This is probably one of my favorite principles from Ready, Fire, Aim…

Hey, what's going on everyone? This is Steve Larsen. You're listening to Sales Funnel Radio.

Welcome to Sales Funnel Radio where you'll learn marketing strategies to grown your online business using today's best Internet sales funnels. And now, here's your host, Steve Larson.

Hey, how you doing? Got kind of a cool episode here for you. It's been busy, busy, and I've been loving it, been enjoying it. I am doing a lot of cool stuff. There's going to be some neat updates with this podcast coming up very shortly, which I'm very excited about. Neat updates with the podcast. This is going to be ... I've got a cool gift for you guys. I'm so excited. I think I have found the right person and hired her and, she's doing some amazing stuff for me with this podcast. So, coming soon there will be something pretty amazing.

Hey, I've been traveling a lot lately, and I was on an airplane. I don't know what it is about airplanes. I love putting headphones on. I pretty much have headphones on all the time. People think that I'm really shy and a bit of an introvert, which is slightly true. But anyway, I was sitting on an airplane, and I love getting out a legal pad, just a blank legal pad and a pen. And, I just think. That's it. I just sit there and I just think.

And I'm listening to awesome music. I got these cool noise canceling headphones. I slip them in noise cancel mode, and, I just sit there and I listen to awesome music, and I just think. And I just designing out whatever funnel or offer or marketing thing that I want to.

And so, I was designing out this really awesome funnel, which you guys will all see shortly because I think it's something everyone could benefit from. And so I have been building that, and I've been putting it all together. It's been a lot of fun, but one of the things I was thinking about as I kind of started studying from different books, and I was putting the pad down and grabbing different books. You guys know that I've been talking a lot of about Ready, Fire, Aim lately.

And guys, the way I read books is very weird, and I know it is. It takes me a solid, solid month to get through a single book if I'm actively reading it. If I'm not, I can be on the same book "for like three months", which is so true, and it's kind of sad. But the reason why is because, if you look, I'm holding a page right now. It is marked to death. So much so sometimes you can barely even read the words that are on the page.

Anyway, I don't know if it's necessarily a good thing, but I think about all the things ... That's the reason why, if I want to actually read a book cover to cover, "read it", I have to listen to it. Otherwise, I stop, I think about it, it connects with other ideas, I draw it, I remember three or four quotes from some other thing and I write them down, I hook them into the book.

And you know, that's the way I read books. Because of that, I was a very slow reader in school, and so, all I would do is I would find PDF versions of someone's book, and I'd go load it into like, an eBook reader and play it at like, four time speed. And that's literally how I got through all school. It's because of this. I think it's a cool problem. It's not necessarily a problem. I don't think it's a problem at all, but, it certainly keeps me going very, very slow.

So, I'm on page 119 and, I've been there for a long time...

Anyway so, I was sitting on the airplane, and I had my pen and paper out and, I start reading this paragraph from this section. And the reason I like to do so much is that, I know that when you learn and when you have ideas that come to you. When you combine them with other stuff, that's really how you learn anyway.

And so, I'll see them in my head by drawing pictures. I'll see them in my head by ... I mean, yeah. Little diagrams. I underline certain words, certain things like that. I star things all over the place. Weirdly enough, I imagine myself teaching the principal from stage, a lot.

That is actually, something I do a ton...

So that, by the time you guys are hearing it on the podcast. A lot of times, I've said it already. Both in my head, on stage, sometimes, actually on stage, probably, in two or three Q & A groups that I do every Friday, that some of your guys are a part of. And so, it's very, very in my head. And when I need to, it just bubbles up, and it pops up, and I use it in the future. And, it's honestly, one of the ways that I'll go learn new stuff. Most of the time I don't just learn for just whatever. I don't learn generically. I learn very, very specific for whatever problem I'm on right now.

So, I'm very, very selective and almost protective of myself based on what I'm going and learning and studying because I don't want to get distracted about stuff that I don't need to be using right now, you know what I mean?

