Bookshelf

Contents

  1. Finding the Right Customers (avatar survey)
  2. Four ways to display a discount
  3. Five types of friction
  4. Customer Financed Acquisition (CFA)
  5. Calculating LTGP
  6. Levels of CFA

and 8 more

$100M Lost Chapters, the cover

Book 3 of 46

$100M Lost Chapters

Lost Treasures from $100M Offers, $100M Leads, and $100M Money Models (Acquisition.com $100M Series)

By Alex Hormozi

161 pages, 7 chapters

Frameworks: 14

The frameworks here are Alex Hormozi's, from $100M Lost Chapters. Claude read the book in Tom's Brain and linked it to his lessons.

How Tom uses this

$100M Lost Chapters backs two of Tom's lessons. Under each of his lessons, what the book says about it, and on which pages.

What it argues

Hormozi argues that growth comes from making each customer worth more than competitors can afford to match, and from picking the right customer in the first place. Customers should finance the acquisition of the next customers, which means recovering cost to acquire inside 30 days and aiming for twice that. Stacked offers, free or discounted front ends, continuity bonuses and up-front fees raise lifetime gross profit, so the owner can outspend the market. The same logic applies to staff: build checklists, train by showing, diagnose performance with a simple diamond, and protect makers' time so the business runs without the founder.

Worth keeping

  • Survey customers, keep the top 20% and name three to five shared qualifiers before marketing to anyone (p. 12).
  • You can charge more because of who your customers are, since the same work is worth more to a bigger client (p. 13).
  • Generate flow, monetise flow, then add friction (p. 21).
  • 30 day gross profit above CAC, with 2x as the minimum standard, removes cash as a growth limit (p. 47).
  • Calculate CAC with payroll, software and commissions included, by channel (p. 52).
  • LTGP is gross profit divided by churn for recurring revenue, and it has no ceiling while CAC can only reach zero (p. 57).
  • Use a value grid, not a ladder, to see revenue per prospect and 30 day cash (p. 76).
  • Match every offer to the right stage, problem, way and time (p. 88).
  • Bigger up-front fees and lifetime discounts lower churn because customers do not want to lose what they paid for (p. 125).
  • Train with Document, Demonstrate, Duplicate, and diagnose drops with communication, training, motivation and circumstances (p. 142).
  • A short meeting costs a maker ten times what it costs a manager, so protect big blocks of time (p. 155).

Which project it moves forward

The Content Operators launch

The offer stacking, avatar survey and CFA maths give the Content Operators launch a way to price and sequence a first cohort offer.

The questions it answers

  • What is content operations actually worth to a company, in money?

    The CAC examples cost a two-person media team plus commissions to get a price per customer, and the content team at Acquisition.com is costed at about $3.33 per engaged lead.

  • How do you build a personal brand that generates inbound rather than requiring outbound?

    Free presentations and long-form content turn strangers into buyers, and 78% of top customers had consumed two long-form pieces before buying.

  • How do you price and sell a tool you built for yourself?

    Freemium, pick your price and offer stacking give concrete structures for pricing a product that starts with no audience.

  • What is the smallest team that can produce at the volume I am used to?

    Trading 40 hours of doing for four of managing, and costing payroll per engaged lead, gives a way to size a team against output.

The frameworks

14 frameworks, one animation each

Every framework, step by step

Finding the Right Customers (avatar survey)

Pick the customers worth the most and build marketing and sales around them.

  1. Survey your customers. Ask about demographics, business stats before and after, aspirations and the buying process.
  2. Find your biggest spenders. Sort replies by who you like most, who spent most and who stayed longest, and keep the top 20%.
  3. See what they have in common. Read the answers and pull out the fewest qualifiers they all share, usually three to five.
  4. Execute. Speak only to the new avatar and re-engineer the sales process to copy how they bought.

From chapter: $100M Lost Chapters, pp. 8–18

Four ways to display a discount

Same promotion, four framings to test.

  1. Percentage off. State the saving as a percentage, for example 87% off.
  2. Absolute amount off. State the saving in money, for example $181 off.
  3. Relative equivalent off. Frame it as something comparable, such as less than going out to lunch.
  4. Simply the discounted price. Show only the new price, which suits well-understood services.

From chapter: Section A: Attract, pp. 19–45

Five types of friction

Dial lead quality up by making the path harder.

  1. Increased qualifications. List who the offer is for in every ad and page.
  2. More information required. Ask heavier questions such as a phone number or income.
  3. More steps. Add stages so fewer, better people finish.
  4. Forced consumption. Make prospects watch a long video before any call to action.
  5. Advertisement length. Lengthen the ad or copy before the call to action.

