201: Have Your Customers Write Your Pitch with Tim Calise

28
Feb

Tim Calise, the managing member of Koko Fit Club, a fitness technology company and the founder of Acote Consulting that partners with and invests in the owners of sub $3 million recurring revenue service businesses. We discuss about the Product to Profit framework, why lead magnets don’t always work and the process for building an MVP for a service business.

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Have Your Customers Write Your Pitch With Tim Calise

Our guest is Tim Calise, the managing member of Koko Fit Club, a fitness technology company and the founder of Acote Consulting that partners with and invests in the owners of sub $3 million recurring revenue service businesses. Welcome to the show, Tim.

Thank you, Steve. I appreciate you having me.

It’s awesome to have you. So let’s start with your journey. How did you get here? I mean, you ran a fitness franchise licensing business, or you still are running it. And now you have also Acote consulting. So tell me about your journey of entrepreneurship.

It started very early for me, from my earliest memories, even going back to kind of middle school age. I was always the kid who found problems that he wanted solved and figured out ways to solve them. And I think, as we think about kind of what is entrepreneurism really at its core, a lot of folks would say it’s folks with ideas and things like that. I believe an entrepreneur is someone who is able to align having a good idea with the ability to execute or take action on that idea, and the combination of those two meet the timing that is relevant to allow the idea to thrive.

You know, so often I think we think of, you know, these grand ideas and really the reality is, I think it’s when those three things come together. And just throughout my life, started early, started two companies while I was in college and I learned the lessons of it’s have an idea, run it through a screen and then it’s what we call speed to money. How quickly can we move from idea to testing? Because that is really what the idea, in my opinion, of what being an entrepreneur really is.

Yeah, I love this idea of aligning the idea with the execution. A lot of people think that it’s all about ideas. You have a good idea, then you can make a million dollars or a billion dollars, but it’s absolutely not so. A lot of times the inventors don’t make much money at all, and it’s someone who is aligning the idea and get the timing right, aligning it to the execution and get the timing right, that’s a very good summation of entrepreneurship.

So tell me about, you know, your fitness franchise and then how did you evolve it to consulting, you’re now investing in sub-3 million revenue companies. So how did the fitness, this licensing company that you are running, how did that create the opportunity? And also, I think you have a connection with Alex Hormozi as well. So maybe share a little bit about that connection and how that helped you evolve.

Sure. So I think when we, a lot of times when I talk to folks and I say, you know, what’s your professional journey look like? It’s these kind of incremental steps along a similar path. I started washing dishes, then I became a cashier, and then I was a manager, and then I became an owner in a restaurant chain, for example, a very linear path. Mine was a little different. I was always entrepreneurial, always tinkered with things, but I started finance, started in the investment management business and raised a lot of capital and invested a lot of publicly traded companies.

So I learned the basics of how to bridge the gap between raising capital and deploying capital. So evaluating companies and valuation and things like that. And I didn’t know it at the time, but at that time I was investing in like in US stocks and things like that. But I knew I also liked to be an operator. So I went from investing in publicly traded equities into putting my money where my mouth was, which is building a fitness brand. My wife and I met as division one athletes in college. So we always, health and wellness was always important to us.

And at the end of 2007, I was exiting the investment management business and was not sure where I was going to go next. But I love the idea of technology, love the idea of health and wellness, and discovered a new company that was creating automated personal training, which was basically replacing a personal trainer with technology. And I love the idea. And so in 2009, my wife and I entered into a franchise. We became developers of this concept and built it from one location to eight locations over the next eight or nine years.

And through that experience, at the end of it, I had the great fortune to win a competition, sales competition, to meet Alex and Layla Hermozy. We were customers of theirs. And I flew down, got to meet Alex and Layla at their home, and Alex told me effectively, his words, not mine, you’re far too smart to be a gym owner. You should be doing something else. You’re in the wrong opportunity vehicle. Go sell your gyms and go do something else. Well, at the time he and I, neither of us knew it, but I went and sold my gyms effectively.

