If I Wanted to Scale An Online Store, Here's What I'd Do

AAlex Hormozi
Advertising/MarketingSmall Business/StartupsManagementHome Repair

Transcript

00:00:00You're about to meet Luis.
00:00:01He runs an online store that sells railing.
00:00:03Although he's doing $2.5 million in revenue, the problem is that 81% of his customers are
00:00:07coming from a single source, which is Google Ads.
00:00:10If that changes or stops working, his business could be in very serious trouble.
00:00:13So first, we're going to dive deep into the business and then we're going to break down
00:00:16all the tactics that he and you can use to scale.
00:00:18And at the very end, we're going to check in with Luis one year later to see if those
00:00:21tactics actually helped him scale.
00:00:23Hi, Alex.
00:00:24My name is Luis Loera, the owner of Optimum Works, and we are a railing company and we
00:00:29sell a variety of railings online.
00:00:31And who we help are homeowners, contractors, and designers.
00:00:35And here are some of the examples below of some of the products we make.
00:00:39Sweet.
00:00:40How much do you make?
00:00:41Currently, we're doing $2.5 million in revenue, $384,000 in profit, and our net margins are
00:00:4715%, and our LTV to CAC is one to one.
00:00:52Okay.
00:00:53So something's weird there, obviously.
00:00:56So what do you want to have happen?
00:00:57I'm trying to build the best railing company in the US and I want to 10x revenue growth
00:01:02and double profit.
00:01:03That is an ambitious call.
00:01:05So how do you get customers?
00:01:06All right.
00:01:07Currently, we're getting them through paid ads and 81% of our customers are coming from
00:01:11Google ads.
00:01:12And we spend about $21,600 a month on Google.
00:01:16And we spent on Meta $4,500 a month, and we have a couple other sources of traffic below.
00:01:24So what's the issue?
00:01:25What's the problem right now?
00:01:27We spent over $300,000 in marketing last year.
00:01:30Our CAC is high and it actually doubled from last year and our conversions are too low.
00:01:34Got it.
00:01:35So you have a conversion issue.
00:01:36So any other problems that you're dealing with besides that?
00:01:40Another problem is that not enough customers are repeat buyers.
00:01:43It's only about 10% and we want to increase our LTV.
00:01:47So you have a different customer mix.
00:01:48So you've got DIY guys and you've got designers, you've got contractors, but 70% of your business
00:01:53is DIY.
00:01:55What percentage is custom versus like just normal off the rack stuff?
00:02:0070% are just like handrails and like stuff that people buy directly on our website.
00:02:06And then 30% are custom orders.
00:02:08What percentage of sales are coming from people buying on the site versus a phone?
00:02:13The last time I checked, it's about like 10 to 20% on the phone.
00:02:17All right.
00:02:19So many ways to make money here.
00:02:20So I'm going to do this a little differently than I normally do.
00:02:25Instead of giving you like a lot of different things, I would like to just give you like
00:02:29two or three things so that you have a high likelihood of actually doing it, that have
00:02:32the highest impact on the business.
00:02:34But fundamentally, I think that we could probably fix a lot of this with like two things.
00:02:39Okay, great.
00:02:40All right.
00:02:41So why don't you go over this way and then we'll do some live breakdowns.
00:02:47Let's pull up the meta ads.
00:02:49Okay.
00:02:50So this is the only ad that's running right now.
00:02:54All right.
00:02:55So are you running these or somebody else running these?
00:02:57I have a marketing agency that I work with and they're doing like the ads, but we've definitely
00:03:03like scaled down on meta and we're only spending like $1,000 to $2,000 a month right now.
00:03:08But we actually use a post-purchase survey and over 90% of our customers are saying they
00:03:13found us on Google.
00:03:14Okay.
00:03:15Yeah.
00:03:16Got it.
00:03:17Well, that's good to know.
00:03:18Yeah, let's do Google real quick.
00:03:19Okay.
00:03:20The CAC to LTV there doesn't make sense because it says your LTV is lower than your CAC unless
00:03:25you're losing money.
00:03:26But it doesn't sound like you're losing money.
00:03:27So something's wrong here.
00:03:28What I'm seeing here though is that like we have a clear data attribution issue.
00:03:33For me to say, "Hey, let's spend more on Google, let's spend less on Google."
00:03:36It's like, "I have no idea.
00:03:37We don't have any data."
00:03:39So we have numbers, but they're not useful.