From chapter: Section A: Attract, pp. 19–45

Customer Financed Acquisition (CFA)

Let customers pay for the next customers so cash stops limiting growth.

  1. Lower CAC. Add every cost of getting a customer, divide by customers acquired, then improve the best channel.
  2. Raise LTGP. Increase gross profit per customer over their whole life.
  3. Shorten payback. Recover CAC within 30 days, ideally at twice CAC.

From chapter: Section B: The Expensive Customer Problem, pp. 46–71

Calculating LTGP

Back-of-napkin lifetime gross profit.

  1. Find gross profit. Subtract the cost of delivery from the price, per thing sold.
  2. Find transactions or churn. Average lifetime transactions, or churn as people lost divided by the starting count.
  3. Combine. Multiply gross profit by transactions, or divide gross profit by churn.

From chapter: Section B: The Expensive Customer Problem, pp. 46–71

Levels of CFA

Where a business stands on funding its own growth.

  1. Level 1. 30 day gross profit is below CAC, so you fund the gap with savings or credit.
  2. Level 2. 30 day gross profit equals CAC, so a credit card works as free money.
  3. Level 3. 30 day gross profit is more than double CAC, so customers finance growth.

From chapter: Section B: The Expensive Customer Problem, pp. 46–71

Ultimate Offer Stacking Process

Weave one of each offer type into a customer journey.

  1. Attract. Open with a free or discount hook.
  2. Up front cash. Sell the high-ticket offer, then downsell in steps to keep every dollar.
  3. Upsell or downsell. Offer products or services that solve the next need.
  4. Continuity. Convert to ongoing payments, then repeat with a second continuity and prepay offer.

From chapter: Section C: Advanced Offer Stacking, pp. 72–132

Four steps to picking the right offer

Check any new offer against four conditions.

  1. Right stage. Match the offer to attraction, 30 day gross profit or lifetime gross profit.
  2. Right problem. Solve a problem you can handle that is worth a lot to the customer.
  3. Right way. Solve it the way the customer wants it solved.
  4. Right time. Make the offer at the point of greatest need.

From chapter: Section C: Advanced Offer Stacking, pp. 72–132

Bonus design for continuity

Keep customers paying by pairing a when with a what.

  1. Pick the when. A delay after a number of payments or a milestone the customer achieves.
  2. Pick the what. A one-time bonus, a variable bonus or a lifetime upgrade.
  3. Announce and label. Tell them what is coming, give them a new status label and celebrate it.

From chapter: Section C: Advanced Offer Stacking, pp. 72–132

Creating a one-time fee

Add a made-up fee that raises commitment and offsets acquisition cost.

  1. Pick your fee name. Name the fee for what the work is.
  2. Pick your fee price. Set a figure high enough to raise the barrier to leave.
  3. Pick your reason why. Give a clear reason for the fee.
  4. Charge, discount or waive. Use the fee as a tool for the salesperson to sweeten or hold the deal.

From chapter: Section C: Advanced Offer Stacking, pp. 72–132

3Ds of training: Document, Demonstrate, Duplicate

Turn what you do into a checklist anyone can repeat.

  1. Document. Write the steps exactly as you do them and test them by following only the checklist.
  2. Demonstrate. Walk the employee through the checklist and fix any step that confuses them.
  3. Duplicate. Watch them do it from the checklist and fix the checklist until it works.

From chapter: Section D: Expanded Employees Chapter, pp. 133–159

The Performance Diamond

Diagnose why an employee stopped performing.

  1. Communication. Check they know that you want it done, by having them restate their priorities.
  2. Training. Check they know how, by having them demonstrate it.
  3. Motivation. Check the reward, the work environment and life outside work.
  4. Circumstances. Ask what is blocking them, such as a broken phone or no beef.

From chapter: Section D: Expanded Employees Chapter, pp. 133–159

The five lead stages

Treat hiring and selling as the same funnel.

  1. Uncontacted. Advertise to them.
  2. Contacted. Incentivise them to engage with your offer.
  3. Engaged. Qualify them on problem and money.
  4. Qualified. Make an offer.
  5. Sold. They give you money in exchange.

From chapter: Section D: Expanded Employees Chapter, pp. 133–159

Maker or Manager solution

Protect maker time at three levels.

  1. Managers. Understand both costs of a meeting to a maker, and the value of their no.
  2. Makers. Set meeting blocks, set response expectations and work when you say you work.
  3. Organisations. Mandate quiet chunks and share the language of makers and managers.

From chapter: Section D: Expanded Employees Chapter, pp. 133–159

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