A simple three step strategy to make sure you’re in the highest tax bracket.
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Hey everyone, this is Russell. I want to welcome you to Marketing in your Car. I just got done meeting with the accountants, which if you've been listening for any length of time you know is by far my least favorite thing in the world. I would have rather gone to the dentist and get my teeth drilled but it is what it is.
I met with the accountants to do our tax return stuff and sign a million papers, all that fun stuff. I also had the chance to find out that thanks to Obama, my tax bracket is now, I think we pay 47 percent. Isn't that crazy, almost half of our money. We're sitting there first and talking about obviously why it makes us angry.
Then there are basically two options. One option is fire everyone and make less money, and just get taxed less or option number two is go and try to make tons more money. You get 50% of it so let's just double, triple, or quadruple what we're making. We thought, “You know what? Not only am I going, obviously set a goal to make a lot more money. I want people on my team to max out their tax bracket too.”
How cool, yeah, you maxed out your tax bracket but let's set a goal for our team. I want three or four people on my team to max out their tax bracket too, to make that much money as well. That's my new goal is to not only max out mine but everybody else's. It basically comes down to you got to make $450,000 to max out your tax bracket is my understanding, is what the accountants told me today.
For all of you guys, I think that should be instead of looking at it as a negative thing because it is a negative thing but when you're negative about it, it just takes your focus off, it takes your eye off the prize and makes you angry instead. Let's look at it as a positive thing. For all of you guys, that should be your first goal right now.
Everyone has, “I want to make a million dollars,” or whatever but let's make the goal I want to max out my tax brackets. I need my income to be $450,000 so that boom, I maxed out my tax bracket and the government is going to take half my money. As depressing as that is, that can now be a cool, exciting, fun thing to shoot for.
After you've done it for yourself, you got any partners, then boom, that's your next one to get your partners to max out their tax bracket. Then let's get our employees. Let's get everyone on our team to max it out because then we're making a lot of money. That's fun. That was my big takeaway from the accountants was just let's shift our focus on what our goals are and figure out how in the world we can max out our tax brackets.
There are a couple of ways you can do that. This is the education part of the podcast. I'm assuming that all of you guys here have your own business. If not, you need to start your own business. Let's get that out of the way. After you've got a business and you're focusing on growing it, there are only a couple of ways to grow a business.
A lot of you guys know who Jay Abraham is. If not, he's a really cool guy to study. As a person, he's kind of weird but his products are really good. He talks about there's only three ways to grow a business. He says there's one way you can get more customers. That's the way a lot of us focus on. We're always talking about traffic, advertising, customer acquisition because that's the first way to grow a business, to get more customers.
It's also the most expensive one. The second way to grow your business is to get your customers to give you more money, to get them to spend more. You can do that by increasing your prices, adding upsells, all these types of things to get them to spend more money. Then the third way is to get them to buy more often.
You have more products, more services, more cool things for them. Those are three ways to grow a business. What's interesting is that most people, they focus just on the first one which is more traffic, more traffic. It's interesting because I'm relearning this lesson. It's fun when you know something and relearn it through the school of hard knocks.
For example, last month, Neurocell, I don't know if I mentioned to you guys or not but we made more in Neurocell. Actually, I think it was pretty close to 50/50. It wasn't quite 50% but Neurocell was almost 50% of our income last month which is crazy, really exciting and cool. The problem is that we spent I think $85,000 in ads to get those things, our customer acquisition. We were getting new customers.
We got tons of customers but that is the most expensive piece of the puzzle as well. We're usually doubling over on our ads but then we still have our product costs, shipping costs, fulfillment, support, call center, all the things that go into fulfillment of it. When all was said and done, we were probably making 20, 25, probably closer to 20 percent which isn't bad but that's what it is on our customer acquisition part of it.
So if I want to grow it, there are a couple of ways I can do it. One is I can go acquire more customers but again, that doesn't geometrically grow your business. It just adds more fuel. You're getting more customers at that 20 percent. The next thing is how do we get them to do step two in the phase which is get them to buy more.