00:03:41We have to get the attribution because you're at a business where like you were spending
00:03:44money on ads.
00:03:45You're making money, but you have no idea where it's really coming from besides your post-purchase
00:03:49traffic, which says Google.
00:03:50But when we look at the Google stats, it says you're losing money.
00:03:53So like here's my red flags, right?
00:03:55So number one is you're showing LTV to CAC of 0.41 to one, which makes zero sense.
00:04:02Because that would mean that every month you would just be actively losing money.
00:04:04And since 80% of your sales come from Google traffic, then I would say 80% of your revenue
00:04:09should be losing money, which you're not.
00:04:11So there is an alternative possibility, which is super, you know, this is possible, which
00:04:16is that the agency that's doing this for you has no idea what they're doing and you're just
00:04:20getting a lot of referral traffic from people who bought stuff from you in the past.
00:04:24And you're actually just functionally blowing money out the backend and not really getting
00:04:29many more sales.
00:04:31I would like, if I wanted to get, if I were, if I wanted to be a ballsy, a ballsy person,
00:04:35I would consider looking at shutting off all the ads and seeing how sales change.
00:04:39Yeah.
00:04:40I mean, yeah, that's the only way to find out, but I mean, if we, like last year, you know,
00:04:46we spent, you know, uh, like 21,000 a month average, and this year we've been spending
00:04:5440,000 and our, and our revenue has doubled.
00:04:57That data of we spent more and we made more that tracks, but it's not being tracked.
00:05:04Yeah.
00:05:05Yeah.
00:05:06And so that's, so based on that, I would be like, all right, well, something's working.
00:05:12And when you spend more money, you're making more, but we have no idea.
00:05:15And so it allows us to do zero optimization and you're at the point in the business that
00:05:19like, you want to go from three to 10, 10 to 10 to a hundred.
00:05:22You have to know these data like the back of your hand.
00:05:24Yeah, definitely.
00:05:25I'm at that point where it's, this data is the most important thing right now.
00:05:29Like you kind of have a blanket strategy of like, well, more people find out about me,
00:05:32more people buy, which I'm all for.
00:05:33No, I mean like I'm game for that, but now we have to be more, as you get to colder and
00:05:38colder audiences, um, we have to be more targeted with the spend.
00:05:43If we were to re-imagine the business, I think that, and to be clear, I don't want to break
00:05:47the business.
00:05:48Obviously it's making money.
00:05:49There's nothing wrong with the business, but I would probably optimize for DIY plus custom.
00:06:04And the reason I'm thinking that is for a number of things.
00:06:07So number one is you already have a strong foothold in DIY.
00:06:09Number two is that they're less price sensitive than the other buyers, which means like, even
00:06:14though the ticket and when can you pull up the customer data real quick?
00:06:18So if we look here, right, the average order value is not like, so if you have, if contractors
00:06:24were like $20,000 and I'd be like, all right, well maybe we should look harder at that.
00:06:27But you're, you're, you're, you're really close in terms of average order value.
00:06:30And so there's no real benefit to going to these highly price sensitive people who are
00:06:35clearly shopping you between a bunch of different sources versus the people who are like, I think
00:06:38this stuff's dope.
00:06:39I want to buy from them, which is I'm guessing what the DIY people are more similar to.
00:06:44Yeah.
00:06:45Right.
00:06:46And so the, basically like if we think about this from a strategy perspective, if you sell
00:06:51to the contractors and designers, you're going to be more and more of a commodity for them.
00:06:56And then they're just gonna be shopping out between a bunch of other shops that do the
00:06:59assembly and whatnot.
00:07:00Whereas DIY, we can drive more gross profit because we could easily take the 873 and probably
00:07:07bump it to a thousand and we have the same average order, but our gross margin would be
00:07:10so much higher.
00:07:11Yeah.
00:07:12And that's where I think the magic is.
00:07:13So it's like, even if we have the same average order or close to it, we could sell way more
00:07:18of them.
00:07:19And the gross margin on each might be double or triple because the margins are thinner in
00:07:22the business.
00:07:23Yeah.
00:07:24That's where I think that like the overall, like if I own the business tomorrow, I would
