5 Steps To 5X: How to give your business the “Incumbency Advantage.”
My fried and AdSkills founder Justin Brooke recently posed the following question…
“If Agora is a BILLION dollar info-product seller and gurus are MILLION dollar info-product sellers, why model the gurus?”
It’s a fair question.
If there is a company in your industry that’s the 500 pound gorilla, wouldn’t it make sense to model what they do instead of what the 10, 50 or 100 pound gorilla is doing?
For example, if their marketing funnels earn billions across dozens of countries, why not just copy that?
Would it be reasonable to assume that if you did what they’re doing, you would also end up with a billion dollar company?
MORE THAN FUNNELS
Agora has a proven model that works for them.
The key word there is “model.”
Agora has FUNNELS to be sure.
But Agora also has a BUSINESS MODEL and a BUSINESS POSITION that make it stand out from the rest.
To be successful, and to become
A billion dollar company, you need MUCH MORE than a marketing funnel.
The truth is that you are NOT just “one funnel away” from creating a billion dollar business, because a funnel is not enough.
A funnel can get you to several million dollars, but it’s just not enough to get you to the very big leagues.
You’ll also need to have at least one killer product positioned properly in your market and a business model too.
Let’s assume that you have the product for purposes of this discussion.
So, what CAN you learn from Agora to 5X YOUR business?
- GOING NEGATIVE.
Agora is comfortable going negative on ad spend up to six months.
Many gurus and info people just cannot afford to do that.
It is a privilege of scale.
Here’s some additional insight from my friend Josh Bizoni of BioTrust.
“We sometimes go 18 months to break even at scale.
“We hired a few business analyst who breakdown our numbers and track the LTV from the source and we gradually invest over time to minimize risk.
“The key is you have to track back to the source and even then you have to make sure the leads and customers are aging in a similar fashion to established metrics as things like decreased email delivery and fatigue of offers will effect aging.
“It’s a constant game of monitoring and adjusting.
“We do a ton of CPL lead gen and this approach is especially important here.”
Oliver Schmalholtz provided some additional insight on how this works with Agora. He said…
“A little over a year I attended a conference where the CEO of one of the Agora companies graciously and openly shared their launch formula for a $11.5 million single day launch.
“The total of the campaign was $29.5 million.
“Yet they were multiple millions in the hole the morning of the launch.
“Here is where it gets interesting: you’d think the next couple launches would be close to this success or maybe even higher.
“Nope.
“Everything aligned on their biggest launch and they could not replicate or increase.
“One home run did not ensure immediate duplication with the following 5 launches.”
Another friend, Juan Martigue added this thought…
“When we look at the companies we admire or public companies in general, we sometimes see payback periods of more than 1+ years or 2 even!
“Of course the more stable a business model (continuity, membership or mission critical SaaS) the easier it is to justify longer payback periods cause the cash flow will be there.
“If I’m “only” a one funnel, one channel info-marketer, then even 6 months might be risky.
“Once that’s understood, then you can asses which risk/reward are you willing to tolerate and establish which payback period a) you can afford/have cash for and b) what data/signals feed google/Facebook to do their thing.
“An info product business might resist longer payback periods, but it’s not only a cash flow/capital problem.
“It’s a risk problem (ie. how likely is my traffic channel to change the rules?)”
ACTIONABLE TAKEAWAY: to afford to go negative on your front-end offers, you must have a back-end offer ascension path that enables you to make up that initial loss, plus earn a profit that is acceptable to you over a specific period of time.
How do you get there?
By starting with an offer that works to paid media initially to a niche that maybe won’t scale out to a large group.
Prove that at least you have a product and offer that works to some niche, no matter how small.
Then, start expanding the audience and channels in which you make that offer.
Conversions rates, and ROAS (Return On Ad Spend) and AOV (Average Order Value) will not be as high as you expand out into less fervent niches and purchaser cohorts, and CAC (Customer Acquisition Cost) will increase.
However, as you watch these KPIs and you run normal CRO (Conversion Rate Optimization) split tests, you will be able to evolve your funnel so that LCV (Lifetime Customer Value) and more importantly for our discussion, ARPS (Acceptable Recoupment Period Sales) fall into an acceptable acquisition cost recoupment time period.