Anyway, so I want to read to you this one thing though. This is very, very powerful, and I think it's one of the major reasons why some people ... they're not where they want to be. Anyway, so I want to read this real quick, okay.

So, this is in Ready, Fire, Aim. It's page 118, sorry. It's a few paragraphs down, and this is what it says. "So, though your primary focus should always be on customer service, you're quantifiable goal as a stage one entrepreneur should be to acquire as fast as possible what we call a critical mass of qualified customers, the number of loyal customers you need in order to make all or almost all of your subsequent selling transactions profitable."

Let me say that one more time. "You're primary focus should be on customer service. Although it is, the actual goal is to acquire as fast as possible a critical mass of qualified customers."

Follow me real quickly on this one, okay? So, you're acquiring a critical mass of qualified customers, right? All right. Once you have a good number of qualified customers, you will be in a really good position where almost every new product you come up with will be successful because so many of your existing customers will buy it. Hmm. That's fascinating, isn't that?

So, let's think through that here real quick, okay? I'm like stuttering right now, sorry about that. I've got a billion ideas and my heads getting in front of my mouth, sorry about that. Okay so, first what you're doing is, you're grabbing a ton of customers, just qualified customers, as many of them as you possibly can and, as fast as you can.

What you're doing is, the reason you're doing it is because, you're acquiring the customer with a product so that ... A buyer is a buyer is a buyer is a buyer is a buyer is a buyer, right?

We all know that, right? What he's doing, what he's saying here is the reason you're doing that is because all the subsequent sales that you are trying to make to your existing customers, they're far more successful because they've already bought from you in the first place. That's what he goes into and talks about here.

And he goes through and he talks about ... This is interesting. On the very next page here he ... I hope you guys are okay that I read certain sections and passages to you. I hope that's okay.

Anyway, on the very next page he's talking about a consultant that sent him this email, and he said, "Although your eyes glazed over when you looked at the convoluted formulas in my spreadsheet that modeled allowable order costs, you immediately understood the dynamics of generating long term profits through the development of large circulation, low-cost products sold at a loss on marketing by upselling high-end products through this larger base."

In layman's terms and in English what he's saying is he goes and he's suggesting to this company basically a tripwire funnel. He is going out and that's what I drew right next to it. He says, "Look, here's what you need to be doing. You need to go out and you need to create long-term products through the development of large circulation, low-cost products sold at a loss on marketing by upselling high-end products through this larger base." So, he said, "Go and create this huge ... Acquire as many customers as quickly as you possibly can."

You get them in the door just so that they're in the door, and you might go and you might actually lose a little bit of cash on them. That's fine. Why? Because there is a followup sale. There is an upsell.

Now, because of the funnel world, because of the upsell world that we live in, we know that could happen immediately. This company, though, was talking about it as though they need to go in the hole for quite some time. We know because of funnels, because of tripwire funnels, because of upsells, downsells, all the different things that you can offer. You can make that second sale immediately right after you acquired them. That's why the book funnel works so well. Right?

The two-step tripwire funnel, or the low ticket eComm funnels, where the first product or two in the funnel are loss leaders, where you're going in and you're saying, "Hey, look, just have it. I'm just trying to help you practice take your credit card out when you see my name, my brand, my product. Oh good, you did. Here's something else." And the percentage of people who will buy from you goes through the roof because of that.

I love what he said in this. I think it's fantastic. So, I started thinking through how can I acquire as many customers for my current product that I'm selling right now as fast as I can, because I'm not building a tripwire funnel for a while, and I'm not going to, and it's on purpose, and it's gonna be quite some time before I actually put a tripwire in front of it.

And you guys all know why. I start at the middle of the value ladder. It's the core of the business. We've done a lot of cash so far, which is great, fantastic, but I could not have done that cash if I was focused on a tripwire funnel. I would've done maybe a couple grand vs. nearing a hundred grand. You know what I mean? Which is what we're doing now. It's just awesome. Okay.

You guys know my philosophy on that. It's the start in the middle, move to the back, and then go to the front. Sometimes you can go to the front second, but usually it's third depending on the business. I know some of you guys are in eComm, and you're like, "I'm not gonna do that". That's fine. That's fine. Just figure out a way to charge more money. That's the biggest takeaway that I'm trying to say.