00:07:27probably reorganize it so that it's just like, this is the home for DIY railings and it's
00:07:32showing all the cool stuff you can do for custom.
00:07:35And then people are just like basically opting in, booking a call and at the end of the call,
00:07:40we can solicit the sale.
00:07:41Yeah.
00:07:42And I think you set that agenda at the very beginning, which is like, Hey, um, we're going
00:07:45to go through like the, you know, these things.
00:07:49So it would look like this.
00:07:51So it would be, you know, custom, they click the button.
00:07:59This thing goes here.
00:08:00They put in there, you know, form, yeah.
00:08:02Form, and then we can have their calendar, right?
00:08:06And this can be together, right?
00:08:07Cause the calendar could take the form.
00:08:09Then after this, we have a post or pre call, but post opt in a video sales letter.
00:08:17And this is like, Hey, this will give them price ranges.
00:08:21And then on the nurture, which you'll do via SMS here is, uh, basically you ask for Bant,
00:08:29just budget authority need timing.
00:08:31And so that's just going to be like easy little text messages being like, Hey, just making
00:08:34sure you're the person like, does your wife need to be on the call?
00:08:37Who else needs to be on call to make a decision?
00:08:39Just because, and I would just be like, listen, we're not a sales company, but I'm happy to
00:08:42hop on the call to figure out what you need so we can get, so we can get your order in.
00:08:47And we're really framing it as like, you're going to be buying on this call.
00:08:50So this isn't like a long sales process.
00:08:52Like I'm just making sure that no one's wasting anyone's time.
00:08:56And then on the call, that is a, I think that is the worst phone I've ever drawn.
00:09:03I don't even really know what it is.
00:09:05Um, I'm going to, I'm going to put an attendant there and maybe we'll put a couple of keys
00:09:11here.
00:09:12I don't know if this is making it better or not, but on the call here, I can draw this
00:09:17one really well.
00:09:18On the call.
00:09:19We'll have a nice, there we go.
00:09:20We got our credit card.
00:09:21That one, that one I did.
00:09:22Okay.
00:09:23I can draw the money.
00:09:24All right.
00:09:25Yeah, and I think that will allow you to one, like, I could see a world where your DIY projects
00:09:32are 1300, 1500.
00:09:34Yeah.
00:09:35Like no problem.
00:09:36And then also you probably have like Klarna or a firm or one of those financing options.
00:09:42Oh yeah.
00:09:44Like to Shopify has like their own like financing.
00:09:47Yeah.
00:09:48Yeah.
00:09:49And so are you processing the custom orders through Shopify as well?
00:09:51Yeah.
00:09:52Yeah.
00:09:53And so here it's like, you can say, cool.
00:09:54Hey, like I would just do AB in terms of the close, which is like, Hey, do you want to use
00:09:58a credit card?
00:09:59Do you want to finance?
00:10:00Same to us.
00:10:01Same to you.
00:10:02Yeah.
00:10:03Um, you know what you would you prefer?
00:10:04Yeah.
00:10:05And then that way you can just lock in on the call.
00:10:06And it's like, and um, and then like here you can also prep them saying, Hey, um, I give
00:10:12a $200 discount for people who move forward on the call.
00:10:15And that's just because it saves us an administrative headache for taking more calls after that.
00:10:19So I tell them before they get on the call, so it's like, they know they're going to buy
00:10:22cause I just want to, I don't want you on multiple calls.
00:10:24I think it's a waste of your time.
00:10:26And I think this process, we're just basically leaning into the people that are the least
00:10:30price sensitive that you already have the most of, and they actually just dialing in the sales
00:10:36process here.
00:10:37And this is where I think you want to like basically let them dream, which is, I'd be
00:10:40like, Hey, there's like, there's 101 railings that you can, that you can put into a house.
00:10:45If you have a modern house, this is might be the type of look you're looking for.
00:10:48If you have a this, this might be what you're looking for.
00:10:50If you have a, this is my, and if you just have wild ideas, let me show you four different
00:10:53wild ideas.
00:10:54And I'm sure that there's custom ones, but the reality is that you know that there's like
00:10:57three or four that like a lot of people just think are really sick.
00:11:00Right.
00:11:01And then just show those ones in the video and you can give the ranges here and be like,
00:11:05obviously it's independent, like on shipping and whatnot.
