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The Game with Alex Hormozi
This Email Strategy Made Over $2,400,000 [STEAL IT] | Spotify Video Exclusive
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$2.4 million in additional profit in five days. That's what one email campaign that we did in one of our portfolio companies generated. If you don't know who I am, my name is Alex Ramosi own acquisition.com, it's a portfolio of companies. There's over $250 million a year. And I make these videos so that hopefully you can grow your business and make lots of money and then maybe someday I can invest in your business and help it grow too. I want to walk you through, step by step, exactly what we did in this email campaign so that you can use the same same thing in your business to get ideally even better results. So let me walk through the context of this business. Number one is it's a business that relies predominantly on paid ads. It's a consumer based business. So lots of media to generate lots of volume of transactions and leads. So we had a very large email list and for the most part we weren't doing much with that email list besides following up for the initial transaction. And then after that they were dead to us, which I definitely don't recommend doing. But, but at the time going into this, it wasn't a constraint of the business and then it became one because all of a sudden some of our ads weren't performing as well. And all of a sudden we thought oh my gosh, we might not hit our quarterly revenue goals. What else can we figure out? Enter the email campaign. Cool. So let's walk through the numbers. So the email list size was 3.3 million emails. Now this was over a few years that we've collected these emails and it was a traditional, think about it like an e commerce setup. So it was an opt in and, and then a sale and then upsells. So the next major number that we need to know is that this was a $2,000 price point and we had an upsell on the back end for about $8,000 that a certain percentage of customers would take. Now the next piece that's important for this is that we had buyers and non buyers that were on the list. So this was just a total list of everyone that we had ever had. Now in this business, traditionally to sell just this $2,000 item, our cost to acquire customer was $1,200. So not a lot of margin there left over. Now you can do this because it's an automated selling machine so you can just crank on ad spend which this particular business does. It's a nine figure company in terms of annual revenue. But we're like, hey, one of the other stats about email that's important is that the cost to acquire customer on email once you've already acquired the lead is $0. Which if I can have free customers, that means whatever my gross profit is of selling, my main thing drops straight to my bottom line. And so as a mental contract for this, I like to think about email kind of like a long term investment account. And so it's like you run ads every single day or you do outbound or whatever it is to build your list up. And that's kind of like your paycheck, right? Like you put work in and you get paid back, right? And it's just like a direct relationship. Whereas the email is kind of like your 401k. It's kind of like your investment account that you put money into. And then over time it starts to compound and compound and compound. And if you have an email strategy, and I'm gonna give you kind of an overarching email strategy that we like to employ in businesses, this business just has crushed doing what we've been doing. So it hasn't been the main focus. But if you have a business like it is one of the easiest ways to just immediately plug in and print money. And the nice thing is, is that even if it's late to the game, I mean this business does a lot of money, you can still employ it and then immediately see the results. There's two things about email and having follow up beyond initial follow up that makes a business more valuable. Number one is that all sales that will come from email are going to drop straight to the bottom line in terms of profit. And so most businesses, 95% of businesses are traded on a multiple of bottom line. And so since these sales drop straight to the bottom line, it will be a big enhancer on the enterprise value. The second point is that if you have consistent email sales that come in, that number isn't gonna really change. Like tomorrow, you don't go from 3.3 million to 1 1/2 million emails on your list unless you clean the list or whatever. But fundamentally the list size isn't gonna change overnight. Your ads might change overnight, but your email list won't. So what that does is it actually can smooth out volatility that occurs in a business, which would make it more attractive to an investor. Long term, you'd like to have some sort of regular email cadence because things like deliverability and domain reputation and things like that come into play. I'm not going to get into that stuff for this Video. I'm just going to talk about big picture email strategy that you can employ in your business now to make money. Great. Now that we have the numbers in the context, let's talk about the campaign. So what we did for the list is that we promoted a challenge and it was a seven day challenge. And the reason that I think this is interesting and important is that number one, this came from the marketing director. And I think the reason that I want to highlight this is that this is why you