How I lost $300k last week lol

Summary

In this candid video, a business owner shares the painful lessons learned from losing over $800,000 due to flawed sales and marketing decisions. The first mistake involved simplifying the sales process by switching to weekly billing, which reduced perceived value and led to a 60% churn rate. The second mistake, influenced by a successful marketer’s strategy, was over-communicating pre-sales information, which annoyed high-level clients and tanked sales. The owner reflects on the importance of maintaining value, controlling communication, and applying customized marketing to avoid costly errors in the future.

Takeaways

• 😀 Transparency in marketing is important, but over-communicating can reduce perceived value and create confusion.
• 😀 Decreasing upfront costs for customers (e.g., switching from monthly to weekly payments) can lower perceived value and lead to higher churn rates.
• 😀 Clients may not understand the complexity of services in the first week, leading them to question the value after a brief trial period.
• 😀 A high churn rate can result in significant financial losses, especially if clients leave quickly and refunds are required.
• 😀 The key to a successful sales process is not just information but customization; people need tailored solutions, not too much information upfront.
• 😀 Sometimes a little friction in the buying process (e.g., upfront fees) helps customers make better decisions.
• 😀 Learning from others’ strategies can be helpful, but blindly applying them without considering your own market or audience can backfire.
• 😀 Over-communicating with high-net-worth individuals (e.g., millionaire business owners) can annoy them and reduce engagement in the sales process.
• 😀 The mistake of over-communicating led to a massive drop in sales (losing $300,000 over six days), as prospects felt overwhelmed and disrespected.
• 😀 Sales calls should focus on understanding the prospect’s needs and offering customized solutions, rather than trying to share all possible information upfront.
• 😀 High-ticket services require a personalized approach, as the decision to purchase is complex and can’t be treated like a simple retail transaction.

Q & A

What was the first mistake made in the script and why did it lead to a loss of money?

The first mistake was switching from charging clients a large upfront fee to a weekly billing structure. While it seemed like a way to make the service more accessible, it actually decreased the perceived value of the service, leading to a higher churn rate and ultimately a loss of money due to more clients canceling after the first week.

How did the weekly billing model affect the perception of value?

By charging weekly, the service appeared cheaper and less valuable to clients. Since the first month of working with a client is the most resource-intensive for the agency, breaking it down into smaller weekly payments made the service seem less valuable compared to the original upfront model.

What was the churn rate like before and after the billing change?

Before switching to weekly billing, the churn rate was under 10%. After the change, the churn rate skyrocketed to 60% in the first month, meaning 60% of new clients canceled within a few weeks after signing up.

What was the second mistake, and how did it impact the business?

The second mistake was over-communicating with prospects before the sales call by sending too many pre-call messages. This led to annoyed prospects, lower show-up rates, and disrespect toward the sales team. It resulted in losing $300,000 in just six days due to poor client engagement.

Why did over-communication with prospects backfire?

Over-communication, specifically sending eight messages in a 24-hour period, annoyed prospects—particularly high-net-worth individuals who value their time. They felt overwhelmed and irritated, which caused them to disengage with the sales process, making them less likely to show up for calls or trust the sales team.

How did the frequency of messages affect the sales process?

The excessive number of messages led to prospects feeling like they were being 'sold to' aggressively. Instead of coming to the call ready to engage, many saw the salesperson as just a cashier, which damaged the relationship and reduced the chances of closing the sale.

What was the initial intention behind sending so many messages?

The idea behind over-communication was to provide transparency and ensure prospects were fully informed before the sales call, hoping that this would lead to more confident buyers. The goal was to reduce objections and help prospects make informed decisions.

What went wrong with the execution of the communication strategy?

The strategy was executed poorly because the business owner didn’t account for the specific preferences of their target audience (wealthy business owners). The excessive number of messages, combined with the highly detailed pre-call information, backfired and led to frustration and disengagement from the prospects.

How did the sales team suffer due to this mistake?

The sales team faced disrespect from prospects who were annoyed by the over-communication. Some prospects mocked the salespeople, which hurt the team's morale and resulted in missed commissions. The team spent time engaging with difficult prospects, only to lose the sales, impacting both their income and productivity.

What lesson did the business owner learn from these mistakes?

The business owner learned that while transparency and information sharing are important, overdoing it can complicate the sales process. Simplifying and customizing the sales approach, rather than relying on automation or excessive communication, is key to maintaining the value of high-ticket offers and fostering positive relationships with clients.