So, here's what I did. As I started thinking through, here's my current webinar numbers, and I started thinking through how do I acquire 1,000 buyers as quickly as I can, as fast as I can. Why? Why? So that when I put a high ticket, back end product in front of them, there are enough customers to make a significant difference in my wallet. Right?

It's the coolest thing, guys. It's the funnest thing. Every time we put a hight ticket application style funnel on the back of an inner circle member's value ladder, it doubles their business. Right? But it only doubles their business if they have a certain number of qualified buyers, when they amass ... What did he call it? He called it a critical mass of qualified buyers. Right?

You have to do that. You have to do it. That's how this whole thing works really, really well. That's when it explodes. That's when it takes off, and there are really, really easy ways to grow big lists quickly. There are really, really easy ways to do this with starting out with not list, with the current list. You know what I mean? Start acquiring the list if you don't have one

Anyway. So, I wanna walk through this right here real quick. These are my current webinar numbers, and I kind of worked backwards on them thinking through how to actually get this done here.

Okay. So, if I want 1,000 buyers and I currently close anywhere from 6% to 15% on the webinar, and I know that's a huge spectrum, but the reason why is because usually it's anywhere from 6% to 10% on the webinar, and then another however many percent during the followup series.

So, I don't totally know the exact number yet. I've only done it live three times so far, but somewhere around there. It goes anywhere from ... I've had it closed even like as 25%, but then on some of them like 6%. You know what mean? So, there's a spectrum, so I'm just gonna say on average.

So, let's say that I want 1,000 buyers, and I close at an average right now of, let's say, 15%. That means I need 6,667 people to hear the pitch. Okay? I'd literally need to pitch ... There needs to on the stack section of the webinar I need almost 7,000 people to actually hear it in order for me to close at 15%. Okay? I get about a 15% to 20% show up rate from those who register, which means I need 33,333 people to register on my registration page.

That's how many people I need to register on the page for 15% to 20% to show up, which allows me to have about 7,000 pitches, which allows me to have about 1,000 buyers. That's about how the numbers shake out give or take a bit because obviously that's fluid.

Now, I'm spending on average anywhere from $4 to $8. It averages out pretty strongly around 5 to 6, actually, $5 to $6 per registrant. So, that means I'll need to spending about $166,000 on ads to get 1,000 buyers. That's actually not bad. For a $1,000 product, that means I'm giving up 16% of my $1,000 to acquire the customer. That's not bad. That's not bad at all.

I'm about to turn on this affiliate program here, and I'm giving away 25%, so you get $250 for every thing that you help me give away, that you help me sell. Let's compare that real quick. So, I started thinking, so I was like, "Wait a second. 16% in ads to acquire an individual vs. 25% to an affiliate. Why would I give 9% extra to an affiliate?" So, I started thinking about it.

This is all on the airplane, and I'm sure the person next to me thought I was a freak because I was writing ferociously. Something about hight altitudes, the pressurized cabin, and fast paced music. I don't know. But anyway.

There's 16% in my ad spend to acquire a customer, 16% of the total revenue to acquire the customer. That's not crazy. What am I ... That's 84% product margin. That's freaking awesome. Tell me another industry that you can get that in.
In school, I was part of a student run business. We built it from scratch. I was assigned to be in the food business.

I am not a cook. I am not good at cooking. I know that...

Other people around me know that. But that's what I was assigned to. We were making 8% to 10% business margin overall, and the professors were freaking out how amazing that was. I was like, "8%?" They're like, "Do you know how amazing that is? That's great. That's huge. Oh my gosh." I was like, "Oh my gosh. I'm not going into the food business. That's good for the food business? Oh man."

Anyway. So, that's the reason I sell what I sell. It's on purpose. It's very much on purpose because I want to choose products where there's high perceived value so that there's more margin so that I can spend more to acquire the customer plus also bring more profit into the business. Does that make sense?

