The Two Changes That Grew This Business 44% in One Year | Ep 966

0:00You're about to meet Luis. He runs an online store that sells railing. Although he's doing two and a half million dollars in revenue, the problem is that 81 % of his customers are coming from a single source, which is Google Ads. If that changes or stops working, his business could be in very serious trouble. So first, we're going to dive deep into the business and then we're going to break down all the tactics that he and you can use to scale. And at the very end, we're going to check in with Luis one year later to see if those tactics actually helped him scale. Hi Alex, my name is Luis Loira, the owner of Optimum Works and we are a railing company and we sell a variety of railings online and who we help are homeowners, contractors and designers.

0:34And here are some of the examples below of some of the products we make. Sweet. How much money do you make? Currently we're doing 2.5 million in revenue, 384 ,000 in profit and our net margins are 15 % and our LTV to CAC is one to one. Okay, so something's weird there, obviously. So what do you want to have happen? I'm trying to build the best railing company in the US, and I want a 10x revenue growth and double profit. That is an ambitious goal. So how do you get customers? All right, currently, we're getting them through paid ads, and 81 % of our customers are coming from Google Ads, and we spent about$21 ,600 a month on Google, and we spent on Meta$4 ,500 a month, and we have a couple other sources of traffic below.

1:23So what's the issue? What's the problem right now? We spent over$300 ,000 in marketing last year. Our CAC is high and it actually doubled from last year and our conversions are too low. Got it. So you have a conversion rate issue. So any other problems that you're dealing with besides that? Another problem is that not enough customers are repeat buyers. It's only about 10 % and we want to increase our LTV. So you have a different customer mix. So you've got DIY guys and you've got designers, you've got contractors, but 70 % of your business is DIY. What percentage is custom versus like just normal off the rack stuff?

1:5970 % are just like handrails and like stuff that people buy directly on our website. And then 30 % are custom orders. What percentage of sales are coming from people buying on the side versus a phone? The last time I checked, it's about like 10 to 20 % on the phone. All right. So many ways to make money here. So I'm going to do this a little differently than I normally do. Instead of giving you like a lot of different things, I would like to just give you like two or three things so that you have a high likelihood of actually doing it that have the highest impact on the business. But fundamentally, I think that we could probably fix a lot of this with like two things.

2:37Okay, great. All right. So once you go on this way, then we'll do some live breakdowns. Let's pull up the meta ads. Okay, so this is the only ad that's running right now? All right. Are you running these or somebody else running these? I have a marketing agency that I work with, and they're doing the ads, but we've definitely scaled down on Meta, and we're only spending$1 ,000 to$2 ,000 a month right now. But we actually use a post-purchase survey, and over 90 % of our customers are saying they found us on Google. Okay. Got it. Well, it's good to know. Yeah, let's do Google real quick. Okay. So CAC to LTV there doesn't make sense, because it says your LTV is lower than your CAC, unless you're losing money, but it doesn't sound like you're losing money, so something's wrong here.

3:24What I'm seeing here, though, is that we have a clear data attribution issue. For me to say, hey, let's spend more on Google, or let's spend less on Google, it's like, I have no idea. We don't have any data. So we have numbers, but they're not useful. We have to get the attribution because you're at a business where you are spending money on ads, you're making money, but you have no idea where it's really coming from, besides your post-person survey, which says Google. But when you look at the Google stats, it says you're losing money. So, like, here's my red flags, right? So, number one is you're showing LTV to CAC of 0.41 to 1, which makes zero sense.

3:57Because that means that every month you would just be actively losing money. And since 80 % of your sales come from Google traffic, then I would say 80 % of your revenue you should be losing money on, which you're not. So, there is an alternative possibility, which is super, you know, is possible, which is that the agency that's doing this for you has no idea what they're doing and you're just getting a lot of referral traffic from people who bought stuff from you in the past and you're actually just functionally blowing money out the back end and not really getting many more sales i would like if i wanted to get if i were if i wanted to be a ballsy ballsyer person i would consider looking at shutting off all the ads and seeing how sales change i mean yeah that's the only way to find out but i mean but i don't like again i don't like If we like like last year, you know, we spent, you know, like 21 like thousand a month average and this year we've been spending 40 ,000 and our and our revenue has doubled that data of we spent more and we made more.