00:11:07Like I think that if you literally just felt this process, you would probably be somewhere
00:11:11in the 50 to 60% close rate range.
00:11:14And we would probably double the average value of each customer.
00:11:19So when we were talking earlier, you said you wanted a 10X.
00:11:23Well, just from hypothetical math here, we could probably double the close rate and more
00:11:27than double the gross margin for a customer.
00:11:30So that's a 4X.
00:11:31Okay.
00:11:32So for the VSL overall, so short for video sales letter, for anybody who's curious, is
00:11:38that we want to have basically a hook, two O's, a hook at the beginning.
00:11:44So we go, we follow the same process for this as I do for like a YouTube video.
00:11:49So we're going to have proof that we can help them, we have a promise and then a plan, which
00:11:57is like, this is how, what we're going to cover in this video, right?
00:12:00And ideally have some sort of picture or roadmap that displays these things.
00:12:05That way there's a visual of like, okay, this is what's happening.
00:12:08Real quick.
00:12:09I'm going to show you the exact 10 stage roadmap from zero to a hundred million plus that less
00:12:13than 1% of companies finish.
00:12:15I've now done multiple times.
00:12:16And so I can say with a lot of confidence that these are the stages as headcount increases
00:12:20that you need to get through.
00:12:22And I broke each of these down by eight different functions of the business.
00:12:25What the constraint feels like, like what are the symptoms of it when you're going through
00:12:29it?
00:12:30And then what steps we actually took to graduate.
00:12:31And we've done this across software, physical products, service businesses, brick and mortar,
00:12:36all of this.
00:12:37And it works.
00:12:38And it's my gift to you.
00:12:39It's absolutely free.
00:12:40And so the links in the description, but you just go acquisition.com/roadmap, just enter
00:12:44your info and it'll spit it right back to you all free.
00:12:46The hook is like, Hey, have you ever wondered, uh, or like, have you ever looked at your
00:12:49railing and be like, man, if I just changed this, my whole house would look different.
00:12:53Um, and this is probably super high ROI from a, from a home resell perspective.
00:12:58So just changing the railings in house, there's a recent report that came out that showed that
00:13:01like railings from an aesthetic perspective only cost a fraction of what they add in home
00:13:05value.
00:13:06And so the way I think about it, railings are basically free, right?
00:13:13What a great, what a great, what a great anchor, right?
00:13:15Um, now you might be wondering like, how do I, you know, how do I think about like buying
00:13:20a railing?
00:13:21And so it's like, there's actually four steps, you know, it's a buying a railing.
00:13:25There's the, you know, the materials, there's the, you know, the number, there's the hook
00:13:30into the wall, the whatever, you know, like, you know, whatever those steps are.
00:13:34Right.
00:13:35And so you go for each of those.
00:13:36I'm going to show you.
00:13:37Perfect.
00:13:38Yes.
00:13:39Yeah.
00:13:40And this looks great.
00:13:41This is awesome.
00:13:42So this one is where I'd go like back and forth, how to choose a right hand rail video.
00:13:49Yeah.
00:13:50I have a bunch of different videos.
00:13:51And so at the end of this, so we're going to go through that whole process, right?
00:13:56And uh, at the end, so we're put this, this is still in the intro, um, I'll explain pricing
00:14:04cause everyone's gonna be like, Oh my God.
00:14:05So that way it'll, it'll keep them cause they're like, Oh, I want to know the pricing.
00:14:08I'll explain pricing and kind of like set expectations for delivery times and things like that.
00:14:11Right.
00:14:12And then you go through this, which is kind of like the meat of the video.
00:14:15And then we go into price ranges and expectations and I would still say, cover this here, which
00:14:24is like, Hey, um, like obviously these things, uh, they are free in terms of the fact that
00:14:29they can add value to the house in excess of what they cost, but they obviously cost money
00:14:33were made here in America or whatever it is.
00:14:35Um, so, you know, come to the call knowing what your budget is.
00:14:38Cause then that way, like I don't waste your time with like making railings out of diamonds,
00:14:41which we can do by the way, uh, you know, you can make a joke, um, authority, which is like,
