Throwback: Nobody Knows You Exist. Advertise More | Ep 936
In this episode of The Game, Alex Hormozi addresses common misconceptions about advertising frequency in business. He explains that while business owners might worry about over-advertising, most potential customers are either unaware of their business or can't recall their message. Using examples from industry giants like Henry Ford, Hormozi illustrates why consistent, extensive advertising is crucial for business growth.
The episode also outlines specific strategies for businesses at different revenue stages. For companies under $1 million in revenue, Hormozi recommends focusing on a single target customer, product, and acquisition channel. He describes how businesses can implement his "rule of 100" for advertising activities, and explains the benefits of unifying sales and advertising departments under one strategy. The discussion includes guidance on when to scale advertising efforts and how to ensure core business stability before expansion.
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1-Page Summary
The Importance of Extensive Advertising
Alex Hormozi emphasizes that businesses shouldn't fear over-advertising. He explains that while business owners might feel they're overdoing their messaging, most potential customers are either unaware of the business or can't recall its message. To illustrate this point, Hormozi shares how Henry Ford's Chief Marketing Officer once had to remind Ford that his personal weariness with an ad campaign didn't reflect the public's exposure to it.
Streamlining Business Focus Under $1M Revenue
For businesses generating less than $1 million in revenue, Hormozi recommends focusing on a single target customer, product, and acquisition channel. He advises dedicating significant time to advertising activities, suggesting what he calls the "rule of 100"—spending 100 minutes creating content, making 100 outreach attempts, or investing $100 daily in advertising. This focused approach helps build a strong foundation for future scaling.
Benefits of Unified Sales and Advertising
Hormozi explains that advertising typically targets low-information buyers, while sales focuses on high-information buyers who need more details before purchasing. He advocates for combining both departments under a Chief Revenue Officer (CRO) to ensure a cohesive strategy. Using GymLaunch as an example, Hormozi describes how this consolidated approach can serve as a pathway to CEO positions, as mastering customer acquisition is crucial for top leadership.
Scaling Advertising Post $1M Revenue
For businesses reaching $100,000 monthly revenue, Hormozi recommends focusing on refining the product and enhancing customer satisfaction before scaling further. He advises waiting until reaching approximately $1 million monthly revenue before adding new acquisition channels. This approach ensures the core business operates smoothly and profitably before expanding, preventing potential performance issues that could arise from premature scaling.
1-Page Summary
Additional Materials
Counterarguments
- While extensive advertising is important, there is a risk of ad fatigue among the audience, which can lead to negative brand perception if the same message is seen too frequently.
- Focusing solely on advertising might lead to neglecting other important aspects of the business, such as product development, customer service, and employee satisfaction.
- The "rule of 100" may not be suitable for all businesses, especially those with limited resources or those in industries where such tactics are not effective.
- A single target customer, product, and acquisition channel might be too narrow a focus for some businesses, potentially missing out on diversification opportunities that could stabilize revenue.
- Combining sales and advertising under a CRO could lead to conflicts of interest or a lack of specialized attention in each area, as the skills required for sales versus advertising can be quite different.
- The pathway to CEO positions might not necessarily require mastery of customer acquisition; other skills such as strategic vision, operational efficiency, and leadership can be equally or more important.
- Waiting until reaching $1 million monthly revenue before adding new acquisition channels could slow down growth and allow competitors to capture market share.
- The advice to focus on refining the product and enhancing customer satisfaction before scaling may not consider that some businesses might need to scale quickly to capitalize on market opportunities or to meet investor expectations.
Actionables
- You can track your ad's freshness by asking friends or family who aren't involved in your business how often they remember seeing your ads. If they can't recall your ads or the message, it might be a sign that you're not over-advertising and could potentially increase your ad frequency.
- Create a customer feedback loop by offering a small discount or incentive for customers who provide detailed feedback on your product. This can help you refine your product and enhance customer satisfaction, which is crucial before considering scaling your business.
- Experiment with a weekly personal "advertising hour" where you focus solely on reaching out to new potential customers or creating content for your business. This dedicated time helps you build a habit of consistent advertising efforts without overwhelming your schedule.
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The Importance of Extensive Advertising, Even When Excessive
Alex Hormozi underlines the value of abundant advertising, explaining that customers need consistent and frequent reminders to effectively receive business messages.
Business Owners Tire of Ads, Customers Still Unaware
Customers Need Repeated Reminders of Business Messaging
Hormozi stresses that businesses must prioritize repeated messaging in advertising campaigns, noting that often, it is not a matter of educating the audience but reminding them. He points out that business owners may feel like they're overdoing it and even harassing the audience with too much repetition, but the reality is much different. Most potential customers are either unaware that the business exists or cannot recall the specific message the company is trying to communicate.
