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Featured Coaching Excerpt - Notes & Transcript, Part 1
Break It Down:
Determine Your Ideal and Likely Buyers: 7. Income Level
Fun Factoid: America's Most Livable Cities:
Fun Factoid: http://www.infoplease.com/business/economy/cost-living-index-us-cities.html
Lesson Nugget: Don't stay loyal to disfunction.
- So what we did is I started-- well "What publications do you read?" and they started to say "Well, we read Modern Bride, "Martha Stewart Weddings." So guess what I did? I cut all advertising that wasn't in those featured publications and I raised the prices by, guess how many times? Just guess, I mean guess the percent
- [Man With Glasses] Five, five times
- It was almost six times. So we literally, these cakes were couple hundred dollars and when I was done with 'em we were selling for $1,200. True story, and no one complained and we took the facility and we turned it into, like a design studio look. So you walked in and we had the cake displayed, so frames were hanging, like a modern art gallery, in front of the cakes. Guess how much money you make on a cupcake, by the way, just throwing that out there.
- Wow, how much money you make on a cupcake?
- Yeah cause you know this person, this business, this entity, just at Thrivers, now we work with companies all over the world, all different, I'm literally talking to a bakery, yesterday, in San Diego, so this is like, we do this all the time. But guess, just guess how much money this person's making per cupcake.
- Ten bucks.
- No, they're selling cupcakes for three dollars, at the time, how much profit do they make on a cupcake?
- [Man With Red Tie] Over three dollars worth.
- [Man With Glasses] A dollar fifty, fifty percent.
- [Man With Red Tie] Two bucks.
- [Clay] 'Bout a dollar fifty. So a dollar fifty.
- Do you make cupcakes? Does he make cupcakes? He guessed it right.
- How many cupcakes though, how many cupcakes would you have to sell, if you made a dollar fifty profit, if you wanted to make an income of a thousand dollars a week, roughly? If it was 500 it'd be like $800. You need to sell about 750 cupcakes. If you're only open six days a week, how many cupcakes do you need to sell per day? I'm doing the math and it's about 125 cupcakes a day. And if you're only open eight hours a day, how many do you need to sell an hour? Like 14.
- [Man With Red Tie] You're breaking it down man.
- So you gotta sell 14. So I ask the question, this is the part that really irritated said person, but it helped. I said "how many cupcakes do you need to sell per hour?" You did economics, in order to achieve your financial goals. "Well, I love cupcakes, "people love 'em, I love 'em." "How many?" "Well I don't know, "it's hard for me to tell--" "How many?" "I don't--" "Listen, it's 14, "so if you had to sell 14 per hour, "have you ever sold 14 an hour? "And is it even possible, at this location, "to sell 14 an hour? "How many ovens would you need to make that many? "So you know what we're gonna do, "we're gonna give away cupcakes for free, "for anybody who comes in for samples. "So you're gonna sample their wedding cakes. "Those flavors are just-- "giving them away, "and we're now taking the price of your wedding cakes "and we're gonna raise them up six times. "And we're just gonna sell how many wedding cakes a week? "Four. "We need four customers a week "and we are going to achieve all your financial goals. "Or we need 12 cupcakes per hour. "What do you wanna do?" And that's how you do business. So you gotta get in here. So we found is with the Elephant in the Room, we found, here, that the min-- okay we're going through these. The next is the income level. The income level, okay. We found out that the income level of our average customer at Elephant in the Room was what? I mean, just wanna speculate?