00:14:46okay, uh, if you have your wife or husband who needs to be on the call, um, I'd recommend
00:14:50you guys do it together.
00:14:51Cause sometimes you got one person who has the taste and other person who handles the
00:14:53money.
00:14:54Like you want both of you guys on the call.
00:14:56And then from a need perspective, um, they're here so you don't have to cover that one.
00:15:01Um, they have pretty high intent of watching railing videos, uh, and then it's just timing.
00:15:05So it's like, Hey, and also I just want to know, um, basically what's your timeline in
00:15:09terms of, uh, getting it installed.
00:15:11And if we were to, you know, get it, get it shipped out to you, like how fast do you need
00:15:14it?
00:15:15Yeah.
00:15:16Right.
00:15:17And I like thinking like how fast do you need it?
00:15:18Because that way we can try and push the urgency in the sale, uh, to get them to buy.
00:15:21But it basically, this is it.
00:15:22So it's like we have our, we have our hook at the beginning.
00:15:24We have our proof promise plan picture, and then we set our expectation to open loop to
00:15:27the end.
00:15:28We have how you pick the hand railing.
00:15:29And then we say, cool.
00:15:30Now that you like that.
00:15:31Um, if you're like, if you're like, I'm not sure it's like, that's why we have the call
00:15:34because listen, it's an important decision.
00:15:36It's going to change the way your house looks.
00:15:38And uh, I've done this a lot of times and I, and I attended, you know, I can, I can shepherd
00:15:43you through this process really well.
00:15:44Okay.
00:15:45And that's it.
00:15:46And this video probably you could be looking at, you know, five to seven minutes.
00:15:49Okay.
00:15:50Doesn't have to be a little bit.
00:15:51And that's it.
00:15:52And then we just have our, have our texts, um, our texts that we're sending afterwards,
00:15:57which we're really just looking for, uh, personal info again.
00:16:01And then reaffirming these, which is like, Hey, just to make sure, what did you say your
00:16:04budget was?
00:16:05Um, you know, are you going to have your, your spouse in the car, whoever makes the decisions
00:16:08and in terms of timelines, where are you looking for?
00:16:10Okay, cool.
00:16:11So I'm looking forward to call later today.
00:16:12Uh, and yet we'll move forward at the end of that call.
00:16:16I honestly only want to give you this because I think that's the only thing that matters.
00:16:22Yeah.
00:16:23Cause I could, like I said, like I could, I could give you 20 more things, but I'll give
00:16:28you one more.
00:16:29Okay.
00:16:30I'll give you one more.
00:16:31This is all, this is all I'm going to do, we need one more, um, which is, uh, the long-term
00:16:36nurture.
00:16:37Yeah.
00:16:38I think it's probably worth building this out.
00:16:41How big is your email list?
00:16:42Uh, like 10,000.
00:16:44All right.
00:16:46So, uh, if you have basically a 10,000 person list, you ask, you had the original problem
00:16:53that you're dealing with, which is that you don't have a lot of repeat purchases, right?
00:16:57Yeah.
00:16:58I think that there's like, there's like, I don't want to force continuity in this business.
00:17:02I don't think that's, I don't think that's really the play.
00:17:05Yeah.
00:17:06Um, I think that what we can do is try and consistently market so that the next time they
00:17:10do an expansion, we're the first ones they look for, but the only way that we can do that
00:17:14is just through consistent long-term nurture.
00:17:16Okay.
00:17:17And I think that will compound like a snowball.
00:17:18Like it'll just keep building up and I'll bet you that like you have, I mean, you're doing
00:17:21two and a half million a year, how old is the business?
00:17:23It's, uh, five years old and like I barely went full time two years ago.
00:17:28Yeah.
00:17:29Okay.
00:17:30So if it's five years old and you have a 10,000 person listening in two and a half million
00:17:32dollars, like that list is probably a very good list.
00:17:34Okay.
00:17:35Because that's a really small list relative to the revenue.
00:17:37Yeah.
00:17:38And so, um, basically I would like you to just commit to two times per week, sending an email
00:17:45to the whole list.
00:17:46And I just wanted to do one is a before and after.
00:17:52And the other is cool shit.
00:17:57And if you want to have a third, which you can rotate, like, you know, this could be the
00:18:02next week.
00:18:03You do this one is an FAQ, which is what are the most common questions that people ask that
00:18:08don't buy?
00:18:09Yeah.
00:18:10So it's like, these are like bait.