And then six months later, he said, you want to come on board? Gym launch is getting some traction and this thing’s taking off like a rocket ship and I’m looking to build out the executive team. And so I was quite fortunate in 2018 to join Alex and Layla and our CFO as one of the four members of the executive team over at GemLaunch. And that led me into consulting and helping improve the quality of, excuse me, the quality of businesses and business plans and foundations. And then that led me into consulting in my more recent years.

That is very fascinating. So, Tim, we can talk more about how you invest in these companies. I’m curious about that. But this podcast is all about frameworks, and you have developed several frameworks along the way. One of the things that we discussed, which I thought was very fascinating, was this idea of the product-to-profit framework. So how do you take, I mean, you talked about aligning the idea of execution and timing, that’s kind of big picture, but how does that execution machine work? How do you take the product to profit?

Yeah, so we’re sitting in early part of 2024, and over the last couple of years, the marketplace in general has been flooded, especially with the rise of social media and shorts and all of these other kind of the landscape of media that are out there to try to get buyers attention. We are now inundated with words and claims and guarantees.

And so, in my opinion, as we look forward over the next couple of years, there has to be a different way to approach this. If you go back two or three years, you can do a dancing video on TikTok, get some attention and hopefully convert those folks into customers. I don’t think that holds anymore. And the reason is, buyers now are more skeptical than ever. And they’re wondering if the experience they see on the way in, accurately reflects what it’s like to actually be behind the paywall. And I had this epiphany to some extent when I was sitting about a year ago and said, oh, I’ve got to go create content.

And on the other hand, I have to go and coach and mentor and work with clients. And I thought to myself, why do those two things need to be different? Because really what the best way to understand who I am and what I do is to document and demonstrate and give you a peek behind the scenes of what it’s like to actually be a customer and be a client. So we built this product to profit framework, which is two things.

One, it uses your existing product, the existing service that you offer and repackaging it for acquisition. And we do it in a way that we are able, either now or in the future, to run some kind of paid acquisition program and get repaid for that cost of acquisition at the time where someone becomes a paying customer first.

And the reason for that is one of the ways that we were able to build GymLaunch so efficiently is to use that analogy, if you had a machine that for every $50 you put in, a day later it spit $100 or $200 out, do you think that, how many dollars would you put into the machine? And the answer is typically as many as I can find, as many as I can to keep that ratio going. And that’s the reality. So many small businesses stay small because they can’t acquire customers at a profit.

Okay. You know, I’m just reflecting on Alex Hormozi’s two books, The Million Dollar Author and The Million Dollar Lead. And it sounds like this is about that. So package your existing service requisition of new customers, that’s kind of the offer, perhaps, I’m just wondering. And then how do you get the leads and maybe that, I don’t know, this outreach program that systematically creates those leads so that you can show the offer to is maybe that the lead piece. So is it correct? And can you give more meat on the bone here?

Sure. So I come out of the fitness industry and in fitness, the most common offer was to come in and have a free day or a free week, some kind of free offer. At Gym Launch, we pioneered the high ticket six week transformation challenge. It was $600 for six weeks. And it fundamentally changed the businesses that we worked with because every time they got a sale, they took in $600 and then they could use part of that money to both deliver well, like give a high quality experience, which is what the client wants anyway. And we could use some of that money to then recirculate into acquiring the next $600 customer.

So you end up with this virtuous cycle of acquisition. Lead magnets are a great example today. How many people have you seen, and Steve, you’ve probably seen this quite often, a lead magnet is this fluffy, high-level, really not interesting piece, because all somebody’s hoping for is to just get some attention. I want an email address, I want a phone number, I want a first name, last name on an opt-in, for example. In my opinion, the world has moved past low value free lead magnets as an efficient way to get clients.