need to have smart people. This didn't come from me, this didn't come from the founder. The marketing director was like, hey, I think we should do a challenge. Now. We weren't actually super on board for this because we're like, hey, this might be a distraction, but it turned out to be really, really good. And added over $100 million in enterprise value to the business. Remember, this business is already a multi hundred million dollar enterprise value business. And so adding 10 or 20% of the enterprise value can be a very big difference. The second thing is that this challenge actually came from the product. And so we pulled out something that was already something that we knew, work that we were doing for customers. We pulled it out and we made it into a lead magnet. And so fundamentally a lead magnet is a complete solution to a very narrow problem. And ideally, once you solve that problem, you create the next problem which you solve with your offer. And so fundamentally that is what a good lead magnet does. And this is why challenges, I think are, are very strong lead magnets for a lot of businesses because they also satisfy all the elements of a value equation which I talk about in my first book, $100 million offers, which has sold almost a million copies so far. Now the value equation works like this. You've got the outcome, which is the thing that people want. And so as long as you have a clearly defined outcome that they want, then that becomes more valuable. Now you multiply that by low risk or the perceived likelihood of achievement and how likely is it that when I buy this thing, I'm going to get this thing? If you have an outcome you want and it's guaranteed to get it, this is going to be really valuable. But there's two other elements. The thing is, how long is it going to take? So if it takes a really long time, then I'm like, okay, sure, I have this outcome which is I get really rich. And the guarantee is that it'll definitely happen. But I got to wait 20 years of investing my money to become really rich. Well, it's not as attractive anymore, right? Then you do ease, which is how hard is it? So effort and sacrifice that are associated with this outcome. And so these are the four elements of value. And so a challenge is a really clear outcome that everybody wants. It has high likelihood of actually happening. It happens really fast because we attach a time to it and because we're going to say, hey, we're only going to do this one thing and we're going to give you all the steps. The perception of the prospect is that it's easy, which makes these very strong lead magnets. If you want to go through the experience of what going through one of these challenges looks like and you are somebody who wants to start a business or you have a business, either way you can go join the school challenge for free. It's 14 days. We walk you through everything that we have. I take calls in that community to help people get their first business online started. We have everything down step by step. Once a month I drop a full day mastermind training of all the people who are starting communities and making them. We've got it down like we're pretty good at helping people get to that first dollar. And so you can start for free. Go to school.com games and I'll see you in there. So for this particular business, it's a business that helps people achieve an outcome that actually takes a little bit of time. And so what we did was say, okay, is there a smaller mini version of this big outcome that we can just kind of give them a taste to say, hey, imagine you were writing a book. That would take a really long time. Can I write a book lit in a short period of time? And if the answer is yes, which would be the version of this challenge, then we'd be cool, let's do a thing that we can write a booklet for somebody and in that period of time. And that's exactly what we did. Now I use this as an example but for every business, just think, is there a mini version or a first step version that I can completely solve that. Then someone's like, well now I have this thing. Now I have my table of contents, now I have my wireframe. Now I have my first step on this multi step journey. So if I was in weight loss, I'd probably have them to do some sort of like seven day cleanse or something like that. Again, I'm not going to get into what's good, what's bad here. I'm just saying that I would have some person, it gets, you know, they lose Seven pounds in seven days. A lot of that's going to be water. But they're excited about it. They're like, great, now let's talk about your long term goals, right? Because now they have an element of belief. They, they've taken action, they've gotten some reward for their behavior, they've interacted with us. All of these things align with them making a purchase. What challenges do is they approximate brand. And so this is how it actually works. The reason the direct response Internet marketing world does a lot of these things is because none of them have brands. And so like for me, for example, if someone's already consumed a gazillion videos of mine or podcasts of mine, then if I say, hey, do you want to check this thing out? A lot of people are like, yeah, you've already given me a gazillion other things. And so, sure. But if you're brand new, then what you do is you basically approximate a relationship where you would have already had a lot of interaction. So you basically try and cram, you know, a six month relationship into