4:56Yeah that tracks But it's not being tracked. Yeah Yeah, and so that's so based on that I would be like, all right, well Something's working and when you spend more money, you're making more. Yeah, but we have I have no idea. And so it allows us to do zero optimization. And you're at the point of the business, like, you want to go from 3 to 10, 10 to 100? You have to know these data, like, the back of your hand. Yeah, definitely. I'm at that point where it's... This data is the most important thing right now. Like, you kind of have a blanket strategy of like, well, if more people find out about me, more people buy, which I'm all for.

5:28No, I mean, like, I'm game for that. But now we have to be more... As you get to colder and colder audiences, we have to be more targeted with the spend. If we were to reimagine the business, I think that, and to be clear, I don't want to break the business. Obviously, it's making money. There's nothing wrong with the business. But I would probably optimize for DIY plus custom. And the reason I'm thinking that is for a number of things. So number one is you already have a strong full hold in DIY. Number two is that they're less price sensitive than the other buyers, which means like even though the ticket and when, can you pull up the customer data real quick?

6:04So if you look here, right, the average order value. So if contractors were like$20 ,000, they'd be like, all right, well, maybe we should look harder at that. But you're really close in terms of average order value. And so there's no real benefit to going to these highly price sensitive people who are clearly shopping you between a bunch of different sources versus the people who are like, I think this stuff's dope. I want to buy from them, which is, I'm guessing, what the DIY people are more similar to. Right. Right. And so basically, if we think about this from a strategy perspective, if you sell to the contractors and designers, you're going to be more and more of a commodity for them.

6:40And then they're just going to be shopping you out between a bunch of other shops that do the assembly and whatnot. Whereas DIY, we can drive more gross profit because we could easily take the 873 and probably bump it to a thousand. And we have the same average order, but our gross margin would be so much higher. Yeah. And that's where I think the magic is. So it's like, even if we have the same average order or close to it, we could sell way more of them. And the gross margin on each might be double or triple because the margins are thinner in the business. That's where I think that like the overall, like if I own the business tomorrow, I would probably reorganize it so that it's just like, this is the home for DIY railings.

7:16And it's showing all the cool stuff you can do for custom. And then people are just like basically opting in, booking a call. And at the end of the call, we can solicit the sale. Yeah. And I think you set that agenda at the very beginning, which is like, hey, we're going to go through these things. So it would look like this. So it would be custom. They click the button. This thing goes here. They put in their form. Yeah, one sub funnel. Yeah, form, and then we can have their calendar. And this can be together, because the calendar can take the form. Then after this, we have a post or pre-call, but post opt-in video sales letter.

7:54and this is like hey this will give them price ranges and then on the nurture which you'll do via sms here is basically you ask for bant which is budget authority need timing okay and so that's just going to be like easy little text messages being like hey just making sure you're the person like does your wife need to be on the call who else needs to be on call to make a decision just because and i would just be like listen we're not a sales company but i'm happy to hop on the call to figure out what you need so we can get your order in. Yeah. And we're really framing it as, like, you're going to be buying on this call.

8:25So this isn't, like, a long sales process. Like, I'm just making sure that no one's wasting anyone's time. Mm-hmm. And then on the call, and so we'll get the card. Yeah. And I think that will allow you to, one, like, I could see a world where your DIY projects are 1 ,300, 1 ,500. Yeah. Like, no problem. Mm-hmm. And then also, you probably have like Klarna or Affirm or one of those financing options. Oh, yeah. Like Shopify has like their own like financing. And so are you processing the custom orders through Shopify as well? Yeah. Yeah. And so here, it's like you can say, cool, do you want to pay?

9:04Like I would just do AB in terms of the close, which is like, hey, do you want to use a credit card? Do you want to finance? Same to us. Same to you. Yeah. You know, which would you prefer? Yeah. And then that way you can just lock in on the call. And it's like, and then like here, you can also prep them saying, hey, I give a$200 discount for people who move forward on the call. And that's just because it saves us an administrative headache for taking more calls after that. So I tell them before they get on the call. So it's like, they know they're going to buy, because I don't want you on multiple calls.