Because two things, the company, the provider is putting together packages that come from a place of being afraid to give any real value because they keep that for the future. Well, when they pay me, I will get the good stuff. Well, we actually package the good stuff on the beginning, the high value things to show somebody what it’s like. And then the second is product, which is how do we organize all of this? And yes, I mean, Alex speaks to how do you create leads and how do you create offers. We actually look at evaluating the entire flow from lead to customer, customer to client, and I can speak to what that means. So that it’s all aligned, so that we can make money at every step. And that is a different strategy than a lot of people I see deploy.

Okay, so let’s get into it. So lead to customer to client, so what does that look like?

So a lead is someone who is both problem and solution unaware. Meaning I am in my current state. It is not my ideal state, but I don’t know exactly how to move forward. Like I don’t know exactly what the source of the problem is, and therefore I cannot take action to help solve it. They’re effectively unaware across the board. So our language and one trap that I see people try to do is they try to market to sell instead of market to create awareness.

Many people try to do is they try to market to sell instead of market to create awareness. Click To Tweet

So what we do is we say, okay, you need to be problem aware so that we even have a chance of being the solution. So moving somebody from a lead to a customer, a customer is a lower ticket but profitable offer that allows someone, and it’s usually a one-time sale, that allows someone to come into our world under a program that uncovers the problem very clearly.

And this can be around a diagnostic, it can be around a small workshop or something like that, which uncovers the problem. So we’re organizing the thoughts of the lead to say, if you feel like this, if you’re this person, come here and we’re going to create some clarity for you. At the end of that, now they’re clear about what the problem is, now it’s, well, do you want help? Do you want to solve that problem? And there’s lots of ways you can do that. And we have the inside track to be the next kind of step in that process.

So I see more often than not, and again, I focus on service businesses primarily. Service businesses are, let me create a video and then do you wanna buy my 12 month high ticket $50,000 coaching offer as an example or high ticket recurring service. It doesn’t work that way anymore because people are distrusting. We have to add an interim step in the middle and it’s working very, very efficiently now because it’s repackaging from an authentic place of documentation and demonstration. So there’s alignment across the board.

So you create the awareness, then you sell a low ticket offer that allows you to essentially feed the marketing machine.

It’s a non-recurring offer. It doesn’t have to be low ticket. It can be a thousand dollar, or one day intensive. It just has, it’s not a, it’s not the core offer, meaning not the thing that you ultimately want them to end up with. It’s a thing they can say yes to around one element of the problem that they have. What is the biggest, you know, what is the thing that we can solve that has the biggest value in the shortest amount of time? It’s typically where we focus.

Yeah, love it. Okay, that’s great. And then when you solve the problem, then you create an opportunity to be a trust and then you can pitch your core offer. Is the idea?

Well, usually once you solve the first problem, then the first problem begets other problems. And then you say, well, Steve, now we’ve solved, now you know what the problems are. We’ve done an evaluation of the business. And I love some of your frameworks around this. I think they actually run kind of in parallel, which is, well, now you need implementation, you’re going to need accountability, you’re going to need support, all of those things. So we look at what we call the how and now, which is the implementation side, is what we get paid for. The awareness side is much more of a, that’s more where we play in the free area, because I think that’s ideas are cheap, insights are valuable.

Okay. So, you got the lead, you created the awareness, then you sell either a low ticket or at least a non-recurring, non-call service. And that is going to reveal other issues. You solve this, but then, okay, but how do you move forward? Then you realize that you were not aware of other issues that you could solve and now you build some trust. So it’s an opportunity to get that customer that was just created with this simple offer into a recurring relationship, which is going to lead to solving all the other problems. And then you have a client, essentially. So that’s step three, is you create the client after you solve the first problem and maybe then that comes to the definition of first the customer and the client, client is the recurring customer.

That is correct. And then we drill down into each of these. This is what we create, which is somewhat unique to each client is what is the offer at each step can be very different for each business. I don’t have a, everything I do is not cookie cutter. It depends on the type of business and what relationship they have with their future customers.