Anyway. So, 16% of the sale is what I give up to acquire a customer when I spending ads. So far, that's about where they're shaking out. And I think that's not 100% always gonna stay there because the ads are getting better, we're finding sources of traffic. We just got offered a huge list to go promote to. But that now goes into the affiliate side, right? So, I could do 16% of the sale for ads or 25% of the sale for my affiliates.

Now, why would I do that? Why would I not just continue to acquire customers just through ads and save the extra 9%? 9% of a thousand bucks, that's starting to make a dent over scale, right? That starts to be a lot of money. Here's why. Speed. If all we care about is average cart value, which right now my average cart value is $997, and cost to acquire the customer, cost to acquire ... Until I read this passage in this book, just this last little bit here, I always thought of cost to acquire as dollars cost to acquire, and it's not. It's also time cost to acquire.

I could go out, and I could keep spending 16% on my ads to actually get people in the door. Right? And it would be good. It would be great. But man, if someone's already amassed a huge group of people and I want just this huge influx of people, why would I not go really quickly, just go and even give up extra margin to get a huge influx of people to come in? Why? Right? I'm acquiring as fast as humanly possible my critical mass of qualified customers so that I can give them the upsell easier. Okay? That's why. That's why.

Cost to acquire is not just about dollars. It's also about time, and I realized that while I was sitting on the plane, and I was like, "Holy crap. Why have I never ever thought of that before?" That might be a no-duh thing for you guys, and it might be, but man, I had never thought of it before.

So, think through, you guys. Think through...

You might be having great ad spend. Everything might be great. Everything might be profitable, but take into account the consideration that you might actually, if you get customers at a faster and faster rate and the time to get them in is drastically reduced, you might just be getting them in that first time so that you have this awesome base to be able to sell your next thing to where your massive profitability is. Right?

This little strategy right here, oh man. In my mind, that takes the place of any source of VC funding that could ever be needed because that's exactly what VC funding does. Let's go get a huge influx of cash from someone. We'll go borrow a ton of money from somebody. Then what we'll do is we'll start spending ad money in different places to acquire the customer.

So, there's a J-curve, right? You go down in the hole, and you owe tons of money, and you're not profitable yet, and you're spending more money than is coming in. That's freaking scary, by the way, which is another reason I hate VC funding. That's freaking scary. And you're spending more money than is coming in, and then eventually the hope is that you guys figure out enough how to acquire a customer as you go to eventually reach profitability where you're making more money than you're spending, then you actually make more money than you ever borrowed, and then you eventually go sell it off and do roll ups and all these different kinds of strategies. Does that make sense?

That's scary in my opinion...

What I just said in my mind takes place of all VC funding. Okay? It's the whole reason the tripwire funnel works. You're getting in there at the bottom of the value ladder. You're not trying to make money. You're trying to break even. You're acquiring the customer, you're training them that you're a good person to buy from, you're training them how to pull their credit card out, you're training them on your culture, you're training them that you're the attractive character, the charismatic leader, that there is a cause, that this is a viable business so that value ladder step number two you're pure profit.

You don't need to reacquire them. These people that are buying from you right now, I don't need to reacquire them they're in my home. You know what I mean? And those who didn't buy, they're on my list. I don't have to reacquire. I own that traffic now. Someone else owned it, Mark Zuckerberg, I paid him some money, he gave me some of his traffic, some of those people joined my list. I now own that traffic, and because of that I control that traffic through ads, and then now I own it. Sorry.

I own the traffic. I was talking about a different strategy. I own the traffic, but now they're on the list, and I can start promoting my upsell thing to them. So, what I've been doing ... That was a lot. Hopefully that's okay. What I've been doing is I've been trying to think through what my upsell is. Okay?

I've had seven MLM CEOs ask me for this product over the past year and a half. Especially this last little bit as we actually launched it, tons of people have been asking for it. I know it kicks butt, and I have a lot of people ask me, "Steven, why did you choose MLM?" Well, it's because I know what I do is extremely blue ocean for that market. Okay? I know that if I go play the card right and I get it front of enough people, if I can just get that first 13%, 17% to just take on this possibility, man, we just changed an industry.