00:18:11And then this is like overcoming the concern that you immediately have because you're like,
00:18:14Oh, I do want that.
00:18:15But you're like, Oh, but who's doing the install or like how, how much is shipping?
00:18:19Um, like just these normal, random questions that people probably already know that 20 questions
00:18:23people ask.
00:18:24Yeah.
00:18:25Just take all 20 questions and just rotate them, um, throughout the year.
00:18:28Just like kinda kinda rotate them consistently.
00:18:32Yeah.
00:18:33You could do that.
00:18:34But that's it.
00:18:35Like if we just do this and then every email I would structure, so we've got our subjects.
00:18:40That should be an E there we go.
00:18:42Um, and then underneath we're going to have some sort of immediate reward.
00:18:47So um, if we can, I like to do really cool quotes.
00:18:51Um, what do you think?
00:18:53Like something immediately like that would be sweet, just like an image for like a new
00:18:59email.
00:19:00Yeah.
00:19:01For like following this, this, this framework, like rail transformation.
00:19:03Okay, cool.
00:19:04So we would just do probably a picture here should be like, check this out.
00:19:08Because the thing is, is people who are like, when I improve their home, it's kind of like
00:19:10porn for them.
00:19:11Like they're just like, they get super obsessive with it.
00:19:14They love it.
00:19:15Yeah, no, exactly.
00:19:16So it's like, check this out.
00:19:17We point to this thing and then I would just have my like CTA, uh, or FAQ about this link
00:19:25tier.
00:19:26But the point is that we want to give them a link and then a PS, you know, um, discount
00:19:33or joke, just something that's like, you know, friendly, fun, whatever it is.
00:19:39And I think that you can basically model this as the structure that we use in the emails
00:19:43because these people, they're going, if they love this stuff, then they're going to open
00:19:47it up just to see, you know, what's going on and, and then that's like, that's what's
00:19:53going to bring people back in.
00:19:54Awesome.
00:19:55So it's 80% of people are like, you know, purchasing directly on the website and like, you know,
00:20:01they're just filling out the checkout and like their card info and, you know, proceeding with
00:20:06the order.
00:20:07And then the other, um, 20% that we're doing like custom railing orders is like, they fill
00:20:13out like a custom order form and like they put all that info.
00:20:17Once they fill that out, you know, we make sure like if they have all the correct info,
00:20:23then we'll proceed with the quote and like, we'll, we'll get like an email that they filled
00:20:28it out with all their information and then we'll send them the quote within like 24 hours.
00:20:33So where's the custom quote thing?
00:20:35Yeah.
00:20:36Custom orders.
00:20:37And we have it.
00:20:38So where we actually get also a good amount is that we have it on our, on our most popular
00:20:44railing.
00:20:45Okay.
00:20:46Let me see it.
00:20:47Let me see it.
00:20:48It's in the same project.
00:20:49Yeah.
00:20:50That one.
00:20:51Put it.
00:20:52So it's, yeah, it's underneath.
00:20:53Is that on all of them?
00:20:54That is on the best sellers.
00:20:56That's it.
00:20:57Any reason to not put it on all of them?
00:20:59No, we should put them on all of them.
00:21:01Let's put this on all of them.
00:21:02Yeah.
00:21:03All right.
00:21:04So we're going to make this kind of like up here, all rails, have the custom, custom flow.
00:21:17And so this custom order should then lead to here.
00:21:21Now, this little click thing is basically A, right?
00:21:24Because this is one source of getting those clicks.
00:21:26Can you scroll up, Michael?
00:21:28All right.
00:21:29One of the other things I want is, so can you scroll all the way to the top again?
00:21:34So there was a banner that I saw that said free something and then it disappeared.
00:21:37Okay.
00:21:38Free shipping in the USA.
00:21:40I would have a banner across the top that has custom designs available and make it sticky.
00:21:57So the one that you have currently disappears, like let's keep it sticky across the top.
00:22:03Which one is the Google, or the Google ads linking to this one?
00:22:05Yeah.
00:22:06The Google shopping ads are going to that one.
00:22:08And that's what you're spending your money on?
00:22:09Yeah.
00:22:10Most of my money.
00:22:11Yeah.
00:22:12On those.
00:22:13Yeah.
00:22:14Okay.
00:22:15So just going direct.
00:22:16Direct to the listing.
00:22:17Yeah.
00:22:18I love these little testimonial things at the bottom.
00:22:21That's really nice.