9:33I think it's a waste of your time. And I think this process, we're just basically leaning into the people that are the least price sensitive, that you already have the most of, and actually just dialing in the sales process here. And this is where I think you want to like basically let them dream, which is I'd be like, hey, there's like, there's 101 railings that you can put into a house. If you have a modern house, this might be the type of look you're looking for. If you have this, this might be what you're looking for. If you have this, this might be... And if you just have wild ideas, let me show you four different wild ideas.

10:03And I'm sure that there's custom ones, but the reality is that, you know, that there's like three or four that like a lot of people just think are really sick. Right. And then just show those ones in the video. And you can give the range easier. And be like, obviously, it's dependent on shipping and whatnot. Like, I think that if you literally just follow this process, you would probably be somewhere in the 50 % to 60 % close rate range. And we would probably double the average value of each customer. So when we were talking earlier, you said you wanted a 10x. Well, just from hypothetical math here, we could probably double the close rate and more than double the gross margin per customer.

10:39So that's a 4x. Okay. So for the VSL overall, so short for video sales letter for anybody who's curious, is that we want to have basically a hook, a hook at the beginning. So we go, we follow the same process for this as I do for like a YouTube video. So we're going to have proof that we can help them. We have a promise and then a plan, which is like, this is how, what we're going to cover in this video. And ideally, have some sort of picture or roadmap that displays these things. That way, there's a visual like, okay, this is what's happening. Real quick, I'm going to show you the exact 10-stage roadmap from zero to 100 million plus that less than 1 % of companies finish.

11:20I've now done multiple times. And so I can say with a lot of confidence that these are the stages as headcount increases that you need to get through. And I broke each of these down by eight different functions of the business, what the constraint feels like, like what are the symptoms of it when you're going through it, and then what steps we actually took to graduate. And we've done this across software, physical products, service businesses, brick and mortar, all of this, and it works. And it's my gift to you. It's absolutely free. And so the link's in the description, but you just go acquisition.com forward slash roadmap, just enter info and it'll spit it right back to you all free.

11:50The hook is like, hey, have you ever wondered, or like, have you ever looked at your railing and be like, man, if I just changed this, my whole house would look different. And this is probably super high ROI from a home resale perspective. So just changing the railings in-house, there's a recent report that came out that showed that railings from an aesthetic perspective only cost a fraction of what they add in home value. And so the way I think about it, railings are basically free. Wow. Oh, wow. Yeah, what a great anchor. Now, you might be wondering, how do I think about buying a railing? And so it's like, there's actually four steps, you know, it's a buying a railing.

12:28There's the, you know, the materials, there's the, you know, the number, there's the hook into the wall, the whatever, you know, you know, you know, whatever those steps are. Right. And so you go for each of those at the end of this. So you're going to go through that whole process. Right. And at the end, so we're put this, this is still in the intro. Yeah. I'll explain pricing because everyone's going to be like, oh, my God. So that way it'll keep them because they're like, oh, I want another pricing. I'll experience pricing and set expectations for delivery times and things like that. And so then you go through this, which is kind of like the meat of the video.

13:00And then we go into price ranges and expectations. And I would still say, cover this here, which is like, hey, obviously these things, they are free in terms of the fact that they can add value to the house in excess of what they cost, but they obviously cost money. We're made here in America or whatever it is. So, you know, come to the call knowing what your budget is, because then that way, like, I don't waste your time with, like, making railings out of diamonds, which we can do, by the way. You know, you can make a joke. Authority, which is like, okay, if you have your wife or husband who needs to be on the call, I'd recommend you guys do it together because sometimes you got one person who has the taste, another person who handles the money.

13:36Like, you want both of you guys on the call. And then from a need perspective, they're here so you don't have to cover that one. They have pretty high intent of watching railing videos. And then it's just timing. So it's like, hey, and also I just want to know, basically, what's your timeline in terms of getting it installed and if we were to get it shipped out to you, like how fast do you need it? And I like thinking like how fast do you need it because that way we can try and push the urgency in the sale to get them to buy. But basically this is it. So it's like we have our hook at the beginning, we have our proof promise plan picture and then we set our expectation to open loop to the end.