What can we tweak or change in our upsell flow? What do we need to add? Can we add another upsell, can we increase the price, can we add a sixth bottle option? What else can we do? In the supplement space, it's about more products and bigger ticket. In the info product space, one thing I saw Daegan Smith do that was really cool, he had an upsell where the upsell was first I think $500 for this product. It did well.
Then he was like, “Hey, what if I sold $500 for the product or $1000 for the license to sell the product?” He did that boom, people started taking the license to sell the product. He doubled the prices and his customer value just shot up dramatically. Then he was like, “Wait a minute, what if I instead of doing that, there was a one-year option license or a three-year, or a lifetime option? The lifetime option is two grand.”
He added that in there. It's basically the exact same thing he's selling. He just put a license and time limit on it. Suddenly, all these people started taking the $2000 option because they didn't want to renew it after a year, and increased it as well.
What things can you add to your existing sales funnel to increase the average transaction value? That's the second thing. The third thing is how do you get people to buy more often? What else can we sell them? That's been, for the last, we're in April right now, the last four or five days here since we got our month end reports, I've been looking at our sales and our profit.
Man, for as much gross sales as we did, our profit was horrible on our supplement. I was like, obviously everything we sell after this to these existing customers, we don't have the customer acquisition costs. We don't have all the other pieces that are involved. That's why I'm like how else can we monetize this and get people to buy more often.
We started looking at more products in our product line. For me, I don't want right now to go and buy more supplements because inventory costs drive me crazy but obviously the people that have supplements keep buying supplements. We found some friends that have supplement companies and we're partnering, selling some of their products.
We won't have as much profit on them but I don't have to spend ads, do shipping, inventory fulfillment, any of that stuff. They take care of all of that for us. All we got to do is tell my customers about their products. That's what we're adding in this month. I was thinking about it. What's cool is let's say we sell 30, 40, 50, 60 thousand dollars of affiliate commission on these products? That's just pure profit to the bottom line. There's no fulfillment cost, no nothing.
It will take that 20% profit margin we're running at right now with the supplement, and it will make it now 30, 40, 50 percent. That's how we grow a company.
This is some fun stuff. I am sure you have probably heard the Jay Abraham stuff before. I am curious if you are looking at this in your business and thinking about it in this way. Again, I learned about this ten years ago and then again five years ago. Over the last three or four days it has become real to me again. I am looking at how we can grow this company and thinking, “Rats! We are focusing everything on number one which is good, but it is the most expensive by far. How do we add more of number two and number three?”
For us it is specifically about number three. With number two we are doing pretty well with the supplement.
Let me step back and take a look at DotComSecretsLabs. At DotComSecretsLabs customer acquisition is doing awesome and our resell stuff and backend monetization is also doing awesome. However, in the middle our profit per sell is, I think, where we are struggling.
In fact, you have heard me over the last two or three months. I have rebuilt the upsell process for DCS Labs probably three, four, or five times. We could not get the average transaction value high enough.
Finally, we cracked the code with this last version and we got it now. This is kind of cool because for every free book we give away we are averaging $49 in cash from the upsell flow. This is exciting. Obviously, we still have to print the books and ship them, so there are still other costs involved. It is cool, though, because we can now spend $20 to $30 on a book and when all the costs are added we are getting pretty close to breaking even. This gives us the ability to buy more media, get more affiliates, and to do all the other fun stuff.
It is kind of cool to look at each of our businesses, each of our funnels, and think about those three things and focus on all three of them. Like I said, the money is going to come more from number two and number three most of the time, but all our focus is on number one, including me. We focus our time on traffic, traffic, traffic! It is getting more customers, more people and more people as opposed to focusing on the other two.
This is some interesting stuff that you guys can use in your businesses to help you max out your tax bracket, then your partners’ tax brackets, and then your team’s tax brackets and everybody’s. I am not sure if I am going to tell all my people that this is my goal for them. They are going to really want that much money. However, I think it is a good goal to set. I am going to talk to them and have them set this goal for themselves, as well. They can start focusing on this and try to figure out ways inside of our company, inside of what we are doing, to increase what they are making. Together we can figure out other ways to add value to reach the point where they can max out their tax brackets, as well.