00:22:23Okay.
00:22:24I honestly like, this is all I want you to do.
00:22:26I don't think you need to do anything else because if we just do this right, you're probably
00:22:31looking at like a three or four X like I just like, I don't, I don't want to over-complicate
00:22:36this.
00:22:37Like you have this, you have this, the right customer.
00:22:39Like the reason this is so straightforward to me is because everything is aligned.
00:22:43You have the best customer that you have the most of that's the least price sensitive that
00:22:48you have.
00:22:49That is the most obsessed with this type of product, which leans itself towards custom
00:22:53anyways.
00:22:54And so it's like, cool.
00:22:55Let's and this also, okay.
00:22:56Okay.
00:22:57Does this work for longterm strategy?
00:22:58Yes.
00:22:59Because if you can do more custom stuff and we know this, not that custom, right.
00:23:03But it's enough custom that they feel special about it.
00:23:07And I think part of the pitch is like, listen, you don't have the same railings as your neighbor
00:23:09down the street.
00:23:10And of course, like they would be so horrified of that, but who gives a shit, but somebody
00:23:13else might.
00:23:14Nobody's using the railings one, but, and then we add the nurturing so we can bring customers
00:23:20back.
00:23:21That's it.
00:23:22That's all we would do in terms of doing this in order.
00:23:25I would set this up first.
00:23:28I put these on second because basically it's like, we have to have the system in place.
00:23:32Then we drive traffic to it.
00:23:35We talked about, this is still the video.
00:23:44Then you use this script, then we add in our lead, our longterm nurture because now we're
00:23:51getting more leads through and we're converting more people, but this gives us more longterm
00:23:54follow up.
00:23:57And I think this, you just run in parallel because this is the stuff you're going to do.
00:24:00This is just somebody else.
00:24:01You're going to write a check and you're going to get somebody else to do it.
00:24:04Okay.
00:24:05Awesome.
00:24:06All right.
00:24:07Got it.
00:24:08Rock and roll.
00:24:09Perfect.
00:24:10Boom.
00:24:11Easy peasy.
00:24:12So it's been almost a year since we filmed this episode with Luis.
00:24:13My team jumped on a call to check in on his progress and I'm going to watch it live.
00:24:17So from the time we shot that episode of Cash Cows, it was April, 2025, and we were currently
00:24:23doing $2.5 billion in revenue with $384,000 in profit right now to this day in March, 2026
00:24:32for the past 12 months, we've done $3.6 million with $548,000 in profit.
00:24:37So we've grown our revenue by 44% out of all the changes we discussed that had the biggest
00:24:42impact on profit.
00:24:43It was optimizing for custom orders that has become now a way bigger part of our business
00:24:50and it's become 50% of our business.
00:24:52So once we fixed attribution, we discovered we had campaigns that were breaking even.
00:24:57So what we did is that we took the money out of the losers and put it into the winners.
00:25:02So once we raised prices, our close rate is currently at 20% and we have tripled the amount
00:25:09of leads slash custom orders submitted.
00:25:12The advice that made the biggest difference was optimizing for custom orders and improving
00:25:17the custom orders page and improving the sales process when it came to taking those custom
00:25:23orders.
00:25:24Alex, thank you from the bottom of my heart for all your help and wisdom.
00:25:28You've completely changed my business and you've got me out of the swamp.
00:25:32So I commend you for that and I know it's only up from here.
00:25:36So thank you and I wish you well.
00:25:38So first off, that was awesome.
00:25:39I love hearing the 44% increase in a year.
00:25:41That's bad ass.
00:25:42And to be clear, this is all because of Louise actually taking action on this.
00:25:46It's not because of me or some sort of magic.
00:25:49We looked at the orders that were making the most money.
00:25:52We put more resources towards those ones.
00:25:55One of his differentiators, he had this custom thing that a lot of other people in his space
00:25:58don't have that ability to do.
00:25:59We doubled down on those things, served higher customers on a higher level.
00:26:02And obviously he reaped the profit.
00:26:03So kudos to you, Louise.
00:26:04Appreciate you.
00:26:05And yeah, so you follow the steps and the stuff actually works.
00:26:08So yeah, go do that.
00:26:10Go do what you just saw in this video and hopefully you reap what Louise did and even more.