14:07We have how you pick the hand railing and then we say, cool, now that you like that. If you're like, I'm not sure, it's like that's why we have the call because listen, it's an important decision. It's gonna change the way your house looks and I've done this a lot of times And I tend to, you know, I can shepherd you through this process really well. OK. And that's it. In this video, probably, you could be looking at, you know, five to seven minutes. OK. Doesn't have to be a long video. And that's it. And then we just have our texts, our texts that we're sending afterwards, which we're really just looking for personal info again, and then reaffirming these.

14:39Which is like, hey, just to make sure, what did you say your budget was? You know, are you going to have your spouse in the car, whoever makes the decisions? And in terms of timelines, what are you looking for? OK, cool. So, I'm looking forward to a call later today. And yeah, we'll move forward at the end of that call. I honestly only want to give you this, because I think that's the only thing that matters. Yeah. Because I could, like I said, I could give you 20 more things, but I'll give you one more. Okay. I'll give you one more. This is all I'm going to do. We'll give you one more, which is the long-term nurture.

15:12Yeah. I think it's probably worth building this out. How big is your email list? Like 10 ,000. All right. So if you have basically a 10 ,000 person list, you had the original problem that you're dealing with, which is that you don't have a lot of repeat purchases, right? Yeah. I don't think that there's like, I don't want to force continuity in this business. I don't think that's really the play. Yeah. I think that what we can do is try and consistently market so that the next time they do an expansion, were the first ones they look for. But the only way that we can do that is just through consistent long-term nurture.

15:50And I think that will compound like a snowball. Like, it'll just keep building up. And I'll bet you, like, you have, I mean, you're doing two and a half million, how old is the business? It's five years old, and, like, I barely went full-time two years ago. Yeah, okay. So if it's five years old, you have a 10 ,000 personal list, you're doing two and a half million dollars. Like, that list is probably a very good list. Okay. Because that's a really small list relative to the revenue. Yeah. And so, basically, I would like you to just commit at two times per week, sending an email to the whole list.

16:18And I just wanted to do one is a before and after. And the other is cool shit. And if you want to have a third, which you can rotate, like, you know, this could be the next week you do this one, is an FAQ, which is what are the most common questions that people ask that don't buy? So it's like, these are like bait, and then this is like overcoming the concern that you immediately have, because you're like, oh, I do want that. you're like, ah, but who's doing the install? Or like, how much are shipping? Like, just these normal random questions that people probably... You already know that 20 questions people ask.

16:52Just take all 20 questions and just rotate them. Yeah. Throughout the year, just like kind of rotate them consistently. Yeah, you could do that. But that's it. Like, if we just do this and then every email I would structure... So we've got our subject, that should be an E, there we go. And then underneath, we're going to have some sort of immediate reward. So, if we can, I like to do really cool quotes. What do you think, like, something immediately, like, that would be sweet? Just like an image? For like a new email? Yeah, for like following this framework. Like rail transformation? Okay, cool.

17:28So we would just do probably a picture here. Should be like, check this out. Because the thing is, is people who are like, want to improve their home, it's kind of like porn for them. Like they're just like they get super obsessive with it. They love it. Yeah, no, exactly. So it's like, check this out. We point to this thing. And then I would just have my like CTA or FAQ about this linked here. But the point is that we want to give them a link and then a PS discount or joke. Just something that's like, you know, friendly, fun, whatever it is. And I think that you can basically model this as the structure that we use in the emails, because these people, they're going, if they love this stuff, then they're going to open it up just to see, you know, what's going on.

18:10And then that's like, that's what's going to bring people back in. Awesome. So 80 % of people are like, you know, purchasing directly on the website and like, you know, they're just filling out the checkout and like their card info and, you know, proceeding with the order. And the other 20 % that we're doing like custom railing orders is like they fill out like a custom order form and like they put all that info yeah once they fill that out you know we make sure like if they have all the correct info then we'll proceed with the quote and like we'll we'll get like an email that that they filled it out with all their information yeah and then we'll send them the quote within like 24 hours so where's the custom quote thing yeah custom orders it's so small and we have it so yeah where we actually get a also a amount is that we have it on our on our most popular railing okay yeah let me see it let me say it's in the same product yeah that one that one but it so it's yeah it's underneath is that on all of them that is on the the best sellers that's it any reason to not put it on all of them no we should put them on all of them dude let's put this on all of them yeah all right so in order to do this, I'm going to make this kind of like up here.