So that leads me to the question, how do you package your service? So you talk about MVP for a service business. It’s the minimum viable product for a service business. So how do you do that? You know, in tech, when it’s all about innovation, it’s about coming up with a new idea, I guess, for service business, which would be a home service, maybe a SaaS business service, but could be a really simple service. How do you create that minimum viable product that maybe becomes your non-recurring non-core offer that you can then package? What’s your process for that?

Yeah, so one thing to be aware of here, I think we’ve all asked ourselves the question, what is the most important KPI or metric that we should pay attention to? Under about a million dollars a year in revenue, in my experience, the only metric that matters is the number of offers that you make. And the reason for that is under a million dollars a year in revenue, you are effectively trying to navigate your way towards what we term product market fit, which is taking the thing I offer and making sure that it fits so intimately with the core client, my avatar. It’s a discovery process.

And the reason why so many small businesses either fail or stay small is because they either go too slowly down this path and they end up, they run out of resources or their ego or pride gets in the way and says, well, I designed this thing, the market has to like it. So to answer the question, how do we go through the MVP process is to understand very clearly who our core client is, what is the avatar?

And we actually go much more in depth than most people around that. We understand, you know, above and beyond their demographics, but you know, psychographics, what do they think, what do they feel what their biggest fears, what their aspirations, etc. We got a very clear profile of who that person is. And then we say, what is the what is the first problem that we want to solve for them to your point, you know, creating a customer.

To go through the MVP process, understand the core client first then investigate, sell, and build. Click To Tweet

And then we have a thesis of how to do that. So what we will do, very tactically, is we will go and find five to 10 people who fit that avatar. We have not built the process yet, product yet. We will say, Hi, Steve, my name is Tim, I am thinking about building a thing. I’m going to do a workshop, or I’m going to create a service I can help consultants clarify what their zone of genius is and help them stay in that zone of genius as long as possible, and then build a team around them to support the rest of the business.

I think I’m gonna do like a six week program. It’s gonna have three components to it. And I think I’m gonna charge probably $497 or something like that. If I built this program, is that something that you would be interested in? And you can talk about price or not, it’s somewhat irrelevant actually in the beginning. And you can say, oh, that sounds really fantastic, it’s really interesting. And then I might say, well, is there anything I’m missing? And you’d say, well, hiring or building a team or something like that.

And we kind of work through the process before we’ve built the program. Once we get at least 50% of people to say, I would be interested in that, then we start to go and build, but we ask for a deposit in advance. So I’ll say, great, I heard all the feedback. So Steve, I came back to you, we spoke a week ago and you said you’d be interested in this thing.

The program’s gonna look like A, B and C and I’ll have it ready in about three weeks. It’s gonna be $497 and I’d love for you to be a founding member. How would you like to pay?” Then I take that $500 from 10 people and now I’ve got $5,000 in my war chest to go and build the program. And I can usually do that for less than that. And I have my first 10 customers. So we investigate first, understanding what the process is and what the product should look like. Then we sell, then we build.

Yeah.

And most people get that order backwards in my experience.

Yeah. It sounds like the product launch formula idea, which was very popular in the 2000s. I’m trying to remember the author of the book, Jim Edwards, the product launch formula. Perhaps. Yeah, that makes perfect sense. So you go out, so how do you then test? So how do you find those five to 10 people? You said that number one KPI is how many offers you make. So would you be making multiple offers and then one of them would touch people and that will bring you the 5 to 10 people? Is the idea?

Great question. So in the beginning, if you and I spoke and I said, I’m thinking about this program, you might say, that makes no sense to me. I would never buy something like that. And I might say, well, why? And you’ll say, because it already exists, or this person’s doing it, or it doesn’t solve the problem, or whatever it might be. But now I found out the information before I’ve dedicated a dollar of time and money to building it.

So you actually start to kind of triangulate your solution around an audience, and then you go back to that same audience. And for me, I actually talk to 50 or 100 people before I get 10 that’ll buy, is usually what happens. And it’s cool, I do it cold. I did this before I launched my consulting business. I went to LinkedIn and I said, hey, this is my experience. This is my point of view on the world. You’re someone who sounds like might be able to fit, to get benefit from this thing I’m thinking about building. If I was to build it, would you be interested?