Founder's Ad Exposure Not a Reliable Target Audience Indicator
Through an anecdote about Henry Ford, Hormozi further illustrates the disconnect between a company's advertising exposure and the public’s awareness. He recount ...
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The Importance of Extensive Advertising, Even When Excessive
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Clarifications
- Alex Hormozi is a well-known entrepreneur and marketing expert who has gained recognition for his insights on business growth strategies, particularly in the realm of advertising and customer acquisition. He is known for emphasizing the importance of extensive advertising to reach and engage potential customers effectively. Hormozi's expertise lies in understanding consumer behavior and the dynamics of advertising campaigns to help businesses maximize their reach and impact in the market. His perspectives often focus on the practical aspects of marketing, such as the significance of consistent messaging and the challenges businesses face in ensuring their advertising efforts resonate with their target audience.
- Excessive advertising involves saturating potential customers with marketing messages to the point where it may feel overwhelming or annoying. Balancing th ...
Counterarguments
- Over-saturation of advertising can lead to ad fatigue, where customers become desensitized to marketing messages and may develop negative feelings towards the brand.
- Excessive advertising can be costly and may not yield a proportional return on investment, especially if the target audience is already reached or the message is not compelling.
- In the era of data privacy concerns, repeated and intrusive advertising can be perceived as a violation of consumer privacy, potentially damaging brand reputation.
- There is a risk of diminishing returns where too much advertising does not necessarily lead to increased awareness or sales, but rather to wasted resources.
- The effectiveness of advertising is not solely dependent on frequency but also on the quality and relevance of the content; thus, a more strategic approach may be more beneficial than simply increasing ad volume.
- With the rise of ad blockers and the ability to skip ads, especially in digital media, excessive advertising may not even reach the intended audience.
- Some audiences may prefer a more organic discovery process for produ ...
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Streamline Core Channel, Product, and Customer Avatar Under $1M Revenue
For businesses generating less than $1 million in revenue, Alex Hormozi underlines a strategy focused on narrowing down their core components for optimal growth and efficiency.
Spreading Focus Limits Optimization Under $1M Revenue
Hormozi suggests that small business owners should avoid diluting their efforts. Concentrating on a single target customer, product offering, and customer acquisition channel is crucial for businesses that have yet to reach $1 million in revenue.
Focus On one Target Customer, Product, and Acquisition Channel For Businesses Under $1 Million
He advises small business owners to concentrate on targeting a specific customer type with a singular product that addresses their unique problem. Trying to cater to a wide range of customers can prevent the business from focusing on creating a product or service that genuinely excels.
Foundation First: Optimize and Repeat one Channel, Product, Avatar
Hormozi prioritizes the optimization of one chosen customer acquisition channel until it becomes a dependable source of business that operates successfully without the business owner's direct involvement. He also emphasizes the importance of productizing and templatizing services or products. This way, businesses can make consistent improvements based on feedback from a targeted market segment. Once the initial channel is optimized, the business owner can then replicate the suc ...
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Streamline Core Channel, Product, and Customer Avatar Under $1M Revenue
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Counterarguments
- While focusing on a single target customer, product, and acquisition channel can be effective, it may also limit a business's potential to discover alternative profitable markets or channels.
- Concentrating on one product offering might make a business vulnerable to market changes or customer preference shifts.
- Over-optimizing one customer acquisition channel could lead to over-reliance on that channel, which could be detrimental if the channel's effectiveness decreases over time.
- Productizing and templatizing services may not be suitable for all businesses, especially those offering highly customized or bespoke services.
- Replicating successful processes is not always a guarantee of future success, as market dynamics can change rapidly.
- The rule of 100 may not be feasible or effective for all types of businesses or industries, especially where content creation or advertising does not directly correlate with c ...
Actionables
- You can streamline your business focus by creating a "customer avatar" worksheet. Start by identifying the demographics, interests, and pain points of your ideal customer. Then, use this worksheet to guide all your business decisions, ensuring they align with serving this specific customer profile.
- Develop a "product evolution chart" to enhance your offerings. On a large poster or digital canvas, map out your current product or service, then brainstorm and note down incremental improvements or variations you could introduce. Regularly review and update this chart to visualize progress and inspire new ideas.
- Initiate a "peer accountability partne ...
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Benefits of Unifying Sales and Advertising Into one "Acquisition" Department
Advertising Targets Low-information Buyers; Sales Target High-Information Buyers
Alex Hormozi articulates that advertising typically focuses on low-information buyers who require less information to be persuaded to make a purchase. On the other hand, high-information buyers need more detailed information before deciding, which is where sales expertise becomes essential. According to Hormozi, combining the sales and advertising teams can tailor approaches to both types of buyers efficiently.
