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This business coaching lesson explains how to grow a business.

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Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Action Step: Have a first-time coupon code for new customers.
  • Jargonization Translation: Loss-Leader - A product sold at a loss to attract customers.

CLAY CLARK: So

-How would that be done on the tech side of the website?

CLAY CLARK: Well, from the Etsy side of things, it would almost be a-- Marsh, let me have you pull up a website real quick. If you can pull up Elephant in the Room, eitrlounge.com. So let's just look at it. Now, the technical side, we can figure that out. But this is just kind of the marketing side of it, just to show you. If you go into sports clips, or whatever, Elephant in the Room's an example of a business that I'm involved in. If you look at-- This is the first time starting in the top right. Well, if you find them in Google, what are we going to do? We're going to say, come on in. We're going to give you a free paraffin hand dip and essential scalp message.

JULIE NGUYEN: Coupon code.

CLAY CLARK: Coupon code. So the first time people get a coupon code. The first time, people put in a coupon code, whatever. And then, if they put it in again, you're going to do a data search, and go whoa, whoa, whoa, homie, that's your 30th time to be a first-time person, so you can't do that. So as far as an action item, Marhsall, I want you to write down coupon code-- OK?-- for first-time people. But the idea is, if it's really well done--

So let's give an example. This coconut water, it's got the pulp. Can you guys see this? This pulp stuff, it's the pulp. This is the real deal. This is the boss. I don't know what I pay. I'm pretty sure it's like $3, or something stupid for this thing. I can't believe I'm spending $3, I mean, on coconut water. But that's the dea-- It's not-- Come on-- You love it, Spence. But anyway, but the thing is, because I like it, I'm willing to pay that.

Now, they at Sprouts, the people at Sprouts, tricked me. And I went there the first time, and they said, buy one, get one free special. So I bought one I could get one free. Well, I bought like seven cases. You know, thinking, I'm going to take it to man. I mean, they're going to-- But now, I love it, and guess what, they don't do that anymore. You know what I mean. And they don't feel bad about it. So think about all the times in our life they do this to us.

We go in, the first time in to an oil change place, hey, first time special. They want to get you used to it, free appetizer, first time, whatever. All we're trying to do. It's just called a loss-leader, but we want to-- I'm OK with this price here, but I feel like it should be more on subsequent prices, because we're so awesome. Make sense?

JULIE NGUYEN: Now, when you say that you feel like it should be more, is that because of the way that this equates out to a $6.75 profit, which the cost of materials, and such, are higher than what they actually are?

-No, I think it should be more, because almost everyone I've ever met in the world of business undercharges for their service. So you think about the companies that are not terrible. I'm just going to make a list real quick and kind of brainstorm. Like, Starbucks, do you like Starbucks or no?

-No.

-You don't, really?

-I don't have Starbucks. Well, we have Starbucks.

-You don't like it though.

-No.

-OK. That's fine.

-I don't drink coffee.

-OK. I'm going to put Starbucks, but not for you. What about Disney World? Do you like Disney World?

-No.

-You're going to be difficult. OK. What about-- Is there a store you go-- Do you like-- Do you like Coach purses?

-No.

-No. OK. I'm striking out here. What about-- Is there a certain kind of car you're into?

-No.

-What is a product that you are willing to pay more for, that in your mind is like a premium product?

-I'll pay for Chanel.

CLAY CLARK: Chanel. That's C-H-.

-A-N-

-E-L, I think. OK. The thing is, though, I'm not going to tell you that I 100% disagree with you, but I'll say a lot of people on the planet are willing to go to Starbucks and pay $4.25 for a beverage that 20 years ago no one would ever pay more than $1 for. I remember going-- Back before Starbucks, you'd go into like a local donut shop, and you'd pay $1. And it's in a Styrofoam cup, and you're like, it's a buck. Somebody named Marge works there, and she's like, hi, welcome to such and such doughnuts. And you get the coffee, and it's $1. Now it's $4, and they've got us to do it.

Disney World. We have five kids, you have a family too. Taking kids to Disney World, it's like getting a small business loan now. But they've convinced us, well, it's worth it.

I see women all the time. My wife and I don't necessarily buy a bunch of Coach purses, but I have friends of ours who buy the Gucci glasses and Coach purses. And I see what they pay for that. I'm like, are you kidding? And then, Chanel, another high-end brand.