And most people said no, but I got about 25 people who said, if you built a six to 16 week program based on these principles, I would be interested in that. I said, great, I’ll come right, I’ll come back to you. And a week later I said, I’ve now designed the program. It’s going to look like this, this and this. Out of the 25 people that I found, 15 of them said that fits what I, what we talked about and actually is even better than what we talked about. And I sold it for $9.97.

Awesome.

So I created a $15,000 revenue stream off of something that didn’t exist. And I think in services, the more often you can do that is test different things with your existing audience or new audiences, the better off you’ll be.

Okay.

It works both ways.

That makes sense. So when you say the number one KPI is how many offers you make, give me an example. So someone starts a business, or maybe you started this consulting business. How many offers did it take for you to get those people interested?

It took me about a hundred, but I’ll give you an example. I know people that’ll, think about what you do every day. When you’re starting the business, where do you dedicate your time? And this is something I’ll ask people in the last 20, you know, 48 hours. How many times did you go to someone who is not a customer and ask them for a sale. And most small business owners are too busy, well, I sat behind a computer and I designed a program and I’m doing all the work and I was on Canva.

Most small business owners are too busy with activities that are never actually being shown to the market. Click To Tweet

Then I spent time on Chat GPT to try to refine this thing. They’re doing a lot of activity, but it’s never actually being shown to market. So you actually don’t know what’s gonna work. And so what I encourage people to do is simply to say, you should be at, you know, you should be maximizing the number of times you go to market, go to your potential avatar and ask them to commit something. It doesn’t have to be money, it can be feedback, it can be, you need to pitch so many times that when you go to market and ask for money, you’ve already done all the work.

You’re not, you, that’s not when the testing begins. The testing begins far in advance. And it sounds very simple and others have had similar concepts. The devil is in the details and it’s in the doing. And I will tell you nine out of 10 people don’t do this. And then they wonder six months later why they’re not getting traction. I’m trying to sell this thing and I thought it was a great idea and based on my experience, it should work.

As I mentioned, I came out of the investment business. There are so many investments. I could give you the list of times that we were right, but we were early. We had a thesis, we believed it, but the market told us otherwise. And that is a core fundamental thing in being an entrepreneur.

So do you find that people are more receptive to this kind of causative, inquisitive approach than even having a fully baked product?

Yes. In my opinion, yes. Because they wouldn’t be in the market if their problem was already solved.

So how do you ask them what the problem is? How do you even know that they have that problem? Do you formulate a thesis and you say, hey, I think that your kind of businesses have this problem. I am working on a solution. Would you be interested to answer some questions? Is this how you do it? Or?

Yeah, it could be if you’re local, I’ll offer to buy you a cup of coffee. If you’re online, can I take 10 minutes just to run something by you? Most people want to be helpful, but they don’t want to be pitched. So if I reached out to you, I would say, hey, Steve, I have this idea. I think it’s something that you might be interested in. Or would you mind spending 5 or 10 minutes? I’d love your feedback.

Yeah, I love it. I think that makes complete sense.

Versus how many times have we gotten cold DMs, you know, do you want to get 10,000, you know, make $10,000 this week, I have an offer, I can get you more sales called. It’s, everybody’s always pitching, but they’re blind pitching. This is a consultative co-creative approach to it. It just happens to be through that testing and kind of fleshing out process.

You also happen to have a warm audience of people you can go back to and say, hey, Steve, I really appreciate all your feedback a month ago. I went, I heard what you said, I went and did this, and now I have the product and I’m gonna launch it and it looks like this. Would that, you know, is that something you or someone you know might be interested in?

And if you go, yeah, you solved all the problems that I had, or you took my feedback and, you know, a friend of mine would be someone who’d be perfect to talk to. We just need to get the ball rolling. But so often we try to do it blind, and we’re kind of throwing things over the wall and seeing what will land. This is an approach that I’ve just seen in my experience. I can only speak to what worked for me. I’m not a marketer in the traditional sense. I personally like to stack the deck in my favor and reduce the risk of failure. And this is one way that I’ve been able to see it happen.