19:26All Rails have the custom flow. And so this custom order should then lead to here. Now, this little click thing is basically A, right? Because this is one source of getting those clicks. One of the other things I want is, so there was a banner that I saw. It said free something, and then it disappeared. OK, free shipping in the USA. I would have a banner across the top that has custom designs available. Okay. And make it sticky. So the one that you have currently disappears, like let's keep it sticky across the top. Which one is the Google ads linking to? This one? Yeah, the Google shopping ads are going to that one.

20:13And that's what you're spending your money on? Yeah, most of my money, yeah. On those, yeah. Okay, so just going direct. Direct to the listing, yeah. I love these little testimonial things at the bottom. That's really nice. Okay. I honestly, like... This is all I want you to do. I don't think you need to do anything else. Because if we just do this right, you're probably looking at a 3x or 4x. Okay. I don't want to overcomplicate this. You have this, the right customer. The reason this is so straightforward to me is because everything is aligned. You have the best customer that you have the most of, that's the least price sensitive, that is the most obsessed with this type of product, which leans itself towards custom anyways.

20:55And so it's like, cool, and this also from, OK, does this work for long-term strategy? Yes, because if you can do more custom stuff, and we know that it's not that custom, right? But it's enough custom that they feel special about it. And I think part of the pitch is like, listen, you don't want to have the same railings as your neighbor down the street. And of course, like, they would be so horrified of that, but who gives a shit, but somebody else might. Nobody's using the railings with. But, and then we add the nurture in so we can bring customers back. That's it. That's all we would do. In terms of doing this in order, I would set this up first.

21:28I put these on second, because basically it's like we have to have the system in place. Then we drive traffic to it. We already talked about this is up. This is still the video. Then you use this script. Then we add in our lead, our long-term nurture, because now we're getting more leads through and we're converting more people, but this gives us more long-term follow-up. And I think this you just run in parallel because this is the stuff you're going to do. This is just somebody else. You're going to write a check and you're going to get somebody else to do it. Awesome. All right. Got it. Rock and roll.

21:53Perfect. Easy peasy. So it's been almost a year since we filmed this episode with Luis. My team jumped on a call to check out on his progress and I'm going to watch it live. So from the time we shot that episode of Cash Cows, it was April 2025 and we were currently doing 2.5 billion in revenue with$384 ,000 in profit. Right now to this day, in March 2026, for the past 12 months, we've done$3.6 million with$540 ,000 in profit. So we've grown our revenue by 44%. Out of all the changes we discussed that had the biggest impact on profit, it was optimizing for custom orders. That has become now a way bigger part of our business and it's become 50 % of our business.

22:36So once we fixed attribution, we discovered we had campaigns that were breaking even. So what we did is that we took the money out of the losers and put it into the winners. So once we raised prices, our close rate is currently at 20 % and we have tripled the amount of leads slash custom orders submitted. The advice that made the biggest difference was optimizing for custom orders and improving the custom orders page and improving the sales process when it came to taking those customers. Alex, thank you from the bottom of my heart for all your help and wisdom. You've completely changed my business and you've got me out of the swamp.

23:16So I commend you for that. And I know it's only up from here. So thank you. And I wish you well. So first off, that was awesome. I love hearing the 44 % increase in a year. That's badass. And to be clear, this is all because of Luis actually, you know, taking action on this. It's not because of me or some sort of magic. You know, we looked at the orders that were making the most money. We put more resources towards those ones. One of his differentiators that he had this custom thing that a lot of other people in his space don't have that ability to do. We doubled down on those things, served higher customers in a higher level.

23:45And obviously he reaped the profits. So, you know, kudos to you, Luis, appreciate you. And yeah, so you follow the steps and the stuff actually works. So yeah, go do that. Go do what you just saw in this video and hopefully you reap what Luis did and even more. Thank you.