🤑 What's your $100M offer?
Hello! Adam Thornhill here. ‘The Podcast Guy’ saving you 10 hours a week.
Enjoy the 99th Podup, with special thanks to TikTok For Business.
Today, we’ll dive into the best insights and ideas from Acquired Podcast.
Alex Hormozi is the master of free, irresistible offers. The idea is simple: provide an offer so good it's impossible to say no. You then monetize with upsells and cross-sells.
Costco is predicated on exactly this. With the help of some masterful storytelling, we're going to unpack the Costco business model and the lessons we can apply.
Deliver value for free
Costco operates as two separate business models:
The traditional retail business
The membership business
Although both operations offer one unified customer experience, financially, they function on entirely different principles.
The retail business enforces a strict cap on the margin it's willing to make. All branded products have a maximum margin of 14%, and Kirkland Signature products have a slightly higher margin of 15%.
The membership business, with close to 100% margin, generates most of Costco's profit. By constantly looking for ways to provide more value to members in their retail business, their membership business benefits from retention and word of mouth.
David Rosenthal
Why it matters
Providing a great product or service isn't always enough. Sometimes, you need to copy the Costco playbook and provide overwhelming value upfront, then monetize with another part of your business.
Take acquisition.com. Alex Hormozi gives away valuable resources to entrepreneurs for free. This builds trust and awareness. When a founder with $1M+ in profit wants to sell part of their business, who do they look to first? Alex, of course. His content is a lead gen machine for his investment company.
What makes this model both unique and defensible is its symbiotic nature. By offering free or undervalued services, Costco and acquisition.com are building long term customer relationships. This creates a moat that competitors will find challenging to bridge without mimicking the same level of initial value.
Next steps
Analyze your value proposition. Can you offer part of your product or service as a loss leader to build trust and attract customers?
Diversify revenue streams. Can you identify a new revenue model that feeds off the primary one? Consider membership models, premium features, or other upsell opportunities that make sense for your business.
Iterative feedback. Utilize surveys, focus groups, or casual customer conversations to glean insights and refine your strategy.
Educate your team. For this model to succeed, it's imperative that everyone, from the C-suite to the front lines, embodies this value-first ethos.
Your thoughts?
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Quotes were pulled at different points of the episode. Sentences were left out to make the narrative more concise. Podup is not associated or affiliated with any podcast.