Jay Abraham and I were talking about this at dinner just last night.
We frequently encounter smart, savvy entrepreneurs who fall into one of two primary limiting belief categories:
a. They believe they can’t spend more than a certain dollar amount per month on a given channel, like for example Facebook, or
b. They believe that every ad spend must be recouped (possibly even with some amount of profit) on the first sale.
Jay was sharing that he had a client who spends $6k per month consistently and from that earns $80k per month.
He asked them why they didn’t spend 2X or 10X that $6k spend, and they just didn’t have a good answer.
They felt they needed to bank the profit from the current spend.
If you already have a business that is profitable on your current spend, why not just increase your spend until your numbers tell you the marginal revenue/profit from that spend does not exceed CAC?
To overcome the second limiting belief, you simply need to expand your product line to offer an ascension path that eventually allows your CAC to equal your ARPS (and target LTV) to balance any negative ROAS.
In other words, be willing to create a value chain that permits you to go negative on spend initially, and then make that up plus a profit on the back.
The more you can afford to go negative on acquisition, the bigger the moat you build between yourself and most of your other competitions.
Agora, Amazon and many other businesses have baked this into their businesses and it sets them up as very difficult targets for their would-be competitors.
And if you’re in real estate or some other business like that where you don’t think you can create additional value chain links, you can still can!
You just have to get creative and find complementary business offerings and partners to extend that value chain.
For example in the real estate businesses there is escrow, mortgage, movers, utility connects, cable, staging companies, photo services, etc.
You are only limited by your own creativity and imagination!
One other important aspect my friend Todd Brown pointed out to the Agora model worth understanding is the size of their teams and how that size allows them to be prolific.
Knowing that most campaigns will NOT be home runs, they crank-out lots of ideas and quickly move beyond the losers.
So, One division, for example, released over 200 offers over the past 12 months. Amongst those 200, only a small number are big winners.
It’s important to understand the impact this has on the whole model.
2. HIRE THE BEST
Agora attracts the best copywriters and pays them well, much better than most gurus can afford to pay.
ACTIONABLE TAKEAWAY: Always be investing in the best team you can afford.
Once you start making money, put a portion of that into team upgrades.
Use that to hire better and better copywriters, funnel builders, managers, trust-agents, etc.
Agora didn’t start with the best copywriters in the world.
They started with one person writing copy.
Then, as they made more money, they hired better and better talent, until eventually they could afford the very best, and pay accordingly.
Some of their copywriters now make well over 7 figures!
3. USE TRUST AGENTS
Agora attracts the biggest personalities.
It is able to trade on big names to draw attention, leads and trust-agent based conversions.
No doubt about it, big names sell!
Influencers are all the rage because they have audiences that look to them as aspirational figures to emulate or as trusted guides to recommend products and services.
Agora hires, contracts or partners with big names like Neil Patel, Grant Cardone and James Altucher because those names are well-known and trusted in their market niches.
Many smaller companies don’t have access to or cannot afford those branded personalities.
In those cases you may need to attempt to gain a trust agent organically by sending out your products or offering their services to influencers to get them to use the product or service and then let the world know about it.
Chilibed saw a 10X spike in sales when Tim Ferriss let his audience know about the mattress cooling product they offered that Tim used and loved.
They had been in business for 10 years with lackluster growth and sales until the Magic of the “Tim Ferriss effect!”
ACTIONABLE TAKEAWAY: You might be able to partner with bigger names if you can find an access point (someone who knows them or some charitable cause or other personal interest the name brand personality has that might cause them to enter into a below-market deal with you).
Or, you can start with smaller micro-influencers and gradually work your way up the star-power chain as you make more money and have greater levels of success, notoriety and cash to work with.
JT Fox did an excellent job of this when he wanted to attract a conservative Republican audience and worked with several smaller figures before targeting Donald Trump and hiring George Ross who then led him to one of Trump’s sons who then could then lead him to Trump himself.
Start with your ultimate dream endorsement in mind and then work your way back through people and organizations they know and work with, until you find someone you can both access and afford.