Key Takeaway

Scaling an online store from $2.5 million to $3.6 million in one year requires moving away from price-sensitive commodity buyers toward high-margin custom orders supported by a structured Video Sales Letter (VSL) and rigorous marketing attribution.

Highlights

Optimum Works increased annual revenue by 44% from $2.5 million to $3.6 million in twelve months by prioritizing high-margin custom orders over commodity products.

Shifting the business focus to custom orders increased their share of total revenue from 30% to 50% while tripling the number of leads generated.

Marketing attribution data revealed that Google Ads campaigns previously showing a 0.41 to 1 LTV-to-CAC ratio were actually profitable, allowing the reallocation of funds from losing campaigns to winners.

DIY customers represent 70% of the business and offer higher gross margins than contractors because they are less price-sensitive and less likely to shop around.

Implementing a structured sales process with a 5-7 minute Video Sales Letter (VSL) and pre-call SMS nurture can achieve close rates between 50% and 60%.

Timeline

Business Performance and Attribution Red Flags

  • The business generates $2.5 million in revenue with 15% net margins but relies on Google Ads for 81% of its customer base.
  • Reported data showing an LTV to CAC ratio of 0.41 to 1 suggests a fundamental flaw in marketing tracking since the business remains profitable.
  • Doubling the monthly marketing spend from $21,000 to $40,000 resulted in doubled revenue, indicating a clear correlation despite poor attribution.

The initial assessment identifies a dangerous over-reliance on a single traffic source. Inaccurate data reporting from a marketing agency creates a 'red flag' where the numbers suggest the business should be losing money on every sale. Fixing this data attribution is the first step toward optimization, as it allows for targeted spending rather than a blanket strategy of just buying more traffic.

Strategic Pivot to DIY and Custom Segments

  • DIY customers are more profitable than contractors because they view railings as an aesthetic home improvement rather than a commodity.
  • Contractors and designers are highly price-sensitive and frequently compare multiple shops for the lowest bid.
  • Custom orders allow for significant gross profit increases by raising average order values without losing the core DIY audience.

The strategy shifts toward the DIY segment, which already makes up 70% of the customer base. By focusing on custom railings for these individuals, the business avoids the 'race to the bottom' pricing found in professional contractor markets. This transition aims to increase the average order value from approximately $873 to over $1,000 while simultaneously improving the gross margin on each unit sold.

The High-Conversion Sales Funnel and VSL Structure

  • A five-to-seven minute Video Sales Letter (VSL) establishes proof, makes a promise, and provides a clear roadmap to the buyer.
  • Pre-call SMS nurture sequences must confirm Budget, Authority, Need, and Timing (BANT) to ensure high-quality leads.
  • Offering a $200 discount for customers who commit during the initial call reduces administrative overhead and multiple follow-up sessions.

The proposed sales funnel uses a calendar-based opt-in followed by a VSL that frames railings as a high-ROI investment for home resale value. The video addresses common concerns and sets pricing expectations before the prospect even speaks to a salesperson. This process uses 'open loops' to keep viewers engaged until the end of the video, where they are encouraged to book a call with high purchase intent.

Long-Term Nurture and Website Optimization

  • Sending emails twice per week to a 10,000-person list maintains brand awareness for the next time a customer expands their home.
  • Email content should rotate between before-and-after transformations, 'cool shit' showcases, and Frequently Asked Questions (FAQ).
  • Adding custom order calls-to-action to every product listing and using a sticky top banner increases site-wide lead conversion.

Consistent long-term nurture acts like a snowball for revenue, especially given a high-quality email list that is small relative to total earnings. The content strategy focuses on 'home improvement porn'—visual transformations that appeal to the obsessive nature of homeowners. On the technical side, making the 'custom design' option permanent and visible across all product pages ensures that no high-intent traffic is wasted.

One-Year Progress Report and Results

  • Total revenue reached $3.6 million with $548,000 in profit after twelve months of implementing the strategy.
  • Custom orders grew from 30% to 50% of the total business volume.
  • Fixed attribution enabled the business to stop funding losing campaigns and reallocate that capital into winning ads.

A follow-up one year later confirms that the pivot to custom orders was the single most impactful change for profitability. The close rate on leads settled at 20% even after price increases, and the volume of custom leads tripled. By identifying the specific orders that made the most money and focusing resources there, the owner successfully moved the business 'out of the swamp' and into a scalable growth phase.

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