- [Man With Glasses] $80,000 a year
- Now we live in Tulsa, Oklahoma, it's like, according to Forbes, and we'll make sure to put this on the screen but Forbes rated Oklahoma, Tulsa, as the second best city for entrepreneurs one year, we were the first another year. We go back and forth, always in the top five, for best places for businesses to start. 'Cause the cost of living here is so low, the level of education is so high, the amount of opportunities so big, the government intrusion is so low, it just works out. So anyway, the average person is making $80,000. Which would be like 180 if you lived in New York, if you cost of living index. You might wanna pull that up on the screen, too, cost of living index because it will show-- but the cost of living in New York, is you know, substantially higher than Oklahoma, so we found out, guess what? Homeboy doesn't care if we charge $40, and I remember that discussion, I remember sitting there having that kind of cupcake to wedding cake discussion. And my partner John, very very wise, John's very wise. John says "We need to charge $40 a hair cut." And we're sitting there going-- In this case I was on the other end, I'm like "Dude, we're in Tulsa. "In Tulsa you can, like, buy a house for seven dollars." He's like "You can't." I'm like "Okay, fine. "But no, but seriously that's a lot of money." And he's like "I'm telling you we're only going "to be able to have two haircuts per hour, "in every chair, and we only have a total of 10 chairs, "and if you do the math, "how many haircuts do we need to make per hour, "do we need to do per hour, "in order to make enough money to make it worth it?" And I'm kinda doing the math and I'm going "I don't know." 'Cause you don't wanna really know sometimes, you really want to stay loyal to disfunction,
- [Man With Glasses] Yeah.
- [Clay] That's kind of a deep thought. But if something's like bad, but you've been doing it for a long time, over time you start to go, you know, "This is a really bad thing but I'm so loyal to it. "It's awesome, I feel goo-- "I mean, this is what I'm known for, "I'm known for the cheap haircut." So long story short, I had my moment and this is what I said.
- [Voiceover] Oh, Billy!
- No, I really did. I literally looked at him, I looked at him and I'm not exaggerating, this is exac-- and this is a live audio recording of that moment.
- [Voiceover] Oh, Billy!
- But I really did say that I literally was like, "Oh, Billy."
Featured Coaching Excerpt - Notes & Transcript, Part 2
Lesson Nugget: The customer will tell you the truth when you survey them.
Notable Quotable: “Face reality as it is, not as it was or as you wish it to be.” -Jack Welch (Retired American business executive, author, and chemical engineer. He was chairman and CEO of General Electric.)
Lesson Nugget: Go out in person and meet your ideal and likely buyers.
How To Determine Your Ideal and Likely Buyers - Recap: 1. Men, Women or Both
6. Publications They Trust / Consume
7. Income Level
- So we changed the prices, and you know what? Income's great, business is good. We have 1800 members in this business. We're growing every day.
- That's amazing.
- It's crazy.
- You know most people are afraid to price too high, ya know? They don't want to price themselves out of the market. You're saying it's just as dangerous to price yourself too low.
- Yeah. It's dangerous to have any assumptions.
- And this is gross, but this is true and then we'll move on. Okay? My daughter, ya know, pointed out the other day. She's like, "Dad, you have a lot of nose hair." And I'm goin, I'm 35, I'm like, "How does she know?" Because I'm just like, it's that weird... No one's ever talked about my nose hair. She's like, "You have a lot of nose hair." And I'm just goin', "How'd you know?" And she's like, "I'm looking at it right now." I'm just like... So, my first thought was, "Can we monetize it and make rugs?"
- Two, "Oh, no. I'm 35." And because my daughter pointed it out, it was then the truth, because that's how young girls talk. But, the customer is gonna tell ya the truth when you survey them. If you're runnin' around with a nose hair, like ZZ Top of nose hair, you've got nose hairs and everyone knows it but you, then it's a bad deal. What you have to do is, Jack Welch has the quote where he says, "Face reality as it is... not as it was, or as you wish it to be." The only way to get this data is by doing this. Quit goin' on to the... such-and-such-demographic.gov. Quit goin' on to bs-market-research.com. Quit goin' on to, you gotta quit doing that crap. I tell ya, I met so many college graduates, who have done this wrong. Get out there and meet your ideal and likely buyers. Go meet 'em, talk to 'em. Don't sit there and download all those ridiculous reports. It's a waste of time.
- All right. So, let's do a quick recap of what we've talked about, determine your ideal and likely buyers. And number one, we talked about determining their gender. Men, women, or are they both? Second, their age. Third, their location. Fourth, their interests. Fifth, their hobbies. Sixth, publications that they trust, or that they consume, that they're reading continually. And finally, what is their income level? If you focus this, and hone in this and you laser target this to your audience. Then, that will work on your behalf, during that income and be successful.