the scaling room but okay yes thank you thank you thank you so how many police do you have right now like two yeah one's my husband let's see here your revenue is a little bit higher than your headcount would suggest so you're probably more on this side yeah uh than you are here and so what we're doing is if we're walking through this we're going annual we're adding the stuff to price to a better person we're making all this extra content to make better free stuff and also v2 of this test is actually just running the trial as the front end offer or making more creative to boost the volume yeah also as a side note i don't know if you're already doing this but i would make sure that you optimize your campaigns around purchases if you're not already doing just in case i have to yeah and then the one thing that i didn't see on your numbers but i would like to get to is just epcs it's earnings per click and i think you'll sleep better knowing that you are doing fine that's it You just giving me this is enough.

22:16And so the more I know, the better I'll be with that. Yeah. One thing that I did miss is I think we should consider when you're making these ads, you said you had hook variations. Yes. I would experiment with different call outs for avatars. So like in the lead book, we talk about call outs. I've done that only in a limited way, literally separating mothers and grandmothers. But I haven't really done a great thing. I would go underneath of, I would go more subspecific. subspecific, but like the game is now a game of a hundred ponds and no oceans. Like you're, you're draining a hundred ponds of audiences to get your scale more than trying to advertise to the issue.

22:53To the world. Right. Like you're running two ads and trying to convert, but you're trying to cover everyone with the same messaging. It's true. Right. And so if you want to get the scale, you have to go down, which is counterintuitive. No, I like that. Cool. It's easily done too. All right. Rocking on. This was scale or fail. See you next time.