seven dates. So it's kind of like one of those dating shows where they say, will you get married in 30 days? And. And they like try and cram a whole relationship into that period. It actually kind of is the same thing. When you come from a marketing perspective, you're just rapidly warming up. You're like microwaving the prospect rather than slow cooking it, which is kind of the normal branding way, right? And for example, in the school games, that's our version of a challenge, right? We just call it the school games, a cooler wrapper. We have leaderboards and prizes and things like that. And so we walk people through how to start a business online. And so we get one out of three people just under to get their first dollar within the first month, which is pretty cool. We've put a lot of time into getting that kind of outcome. And then once someone makes a dollar, then they're like, shoot, I can see how I could make more dollars. And so that's the idea is like you want to approximate, you want to do it really fast, you want to be as easy as possible and make it as guaranteed as possible and an outcome that they care about. So now that you know what the setup is, let's go back and add a couple of numbers to this campaign and then I'll walk you through what happened. So we sent the emails only to a small subsegment of the list. So we had 464,000 people that we sent it to and that was because we wanted to test it out. We didn't want to blow our load on the whole, on the whole list. And so we just set it to like 15% of the list. And the reason we did that is because like hey, if this thing bombed, we didn't want to like piss off the entire list. And so we sent it to 15% of the list. A lot of them were non buyers. And from there what we saw is we had 10,000 people who registered for this thing, which good or bad, whatever for us in an absolute number, 10,000 people shows a pretty decent amount of interest. So in order to get this 10,000, we had an 18% open rate, meaning 18, you know, just about one out of five people opened the actual email. Okay, great. Now from there we had about 5% of those people actually click to join the thing. And then the rest was the opt in percentage on the page to register. That got us to 10,000. So it went from 464 to 83,000. That opened it from the 83,000. 10,000 of them actually registered. So a pretty good percentage actually who did click wanted to do it. And as you get into a cadence of this, which I'll explain at the end, in terms of how to implement this ongoing as an email strategy to make more money, is that as soon as you really nail what that lead magnet is or what that challenge is or whatever it is that you're going to get, you're going to your leads to engage again or re engage. These funnel metrics will always improve. You're going to split test the subject headlines, you're going to split test the opening on the email, you're going to split test the CTAs and the links that you're going to use, the landing pages that you send them to, the offer that you, that you attract them with, the headline of the naming of the challenge, which by the way is a great way to vary this up. If you do it like once a quarter, which I'll talk about later, like you can do the same play but you just put a different wrapper on it. So for example, in the gym world, because I came from this world and it's like I might have a six week, you know, six week challenge, I might have a 42 day fix, I might have a 42 day transformation, I might have a six week booty blast, I might have a six week slim for Santa, I might have a lean by Halloween. Like I've done a lot of these accountabilibuddy challenge. Like, I've done a lot. And you know what? Slim for summer. All of these things work. But fundamentally, what are we gonna do? We're gonna eat. You're gonna eat less, you're gonna move more. And so even though the deliverable of the challenge or the lead magnet might more or less be the same, you can just wrap it seasonally or you can wrap it based on a specific pain point that happens at that time of year. So let me walk you through the results. Math. Right. So do a clean page. So we had 10,000 people who registered. I actually don't have the data on how many people attended live and watched throughout the whole seven days. I can get this, but I. I'll just. I know that the high level. And so from 10,000, we had 800 people who actually bought. All right, so we had about 8% of people who made the purchase, which is pretty good. Not unhappy about that at all. Do I think we can improve it? Yes. But fundamentally, this was to a list of plenty of people who hadn't bought. They knew who we were. So I'd say it was a little bit warmer than true cold. But a lot of them had never bought anything from us before. And so that resulted. Remember, this is a $2,000 price point in $1.6 million in new sales that we did just from this email campaign. You're like, wait a second, I thought you said you did 2 million or more than 2 million. Let me explain what happened from there. So from there, we had 20% of people ascended into the 8K product, which allowed us to make an extra 800K from the ascensions. And so that gave us $2.4 million in total from this seven day email campaign. Now, I want to break something very cool off for you, which is that you see 2.4 million. Now, that was derived from a list that was 464,000 emails. And so that means we were making roughly six bucks per email in this campaign. And so if you know that you do this, call