That's what I'm trying to do. That's the reason why. It's because I know there's people in there who are buyers. I know there are people in there who understand funnels, and I want them to come get this product so that it's proven, those people can see it so they understand that this is actually a very viable thing. And it's very much on auto-pilot more than people realize it is when you use what I'm teaching.

Anyway, that's what I've been doing guys, is I'm going through ... And what I've been doing is I started thinking through, the question then became for me as I was sitting there is, okay, how do I create a low ticket, mass circulation product like he was talking about, a low ticket, low cost, mass circulation product that can get pushed out to tons and tons of people to help me acquire a customer even faster and faster and faster. That's the reason were written.

I know Russell could've sold click funnels just by selling click funnels and nothing else, but the speed was greatly increased by putting low ticket, high circulation products in front of click funnels. That's the reason that he's able to shortcut and skirt out everything else.

Anyway, massive, massive, super, super cool stuff. There guys. Hopefully that made sense. If you wanna re-listen to that, go for it. All I was trying to say, though, is actually I worked backwards, started thinking through ... Here's the application part for you guys for this is start thinking through what's the number of customers that I think I need that lets me have a critical mass of qualified customers. What's that number for you?

Start thinking that through. What I would do is I would start thinking through what percent of them do I need to buy the upsell to really make substantial increases in my wallet? That's what I would do. And for me, I know if I just have 100 people, just 10% of the people who are currently buying from me buy again my high ticket thing, that's gonna be a substantial boost in my wallet.

So, my number is 1,000. Not only just because it's 1,000 buyers at $1,000 is a million bucks, but also because I think I can get 5% to 10% of them to get my high ticket upsell thing even if it's only $10,000. And that is awesome. That's awesome.
So, anyway, that's what I'm working on right now.

That's what I've been thinking through is the low ticket, large circulation products. It's not my focus, but I'm trying to detect and be a good detective of the market. I'm trying to figure out what they want those products to be that will help me acquire buyers really, really quickly. I'm focusing solely on my webinar. I'm not moving from it.

Guys, I'm spending 24/7 on a single funnel. It blows my mind when people are building tons of funnels at once. I can see building maybe two funnels, maybe three if these are low impact funnels, but product funnels? Man. To really pull one off, especially if you don't have a big team like I don't ... I'm mostly doing this on my own right now, and I'm trying to find good people. And I got something cool coming up for everyone else, too, about that in the future here.

But start thinking through what those things are. How do I acquire customers quickly. How do I focus on being profitable really quickly out of the gate, which is why I charge what I do, which is why I do it. You know what I mean? That's what I would start focusing on. Start asking that question. Middle of the value ladder, then either go to the top or the bottom based on what the market's telling you to do. And they're telling you what to create on those front ends. You're not coming up with it on your own. They're telling you, and it removes the risk.

And doing it this way removes the need in my mind of having to get VC funding because if you can figure out what those front end products are that acquire tons of people at once ... The reason why I'm not starting with that is because I don't want a ton of customers all at once and then not have the core of my business be proved out yet, so I start in the middle. Right? Then I'm thinking through all those things in the back. Hey, here's how you actually do it.

Anyway. Guys, it was a long episode, and it was kind of deep. Hopefully that was okay. Someone said I've got all the people buying my product right now just to funnel hack me, which is very honoring and very flattering. How's it going guys. That's nice of you. Appreciate it. But someone sent me a message, and it goes, "I only have to buy your product for $1,000 to learn the deeper inner mind of Steve Larson? Heck yeah I'm in." I was laughing about that. That's a scary place, man.
Anyway. Hey, guys. Hope you're doing great.

Go crush it. This is a fun game...

Don't overwhelm yourself with all the steps, just do the one step in front of you. Don't worry about the other hundred that are in front of you. Worry about step 100 when you just finish step 99 and keep it simple in your head and just focus on the one step in front of you. Don't get distracted and build yourself a sweet funnel.

All right guys. Talk to you later. Bye.

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