And I believe if you market yourself as a premium brand, like a premium supplier for the best website, best-- Then one, the value cycle is so much more fun, because now you can pay your employees more. Now you can have some really cool high-value products. You can deal with customers that appreciate the higher value. But at the bottom of the cycle, if you're going to go the other way, and that's OK, but I would not recommend it.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Lesson Nugget: You can either compete on the value of your product or the price of your product.
  • Lesson Nugget: Give yourself time to brainstorm and record all of the fixed costs you have, even if you are operating out of your house.
  • Action Step: Anytime you add another expense to your business, immediately add it to either your fixed costs or variable costs spreadsheet.
  • Ask Yourself: How many deals do I need to do per month to break even based on my fixed and variable costs?
  • Customer Value Touchpoints: Website
  • Customer Value Touchpoints: Order (Premium Packaging)

[MUSIC PLAYING] CLAY CLARK: But if you wanted to go the other way, let's look at that. Walmart, so you're going to either compete-- oh, and I'm just going to write this down here-- but you're going to compete on either value or price. And this is a big thing. That's why I want to start here today. In the absence of value, we just focus on price. So either you're going to be a value person or a price person. On the price side, I mean, you've got Walmart over there. On the value side, you maybe have a little bit of like a Whole Foods. If you go to Walmart's grocery store, or you go to Whole Foods' grocery store. Or maybe have Target over here, maybe you have an Apple over here, and maybe you have Asus computers over here. Well Asus computers are a lot less, but, I mean, sometimes they-- I don't want to be disparaging of the brand, but you know what I mean-- there's a difference in quality. And then you have to pay your employees less, because, I mean-- So if you go to Walmart, there's a different employee working at Walmart than there is maybe working at a higher end store. And so I'm just saying-- I think it's a lot more fun to be on the value side. I think you're just going to enjoy it more. I think you make more money. -I like it. CLAY CLARK: So I would just right here, state, we want to become a premium brand. So the action items that need to happen-- and Mark, did you get a photo on this? -Yep. -OK. Sweet. So what we're going to do is we need to get your variable costing sheet made for every product. Action item one, action item two. we need to have fixed costs down. Now, I know you're officing out of the house now. That's fine, but you still have costs. I don't know what they are, but just brainstorm them all out. You want to have it on a sheet of paper. Other people might call this a burn rate. You want to know how much money you burn just to be in business. OK? FEMALE STUDENT: OK. -Then, what you're going to want to do moving forward is anytime you add a new expense, let's say you subscribe to Adobe Online and it's $9.99 a month. You just add it. You ask yourself, is this a fixed cost or a variable? And you add it. Let's say you're thinking about adding some new ribbon to the packaging, or something new, it's that a variable or a fixed? And you just work. And you want to ask yourself, what is your break even point? How many deals do you have to do per month just to break even? Per month. Cool? FEMALE STUDENT: Very cool. CLAY CLARK: So I'm going to erase this. Now, let me just take it into the world of the value for a second, because the value world, it's phenomenal. OK? -OK. CLAY CLARK: So I'm going to walk you through this. Do you ever talk to people on the phone for orders? -No. CLAY CLARK: No. OK. -Should I? CLAY CLARK: Well, I mean, if you can. If you're going to do premium value, you might want to. -Do it? OK. CLAY CLARK: But here's the thing. Your website is going to have to look-- we're going to compare with Tiffany. So let's put up the Tiffany website. The great thing is, because of technology, and connections, and people you know, and you're a resourceful person, you'll be able to find people that can build a website for you that won't cost you an arm and a leg. But we need to have a website that looks at least that good. And you might go, that doesn't even look good. Maybe you don't like it. That's fine. But just click at the United States and see. You might like it, you might not. But Tiffany is by far the most expensive premium brand out there. So let's see what they're doing. But anyway, something that looks as good as that-- or let's go to Starbucks. And then we'll go to Mercedes and we'll just look at different ones just to get an idea of what we're talking about. The premium brands-- there you go. So a site that looks at least as good as Tiffany, Starbucks, and we'll go with Mercedes. Then, step two-- step one up here-- Step two, when people order a product, we're going to have to have packaging-- that's packing, packaging, packaging. We'd need to have packaging that's at least on par with one of the top stores, Neiman Marcus, Saks, I mean-- FEMALE STUDENT: Nordstrom's. CLAY CLARK: Nordstrom's. So we need world class packaging. Now, anybody on the planet can do. This is what's so exciting. I'll tell you a fun story. There is a gentleman that I'm friends with, who has a business that is so profitable. It's out of control. So what he does, every aspect of his business is premium. So people walk in, and it's a car place. But you go in to buy the car. In the lobby, it's like, oh my gosh, this is nice. And then, there's like a barista, who offers the beverage. And you're going, what, is this a car place? Then you go in, and then the sales rep, you're sitting in furniture that's nice. It feels like you're in like a nice swank kind of club sort of environment. And then the overhead music's great. It smells great. The food's great. Everything's great. And pretty soon you kind of forget that you're in a car place. But when it gets down to it, the value is so high that people like, two to one in the luxury car market go to his place, because it just feels awesome. But he's thought about all these details. So on the website, boom two. The packaging great. The three is your story.

Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Customer Value Touchpoints: Core Story
  • Fun Factoid: Sophia Amoruso is the founder and CEO of Nasty Gal, the fastest-growing online retailer in the country. She first started selling vintage clothes on Ebay where she learned she had a talent for fashion.
  • Ask Yourself: What is interesting or unique about my story?
  • Fun Factoid: Airborne is a dietary supplement that supports the immune system through vitamins, minerals, herbs, and vitamin C.
  • Notable Quotable: "A story is the vehicle that spreads word of mouth."
  • Lesson Nugget: History's best presenters and influencers used stories to communicate their messages.
  • Customer Value Touchpoints: Social Causes

-The three is your story. They need to know who you are. BUSINESS OWNER: In what way? -Well, OK. Let's say, like, Toms shoes. Let's say Starbucks. Let's say the founder of the Ford, you know Henry Ford. Let's say Walt Disney. Let's say Apple. Let's say pretty much any company-- Spanx. You know, let's just keep going-- Spanx. You kind of know the founder in some way. You're like, oh that's Sara Blakely. She's the lady who started Spanx. Oh, she's-- There's a company called Nasty Gal right now, that's is selling clothing and stuff. People know who Sophia is. They know her. You just want to, like, know. I think your story is awesome. -Really? PRESENTER: Yeah. Let's review the cool facts. How many kids? -Combined, we have eight. PRESENTER: Eight. OK. So I'm just throwing that out there, eight kids. -Got you topped. PRESENTER: You do. Eight kids, and you're married to one of the top 10-- he's probably at number one. I'll say number one. Number one poker player on the planet, right? -Yep. -Now, this is your business. This isn't his business. But this is your business. And that's part of your story. You're based in Las Vegas. To me that's kind of cool. I mean, Las Vegas, that's like the number one little touristy place to go to. And you might go, that's not great. Or some people think it's great. But what I'm saying is, that is part of the story. I can get behind that. You know? So what I mean? Well, OK. Is there any product that you buy, that you buy for emotional attachment? I'll give an example of one that I do. Airborne? What's Airborne? -Isn't that those drops that you put in, it's supposed to make you feel better. PRESENTER: It's supposed make you feel better. I don't even know if it's true or not. But I see people all over the country buying Airborne. And I asked one lady, how'd you hear about Airborne? She said, oh it's a third grade teacher. She came up with them because she was always getting sick. And so she worked with a doctor to develop this formula. And it's helped her stay healthy when she's a teacher. And I'm like, oh OK. But I remember that story. And a story is the vehicle that spreads the word of mouth. I very rarely am like, hey, let me tell you a story. I bought some for $18.50. Oh you did? Yeah. And it's the total price. It's very rare that I'm going to have that story. But the story is like hey, I bought some shiz from a lady who lives in Las Vegas. She's got eight kids. And all of her prices are $18.88. Every price you'd have is-- You know, if you buy something for $30, it's dollars $30.88. Or, it's always eight. $30.08. Everything's $0.08. Why is everything eight? Because she wants to help support her eight kids. You know what I mean? Everything's eight. So every part of your pricing involves eight somehow. And I'm like, I'll remember that. You know? Cool. And then, you go to the site. And instead of looking at that Starbucks Coffee, maybe there's a skyline of Vegas. Or I don't know. But the point is, it's a story. And now a story is something I can pass on. So some of the bigger users of stories, that I can remember in American history, and in world history would be one, Jesus. He tended to use stories. He wasn't like, all right dudes. Do this. Don't do that. Do this. He always had stories, and parables, that kind of thing. Steve Jobs, probably the best presenter of our time, used stories to share. Disney used stories. Jobs used stories, Henry Ford. These people all use stories to pass the vehicle. So story-- You ever watch the news ever? BUSINESS OWNER: Very rarely. -It's a good thing, probably. It's a good thing for you not to watch the news. -It's so negative. -But the news, it's always stories. -Right. -That's just what the news is. So you're going to have to have a vehicle for word of mouth. So the story is you have to have. It's called a core story. OK? Core story. Now after you do that, now we're going to have to send people. There's got to be some sort of-- And a lot of people don't agree with me on this. But I don't care. I believe you have to have some sort of social cause that's tied into what you do anymore. There's a term you can look up called B corp. But basically what's happening is, the media will not write stories about anybody who's making a profit. That's sort of a bold statement. But very rarely, the news are like, tonight on Six, one lady named Julie is making a ton of cash. Holy crap. They don't do that. Tonight on the news, Apple's selling a bunch of crap. They don't do that. But now they're like, tonight, Apple's going to unveil a product that they say is going to change the world. Or tonight Toms shoes-- This guy is giving away shoes to-- They'll do stories about helping people, and social causes. So if you want the media to help share your story, which I believe you do, then you're going to have to have some sort of cause that you're passionate about, that you can tie it in. BUSINESS OWNER: OK.

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