Unifying Sales and Advertising Under a "Chief Revenue Officer" Ensures Cohesive Acquisition Strategy and Eliminates Conflict
Hormozi advocates for unifying the sales and advertising departments under the leadership of a Chief Revenue Officer (CRO) to ensure a cohesive customer acquisition strategy and avoid any potential conflicts between departments. He describes how the marketing and sales departments can operate without friction when overseen by a single CRO, aligning both teams towards the same acquisition goals.
CRO Role as Pathway to CEO: Mastering Customer Acquisition
Furthermore, Hormozi sees the role of a CRO as a gateway to becoming the CEO. An example he cites is an individual named Ca ...
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Benefits of Unifying Sales and Advertising Into one "Acquisition" Department
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Counterarguments
- Specialization can be beneficial; merging sales and advertising might dilute the expertise and focus of each team.
- Different departments can foster healthy competition and innovation, which might be stifled under a unified structure.
- A single CRO might become a bottleneck, slowing down decision-making processes that could be more agile if handled by separate department heads.
- The skill sets required for effective sales versus advertising are distinct, and combining them under one leader might not leverage the strengths of each discipline.
- The pathway to CEO should not be limited to those who excel in customer acquisition; other business skills are equally important.
- Conflict between departments can sometimes lead to better solutions and more thorough strategies than a harmonious but potentially complacent unified department.
- The assumption that advertising only targets low-information buyers might be an oversimplification of modern advertising strategies, which often use data analytics to target a wide range of consumers.
- The role of a CRO might not be suitable for all ...
Actionables
- You can observe the sales and advertising strategies of your favorite brands to understand how they target different buyer types. Take note of how a brand advertises a product on social media versus the personalized follow-up emails you receive after showing interest in a product. This will give you insight into how companies differentiate their approach for low-information and high-information buyers.
- If you're in a leadership role, encourage cross-departmental projects that require sales and marketing teams to collaborate on a unified campaign. For example, have the teams co-create a product launch strategy that includes both broad advertising and targeted sales outreach, and then analyze the results to see how the integrated approach impacts customer acquisition.
- Enhance your understanding of customer acquisition by taking a free online c ...
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Scaling Advertising & Adding Acquisition Channels Post $1M Revenue
Alex Hormozi advises businesses on how to scale advertising and add acquisition channels effectively after reaching major revenue milestones.
Focus On Core Product, Customer Experience, and Retention Before Scaling Acquisition After $1M Revenue
Hormozi emphasizes the importance of businesses focusing on advertising until they reach $100,000 a month in revenue. This level of income provides sufficient customer interactions to refine the product. Post-reaching this revenue, attention should shift to resolving any product issues, enhancing customer satisfaction, promoting referrals, and ensuring repeat business.
Establish Secondary Acquisition Channel Only After Core Business Is Smooth
He strongly advises companies to address the core elements of their product and customer experience and ensure they are robust before trying to scale through additional advertising or acquisition channels. The recommendation is to reach around $1 million per month in revenue, focusing on resolving core business issues to prevent a "leaky bucket" before expanding advertising efforts or adding new acquisition channels. Consider a second or third channel only when the business has smoothed out and solidified its core operations.
Avoid Early Addition of Secondary Channels to Preserve Primary Performance
Hormozi stresses the importance of ensuring the core business is running smoothly, with well-established training and cash flow from the primary channel, before opening a second channel of acquisition. By addressing core business issues first and without immediately adding secondary acquisition channels, businesses can continue to grow steadily with the same level of advertising effo ...
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Scaling Advertising & Adding Acquisition Channels Post $1M Revenue
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Counterarguments
- Diversification of acquisition channels can mitigate risks associated with over-reliance on a single channel, which could be disrupted by market changes or competitive actions.
- Secondary channels can provide valuable data and insights that could lead to improvements in the core product and customer experience.
- Early investment in multiple channels can capture different segments of the market, potentially leading to faster overall growth.
- Some businesses may have the resources and capacity to manage multiple acquisition channels effectively without compromising their primary channel's performance.
- In dynamic and fast-paced markets, waiting too long to establish secondary channels could mean missing out on opportunities and ceding ground to competitors.
- A one-size-fits-all approach may not be suitable for all businesses, as different industries and products may require different strategies for scali ...
Actionables
- You can conduct a customer feedback loop to refine your core product by regularly surveying your customers and implementing changes based on their responses. For instance, use a simple online survey tool to ask your customers what they love about your product and what could be improved. Analyze the feedback for common themes and prioritize those improvements that align with your core product's strengths.
- Develop a customer experience map to identify and enhance key touchpoints. Start by outlining the journey a customer takes from discovering your product to post-purchase support. Then, brainstorm with your team or a group of customers to pinpoint areas for improvement, such as simplifying the checkout process or offering personalized follow-ups.
- ...
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