it four times a year, which I would recommend you do. When we get into the takeaway section, meaning one time per quarter, you do a cleanup. We say, great, we're going to take all the leads that we had and we're going to run them through a conversion mechanism. In this way, it's not like, oh, shoot, I have to do this all the time. It's like, all right, I'm going to do this big thing. We do it once a quarter and we clean up our Q1 we clean up our Q2, we clean up our Q3 by running all of our leads through this high converting funnel that we've structured purposely for non buyers. So we have different hooks, different front ends, that has different messaging that might not have been the primary message that converts the most people, which is our first whack at it, but. But this is our second and third whack at it. And by varying the titles that you use in each of the quarterly things that you do. So Q1 will have a different name than Q2, you'll still be able to attract people without necessarily fatiguing or tiring the list. And in between those times, you can then simply provide value to the list. And so you've deposited some goodwill that earns you the right to be able to ask for the sale. So let me walk you through the takeaways that we had from this that you can use for your own business to make more money. So there's four main takeaways that I would recommend you take from this, that I take from this. Number one is smart people. All right? So you have to be able to trust your people to make recommendations. Now, neither the CEO nor I, so I like to say this like, I also am not always in favor of ideas that make lots of money because I mess up too. But we were like, you know what, they're a little closer to it. We will trust that they're super excited about it. Because the flip side is if you bash every idea that your team comes to you with, then they're not, they're going to stop thinking about ideas. And then all of a sudden you're like, why doesn't my team ever think of anything? It's like, well, because you turn them down every time. And so there's kind of like, what hills do I want to die on? And what times do I want to say, hey, give it a shot? I don't think, like, is this going to do damage to the brand? No, I don't think so. We're currently not doing anything there. And if you're really passionate about it, sure, let's do it. So one, having smart people, two, which is trusting them. All right, So I say this is still his first kind of people related for this is, is that you still gotta trust those people and make a bet with them. And part of the reason I say trust them, obviously you wanna trust them because they're competent, they're intelligent and they're well intentioned. But the other thing is that they sometimes just have data that you don't have. Because fundamentally in a business, there's data that's happening all over the place, and you're only gonna get snippets as CEO, especially the bigger the company is, right? This is the business at almost 10 million a month, like, it's a very large business. There's lots of things going on. And so that person is gonna be much closer to the data, have a much closer pulse than sometimes the founder or CEO might have. And so sometimes they have data that you're not working with. And that's why extending a bridge of trust is important. So the second takeaway is offers to money. All right? So the amount of offers that you make to any prospect is directly correlated with the amount of money that you'll make, with the single caveat that every time you make an offer, you lose goodwill. And so what you want to do is make sure that you're depositing sufficient goodwill that you can earn the ask. And so make as many as you can while also providing as much value as you can. Which means that if you want to make a lot of offers, you just got to provide that much more value. Now, with this particular instance, we were going to a list that we had emailed, but not a lot, but we hadn't really emailed any offers to in a very long time. And so even though we weren't putting a ton of value, our give to ask ratio was still okay because we hadn't asked at all. And so I talk about the give to ask ratio in the content section of this book. And the reason that I actually consider email a form of content is that it's one to many distribution to people who know you now, it's just free. Which also is just like when you post on social media, the only difference is that you control 100% of who gets this. Whereas on social media, algorithms think things like that distribute your content, but fundamentally, you're distributing one message to many people and it's free. And so that is what makes email so profitable, just like organic. And I want to add a little caveat here, which is that it's okay to ask for the sale again. And so all these people, or the majority of these buyers hadn't bought this thing. And so when we asked again, some people were afraid of making the second ask. But people get busy, you know, they leave a shopping cart up and then they, you know, their kid screams and they forget about it. Like it happens. And. And so you can't get too bent out of shape on the fact that, like, you're going to offend people by asking them. It's okay to ask as long as you earn the right and you've given until you've deposited enough goodwill that there's enough demand, there's surge there that you can let loose the valve of money and it can come on and then you can close it again. So the third takeaway