Alex Hormozi: $50 Billion Lessons From The Former Hand Of Pricing Packaging Product at Vista

The video discusses lessons learned from the former head of pricing, packaging, and products at Vista, including the importance of scoring leads and focusing on high LTV customers, and how these concepts can be applied to increase revenue at a gym.

This video by Alex Hormozi was published on Oct 8, 2020.
Video length: 19:09.

In this video, Alex Hormozi shares lessons he learned from Marcus Rivera, the former head of pricing packaging and products at Vista, the world's largest private equity firm for software.

Rivera explained how Vista scores leads and customers based on their value and focuses on the most valuable ones to increase the value of the company they acquire.

Hormozi applied this concept to his gym business by analyzing the characteristics of their most successful and least successful customers and found that certain factors, such as being a full-time gym owner and having a building of their own, contribute to success.

• Alex Hormozi met with Vista's former head of pricing, packaging, and products.
• Vista scores leads and focuses on high LTV customers.
• Scoring leads can increase revenue and should be based on customer value.
• Filtering and qualifying prospects is important for operational efficiency and profit.
• Having a defined end program and focusing on high LTV customers can increase revenue.
• Knowing who the best customers are is important for operational efficiency and profit.
• The importance of onboarding and orientation in increasing customer lifetime value.
• Setting proper expectations can increase trust with prospects and shift their beliefs towards long-term change.
• Applying lessons to gym businesses can increase revenue and customer retention.

$50 Billion Lessons From The Former Hand Of Pricing Packaging Product at Vista [ALEX HORMOZI] - YouTube

Introduction

• Alex Hormozi is an entrepreneur, investor, and CEO of Acquisition.com.
• He attended an event where he met Marcus Rivera, Vista's former head of pricing, packaging, and products.
• Vista is the world's largest private equity firm for software, with a portfolio of over 50 companies and over $50 billion in revenue.
• One of the things that Vista does is score leads and focus on high LTV customers.

Scoring Leads

• Most companies don't score their leads based on the value of the customer.
• Scoring leads can be based on a number of characteristics and behaviors.
• Vista parses out data to find the most valuable customers and focuses on that vein of high LTV customers.
• They stick to simple systems and processes.
• Scoring leads can increase revenue at a gym.

Applying the Concept

• Alex and his team took the last 90 days and looked at all of their exits and escalations.
• They found the characteristics of the people who made the most money and got the highest returns.
• Unsurprisingly, gym owners do better than non-gym owners.
• People who are fully committed to their gym do better than those who have a job outside.
• People who have a building of their own do better than those who don't.
• Having employees makes it easier to do this.

$50 Billion Lessons From The Former Hand Of Pricing Packaging Product at Vista [ALEX HORMOZI] - YouTube

Conclusion

• Scoring leads and focusing on high LTV customers can increase revenue.
• Simple systems and processes are effective.
• Looking at characteristics of successful customers can help improve a gym's revenue.
• It's important to be fully committed to a gym and have a building of your own.

Filtering and Qualifying Prospects

• Filtering and qualifying front-end prospects is important for operational efficiency and profit.
• Qualifying customers means making sure that the people coming in are the best fit who can serve the best.
• Qualification criteria include having at least 25 clients, assigned lease, being a full-time gym owner, and ideally having one employee or more who works with them.
• After qualification, sales decreased from over 100 a month to about 40 to 50.
• People who started after the qualifications had zero escalations compared to 22 escalations before.

Defined End Program

• Having a defined end program tends to be a little bit easier for people to wrap their heads around and more defined in terms of the skills that they need to acquire.
• After the October date, they switched back to the defined end program, which is what they did for three years.
• The people who came back in were actually paying more than the people who were paying before.
• This new vein of customer who's higher qualified is paying more, making more, and requires less work.
• Lowering the bar too much brings in people who are not qualified, takes up more of your team's time, and costs you tons of effort.

Focusing on High LTV Customers

• Knowing who the best customers are is important for operational efficiency and profit.
• It took them three years to realize who the best customers for them are.
• They are now focusing and doubling down on that vein of customers and trying to expand that by really focusing on them in multiple platforms.
• Vista knows how to extract and amplify value by analyzing customers better than the business that they're purchasing even knows their own customers.
• Look at the data from people who left your business and try to get as many character traits as you possibly can.

Lessons Learned

• Filtering and qualifying front-end prospects is important for operational efficiency and profit.
• Having a defined end program tends to be a little bit easier for people to wrap their heads around and more defined in terms of the skills that they need to acquire.
• Knowing who the best customers are is important for operational efficiency and profit.
• Lowering the bar too much brings in people who are not qualified, takes up more of your team's time, and costs you tons of effort.
• Look at the data from people who left your business and try to get as many character traits as you possibly can.

Scoring Leads and Focusing on High LTV Customers

• Knowing the customer's job, goals, and initial investment can help identify good and bad customers.
• Having a stern line and focusing on high LTV customers can cut operational overhead and increase revenue in the long run.
• Short-term inflow may decrease, but it is worth it to avoid servicing customers who are not a good fit.
• Scoring leads and focusing on high LTV customers can be applied to gyms and other recurring base businesses.
• Identifying good and bad customers can help increase revenue and cut operational overhead.

The Importance of Onboarding and Orientation

• The time between purchase and onboarding is when customers decide whether they will stay in the long run.
• Orientation should be a choreographed experience that focuses on over-delivering value and transferring skills to the customer.
• Rushing onboarding and orientation can lead to losing massive amounts of money and customers.
• Expanding the time period for onboarding and orientation can multiply the lifetime value of a customer.
• Being deliberate and intentional in onboarding and orientation can increase the likelihood that customers will stay with the business.

The Importance of Setting Proper Expectations

• Expectations are everything, and setting proper expectations can increase trust with prospects.
• Selling towards behavior and sustainability can shift and break the beliefs of prospects.
• Selling towards long-term change is more beneficial than simply trying to sell customers to say yes.
• Setting expectations too high can lead to selling hot and not being able to fulfill expectations.
• Sharing the average results and costs can give customers a more realistic understanding of what to expect.

Applying Lessons to Gym Businesses

• Scoring leads and focusing on high LTV customers can help increase revenue and cut operational overhead in gyms.
• Onboarding and orientation should be a choreographed experience that focuses on over-delivering value and transferring skills to the customer.
• Setting proper expectations can increase trust with prospects and shift their beliefs towards long-term change.
• Sharing the average results and costs can give customers a more realistic understanding of what to expect in a gym business.
• Being deliberate and intentional in all aspects of the gym business can increase the likelihood that customers will stay and increase revenue in the long run.

Importance of Expectation Management

• Setting reasonable expectations is crucial for customer satisfaction.
• Low expectations can lead to overachievement and excitement.
• High expectations can lead to disappointment and dissatisfaction.
• Resetting expectations can be done through sales and orientation.
• Shifting expectations towards long-term change and behavior change is important.

Qualifying Customers for Higher LTV

• Qualifying customers on the front end leads to longer lifetime value.
• Superior client outcomes and less operational complexity can be achieved through proper qualification.
• Entrepreneurs may not be a good demographic for certain services.
• Deliberate sales and expectation setting can lead to better customer retention.
• Choreographed onboarding and implementation can lead to a seamless customer experience.

Watch the video on YouTube:
$50 Billion Lessons From The Former Hand Of Pricing Packaging Product at Vista [ALEX HORMOZI] - YouTube