Hire or partner with them, and then they can refer you onward and upward.
Brendon Burchard did an excellent job of this and eventually landed on Oprah!
They key here is to actually focus a portion of your efforts and budget on trust agents.
You will frequently need them to get meaningful access to the larger audiences you ultimately want to reach.
4. HIGH PROFIT, HIGH-DEMAND NICHES
Agora, operates in high-revenue, back-end product driven niches like finance and investing.
Many gurus do not have a passion for these high-risk and high-margin niches, and if you don’t, that’s okay.
I’ve seen successful entrepreneurs. create a value chain in everything from floor coverings to legal services, teeth whitening to superfoods and any sort of information based business you can imagine.
Agora starts its customers out by selling them on a small investment.
If that’s where the value chain ended, it would be hard for Agora to make any profit, because their CAC is much higher than the initial investment, as we discussed above.
It’s the higher priced back-end products that make the initial CAC work.
ACTIONABLE TAKEAWAY: you must develop, create an affiliate relationship with, or acquire higher-priced, higher-margin products or services and sell them to your list.
This allows you to go negative on the front end acquisition yet still eventually make a profit within your ARPS.
I just had a consultation about this with a very well-known public figure who is a member of our War Room mastermind.
They were selling a low cost front-end product and actually making a small profit, but they couldn’t afford to scale and increase their spend and CAC to expand into related markets that returned only an 80% ROAS.
However, they had no high-ticket products in their product line.
We added group coaching and mastermind products to the mix.
That provided substantially higher prices and profits, and now the possibilities for additional ad spend and market development has increased by over 5X!
Take a look at your value chain and create bundles, continuity products, affiliate offerings, higher priced products and/or services that permit you to increase ARPS and LTV, so you can correspondingly increase your acceptable CAC and thereby access new markets.
5. RISK TOLERANCE
Agora has a floor-full of attorneys to help them defend against challenges associated with their chosen industries.
Many gurus don’t have that resource and could be out of business with one regulatory battle.
One reason that Agora makes so much money is that it operates in financial and business opportunity niche that many might consider to be high-risk from a regulatory standpoint.
If you’re going to play in those markets, you’re going to need excellent legal compliance and a strong stomach, because once you reach any kind of scale, there are likely to be legal and regulatory challenges that arise.
This is both good and bad, because many would-be competitors will either be shut out after their first challenge or will shy away from these niches because they have no appetite for the associated risk.
We’ve seen this in some businesses where we have had to fight through challenges, hire attorneys, and incur settlement expense where it made more sense to settle than to pay attorneys to fight, even when we were in the right.
ACTIONABLE TAKEAWAY: Agora wins at high-margin, high-risk industries because it is willing to deal with the consequences of operating in those industries.
If you are comfortable with this as well, you will need to plan a war chest fund to cover attorneys fees, settlement costs and missteps you may make along the way.
If you’re not comfortable with this, then stay away from offers in finance, making money, weight loss and health.
Those are all super profitable and super high demand niches, but they do carry risk that is higher than other potential options.
CONCLUSION
Agora has an amazing model… for Agora.
You could say the same thing about Amazon.
Why don’t all e-commerce sellers just copy Amazon’s model?
Because Amazon has size, scale, capital, history and other advantages that those e-commerce sellers do not.
Just because someone has a proven and amazing model does not mean it is easily duplicatable for others in the same or similar industry.
It makes sense to look to the most successful incumbents in your industry as models to take the best that can work for you while recognizing advantages inherent in their incumbency.
You can achieve many of the befits of incumbency by following the 5 key factors mentioned above: 1) going negative, 2) hiring the best, 3) using trust agents, 4) operating in high-margin, high-demand niches and 5) being risk tolerant.
Even if you’re not yet big or successful enough to do what Agora does, you can still follow the 5 Actionable Takeaways in this post and apply them to your business to increase your chances of success by benefitting from many of the “incumbency advantages” of a business like Agora, despite not having the experience, history, size, scale or capital that provides it those advantages.
I’d love to hear your opinions on this. Please comment below and let me know what you think!