is that you can sell the same thing in a different way. And so I can sell a product on a webinar, I could sell it on a phone, I could sell it via a live workshop in person, I could sell it via email. And so you can have less offer fatigue by selling the same offer in a different medium. And so you can get more hacks or more at bets because people will judge their goodwill with you based on the medium that you're communicating in. And so this is something that I have found it also, by the way, is a great way to vary products up. And so, for example, if you're an educator, I'll just use this because it's simple. If I have content on the Internet that's free, if I make a course, you could charge for it, or you could make it free. If I deliver that same course in a book format, it's not going to be able to sell for the same amount that a course could. If I deliver that same format in a live in person experience, that's going to be probably charged significantly more than it would in a digital format. If I did a live format, but virtual, it would be a different price point than the live and in person. And so for each of these mediums, even if the same information is being taught, you price it differently. The same reason that when you go in person in college, they charge you an arm and a leg for it. But digital college almost ubiquitously is way, way, way lower priced. Even though it's the same information, it's simply being delivered through a different medium. And so you can sell in different mediums and deliver in different mediums. And from my experience, people will apprise or judge the decision based on that medium exclusively. So the fourth takeaway is what I'll just call the quarterly cleanup. So this is probably the most tactical recommendation that I can give you that I alluded to a little bit earlier, which is I would recommend that you do this once every quarter you do this conversion mechanism, whether you do some sort of challenge or some sort of defined outcome or some sort of lead magnet that you use to re engage your list and put them through some sort of conversion event with a deadline with a big promise that, that you know you can deliver on. And so if you do this once a quarter and you weren't doing this, you can almost immediately add like you saw the numbers there. We had $6 per email from that 450,000 subsegment. Now, to prove that this worked, what we did was we just did it again. By the way, one of my favorite business strategies, do something that works, do it again, do more of it, and ideally do it better. And so we ran the exact same play again to a different subsegment of the list, and boom, we hit 2.2 million. We didn't even wait a quarter, we just did it the next month. And so I say this because this stuff works. And once you know it works, you can keep duplicating it over and over again. And guess what we're going to do next quarter, now that we know that we tested it on two subsegments, we're going to do it to the whole list. And we're going to use the learnings that we had from the first two tests. And so if you are going to run this as the quarterly cleanup, I would recommend using 10% of your list or a smaller percentage, because believe me, as soon as you learn the things that you messed up on the first try, you're going to be really grateful that you didn't run into the entire list. So do one, two or three test runs before you blow the whole list up with this new promo that you've already tested. The messaging, the subject head, the CTAs, the landing page, those little tests that you can run in the meantime that can sometimes double or triple the throughput of the campaign. And so with every one of these campaigns, I would recommend always testing some elements of it so you can always make it a little bit better. And so one, you're doing this every quarter. Two, you can test it with a small portion of the list. Three is that in order to make it seem and appear different to the non buyer who doesn't buy on the first hack or the second hack, we change the naming of it or the wrapper of it. So change the landing page, change the subject head of the email, change the name of the challenge or the lead magnet, even if the core components are the same, fundamentally your business isn't going to change, right? But the way that you position it or the reason why that you have the promotion can. And I recommend doing something that's seasonal or doing something that's a life event for you. I talked about this in the last chapter of the Offers book, which this is especially important for local businesses because you have much smaller audiences and so fatigue happens much faster with a tiny audience. And so you actually have to have a lot more variety. And I know this because that was the world I came from. And so that's why I have all these isms in the back of my mind of how I had to wrap and rewrap the same thing, which is fundamentally fitness and nutrition. Like how many ways can I slice it? 20? Turns out a lot. And I will say that once you have one annual calendar, you can pretty much stick with it. So you don't need to come up with another thing next year. Once you have your four big promos that you're going to run throughout the year that you know are tested, those just become autopilot and they just become cash printers. And if this type of case study deep breakdowns on business interesting to you, I have another one where I doubled one of our portfolio companies in 60 days. Check that one out.