Okay, that’s fascinating. So we talked about the avatar, you solve the first problem, you build the product, and then you also had a little framework around how to build that MVP. And you said it’s the why, the what, the how.

Yes, I’m glad you brought that up. Yes. That’s a fantastic framework.

Can you explain?

I can. So there are four components of when you’re building any kind of product or service that you should consider. And we call it the why, what, how, now framework. So the why is why should somebody care? And why is it relevant? The what is the meat of it? So what are we talking about? What’s the problem that we’re solving, et cetera, et cetera. And that’s all around awareness.

So if I was to draw this out, I would kind of give it to you as a, you know, if you think of a vertical axis, that’s on the right-hand side of a North-South axis. So that’s around why should we care? Why is it relevant? What is it all about? The left-hand side is all about action and that is the how and the now. So how is around implementation, structure, strategy, tactics, etc.

And then the now is what do we do now? How do we actually implement it? What’s the actual – what’s the way to take action? And so as we think through this process, as we’re creating, you know, MVPs, it’s why does somebody care? And when you walk through that, that is actually how you pitch it. It’s how you talk about it. It’s, you know, so Steve, we’re talking because I’ve seen a gap in the marketplace of how painful it is to be, you know, an online marketer these days and trying to stand out and differentiate is really tough.

So I’ve created a different system which helps you get more in less time or whatever the pitch is. And it involves doing a different approach. And then the how is this kind of tactical framework. And the now is – and the next step to take is we’re going to do this. It allows you to really stack the deck in your favor when talking to either existing or potential clients. And it’s a framework that we teach inside of our community.

And what about the forward?

Oh, there’s only four components to it. So it’s why, what, how, now, framework, maybe is what we were talking about, I think, prior to this. And then the forward is, then we move forward. It’s actually iterative if you think about it in cycles. Then you get to the end and then you start back again. And it actually kind of continues to build upon itself.

Yeah, but I like this idea, the why, you know, tapping into the emotional desires, needs, and then the relevance. So connecting it to where we are. So for example, AI may be becoming very relevant for people because unless they harness AI, they’re going to lose productivity and it’s the time to do it. Okay, fascinating. So Tim, if listeners would like to learn more, they would like to get in touch with you, where do you direct them? Where should they go?

Yeah, LinkedIn is probably the best place. Tim Calise, T-I-M-C-A-L-I-S-E. I do monitor all my own DMs and private messages, especially on Instagram. So if there’s anything I can do to help you, I have some free frameworks I’d love to provide. I’m here because I’ve spent the last 20 years in the battle, the man in the arena analogy. And so if there’s something I can do to help you hopefully avoid some of the heartache and the learning lessons that I’ve had along the way, I’m happy to do so.

And if someone has a sub-3 million revenue business and they’re looking for someone to help them to grow it and maybe invest in it, what, you know, other than being a small revenue business, what are you looking for?

Yeah, so recurring revenue is some memberships and subscriptions are really where I focus. So either if you have a existing service that has recurring revenue and you’re looking to hopefully improve it or optimize it, or if you have a service business that is a lot of one-time revenue and you’d like to have recurring revenue, we install those systems into just about every service business out there. And I have a free framework. Just send me the word Steve on LinkedIn and I’ll actually give you what I call my product expansion framework. And it’s a way to help actually install or improve a recurring revenue component of a service business. And I’ll give that to you as a listener to the show today.

That’s great. So message Steve to Tim Calise. I’ll do it myself after the break. And then you can get this lead magnet or this white paper on how to create recurring revenues, which is super important. So Tim, thanks for coming to the show and you shared a couple of frameworks. We’ll now have the trouble deciding which one to promote. So that’s maybe our way of creating multiple offers. For those of you listening, stay tuned because every week we have an exciting entrepreneur who is bringing a framework you can use in your business. Thanks Tim for coming.

 

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