It is a fun goal! I hope it gets you excited. It gets me excited! It is the one exciting thing I got from the accountant today. Everything else is what it is.
I am almost to the office, you guys. If you like this podcast, please go to iTunes and let us know.
Also, we have started our beta for ClickFunnels. A couple of you guys are in there and it is going crazy. I think there are about 30 people in this beta group. One guy listed off, “This means I can cancel Visual Web Site Optimizer; I can cancel Lead Pages; I can cancel GoToWebinar.” He listed off all the things he could cancel and it added up to $300 or $400 a month in fees he could cancel by using ClickFunnels. He could get all of this at about a tenth of the price which is pretty exciting.
Three or four people said almost word-for-word, “This fills in and solves all the problems I have ever had with Internet marketing; figuring out how in the world to get a sales funnel up.” This is exciting, too. I am fired up about it and I think it is going to be exciting. We will spend two weeks or so in beta getting everybody in there. We are finding bugs in the templates and little things like that. We are knocking them out as quickly as we can. It is kind of a fun process. I have never gone through this before.
This is what we are doing right now. We are cleaning it up and adding more and more templates. After that we are thinking about launch strategies. I do not want to do what a lot of companies do.
Some of my friends own a company called Kijabi. When they launched they had a huge, Internet marketing-style launch. I have no idea how many members they got, but I am sure it was 3,000 to 6,000 people in there. People came in, but with that many coming in that quickly, you just cannot keep up with support. They had headaches, issues, and all the stuff that comes with that. A lot of people dropped out quickly, as well, and there were a lot of bad reviews written about them, about how it did not work and so on.
Eventually, within a couple of months they had it all figured out and now it is a very, very good product. However, you have only one shot to make a killer first impression and they lost that. The people did not come back and they will not come back.
For me, I was thinking that I should have joined Kijabi a long time ago. Why didn’t I? During the product launch I read a review from someone who talked about how bad it was. That was four or five years ago and because of it I never opened an account. I am sure it is now probably the coolest thing in the world, but because of someone’s bad experience, it kept me from even attempting to try it.
We do not want to have that with ClickFunnels. We want to do it differently. I am thinking about more of a delayed rollout. It would be kind of like going to the DMV. You take those little stickers with the little number on it which tells you where you are in the line. We would have something like that where everybody takes their “sticker.”
Each day we would unlock it and say, “Today we are going to let 50 people in, so that is numbers one through 50. Your number is now live. You can come in and get a beta account.” We would let 50 people in and they could spend a day or two in there. We would make sure there were no issue or bugs and then boom! We would open it up and let the next 50 people through.
This is how Gmail launched. You had to be invited by somebody. It was a slow rollout and it caused a lot more mystery, buzz, and excitement. I think we will make it where those 50 people come in under an agreement. You have to create a funnel the first day otherwise we kick you out. We want to make sure people are using it.
Second, if they like it or hate it (I don’t really care), either way they have to write a review about it on their blog or on their Facebook. We want to cause buzz, get people talking, and make everyone want it, right? I think this is the rollout strategy we are looking for. I want to make people go crazy.
Also, we will have the ability from a support standpoint to handle it, to grow it, to scale it, and when we are ready to open the floodgates and allow a million people through, we will have the infrastructure and everything in place. All the bugs will be gone and it will be a rock-solid product from day one.
This is kind of what we are looking at. I am excited. It will be fun to see how we end up deciding on the execution. This is what we were talking about yesterday a bit. I think it would be fun. It would be like a big game.
In a couple of months I think we could get 4,000 or 5,000 very active, very solid customers this way. With Labs, I think we have sold 4,000 or 5,000 DCS Labs books now. We do not have any affiliates promoting it yet. We have a couple that have picked it up, but we have not asked any affiliates to promote it yet. It has just come from our own traffic and Facebook. I think we can do something similar with ClickFunnels.
Anyway, I am at the office. I had a long drive from the accountants’. I hope you did not mind me rambling this whole time. That’s it for today. Have some fun! Go to max out your tax brackets and we will talk to you guys again soon.