The Exchanges

Q That's a good, that's a good process that I get to like do that works. Talk to me, Russell about acquisition. So, so customer acquisition cost, what's that app for you guys currently?

A So it depends. This has been like my favorite thing is we talked to the VCs. They don't understand this. We have like our front end funnel, right? Where it's like people come to click funnels.com. They sign up and our acquisition costs, depending on ads. I mean, it changes on every ad source, every so many things, but on the low end, we're looking at 35, 40 bucks to acquire customer high and about a 120 dollars to acquire customer. But then if you look at our, that's like just such a small piece of our strategy. Um, the bigger pieces like our front end funnels. So for example, like my books, right? Like we have like my book that teaches people about funnels and then they come in and that funnel is profitable up front. So we'll spend anywhere from 10 to 12 bucks on Facebook to acquire a book customer, but we'll make 30 to 35 dollars to the book funnel. So we actually are profitable up front and then we introduce that person to ClickFunnels. So Most of the, like, I would say probably, I don't know, 40% of the traffic that comes to our, to ClickFunnels is somebody who already bought something, and we were profitable up front, and then we introduced them, so there's no, I mean, there's no cost at all on those people, and then we have all the really cool, like, growth hacking stuff Todd's built in, where it's like, on the bottom of ClickFunnels page, there's little buttons that say …

AI assessment note: “on the low end, we're looking at 35, 40 bucks to acquire customer”

Q Like, if they took money out, they wouldn't know where else to go put it. The S&P is only going to give them eight percent. You know, you know, you know, cryptocurrency is volatile. Like, real estate's too expensive. Like, right, foreign markets don't get what they want. So they, they just put it back in the company. So what do you do with money if you take it out?

A So, uh, yeah, so, um, it's kind of funny. So, uh, Todd's got me into cryptocurrencies. Todd's a genius now. So I guess I'm there. But for me, it's like, I'm, Like I'm in this business for lifestyle, right? Like we literally, like I have a side yard that's two acres big. Um, this summer we put in nine underground trampolines, an entire AstroTurf football field, a volleyball court, basketball court, baseball field, and the track that wraps the whole thing. So I can play with my kids every single night and the whole thing's out lights and stuff all night long. Like that's where I'm investing my money is in my family and my kids. Like, the business is growing by itself, and there comes a point where it's like, I can keep reinvesting that, or I can reinvest in, like, the reason why most was gotten a business, which was to get time freedom, get time with our family, things like that. So, like, that's where I'm investing. My money is in, is in my family, and in, you know, paying off my things, getting everything stable, so if anything, you know, if a scary day comes, like, things are all paid off. Now I'm, like, buying some Bitcoins. That's kind of funny. Um, Todd's much more of a better investor than me, so he, he could probably answer that a lot more intelligently than what I do.

AI assessment note: “Like that's where I'm investing my money is in my family and my kids.”

Q So. And Russell, when you, when you first created this, I met, did this come from your own problem? You built it for yourself, I imagine.

A Yeah. In fact, um, the year, the time that Todd was working for free for me, he was building like site after site after site. And then one day he lives in Atlanta. I live in Boise. He was, he'd flown out for the week. And, uh, he's probably tired of me, like having him do so much stuff. He's like, we should just build software that does this whole thing. I'm like, dude, everyone has tried that. Like, it's not a unique idea. It's just not possible. And he's like, I think we could do it. So we sat in front of a whiteboard for an entire week and mapped out like what we wanted ClickFunnels to be. And it was cool because Todd's like, no, we can't do that. But yes, we could do that. We could do that. We could do that. And then he was bringing his own ideas in and then he went back home and, and built it. So, and it, and obviously he did an amazing job.

AI assessment note: “Yeah. In fact, um, the year, the time that Todd was working for free”

Q Russell, tell me how you manage the one-off stuff. So most people that are doing SaaS, they obviously notice 87, 89% gross margin. It's sexy. There's no refund rates, right, on one-time big sales. Why even do the one-time stuff?

A Um, honestly, the biggest reason is it keeps me sharp and helps me understand what our customers want. Like with that many customers, we can't serve them all. So we have really high end coaching programs and bring the top level students in. And, uh, I have a chance to work on them one-on-one daily and I get to understand their frustrations or problems. Things are good. What's happening? Like all the innovations, like we're always on the cutting edge of all marketing and sales because we've got a hundred entrepreneurs working like one-on-one with me. And so I'm able to see like, oh wow, in the dental industry, this is what's happening. And this industry is what's happening and supplements was happening. And We're able to keep the software three or four steps ahead of whatever else is doing because of that. So it gives us a really, like, it's just a really unique insight that we get that I don't think anybody else typically gets with their, with their customer base.

AI assessment note: “biggest reason is it keeps me sharp and helps me understand what our customers want”

Q path for a second. Let's say you get the customer. They're going to be with you for a long time and you actually lifetime value could be huge, a lot of money. How do you decide how to aggressive to be with Because usually the person that can spend the most to get a customer is the one that gets that customer. So why not be more aggressive on CAC?

A Um, you know, when all said and done, it's because, you know, Todd and I are the co-founders of business. Like all the money that we make, we get put in our pocket. And so it's like, we're not answering to a board of directors. Like we're answering to like how much money do we want to pull out of the company each month? And I don't know about you, but I love having huge checks every single month that are insane. And so it's like, I can dump more to acquire customers or I can just Take more of the profit off the top. And so it's like, we're not trying to get bought out. We're not trying to get VC, but like we're, we're, we're trying to run a business as profitable for us as owners, which I had a finance teacher in college who told me the only purpose of a business is to make the owners rich. And so like, I kind of believe that, like if you do that, then it, then it creates jobs, it creates all these other things. But for, for me, that's kind of my point of view. I don't know if you're.

AI assessment note: “I can dump more to acquire customers or I can just Take more of the profit”

Q the, you know, Facebook was famous for saying, we know we've got to get users to add seven friends in 10 days if they're going to be sticky, right? I, I imagine, based off how data-driven you guys are, you're, you're fucking crazy, right? You probably know what you have to get users to do in the first X amount of time to make them sticky. What is that thing?

A There's a bunch of cool stuff. It's been fun. The whole game we have now is like, can we find out those things? And then we add them in. So, uh, one of them, we found out if they set up a custom domain, like their likelihood of, I don't know exact numbers, it drops dramatically. So now when you go through our onboarding process, first thing we do is we actually, we, we set the first domain for them and we actually pay the bill for that. Cause as soon as they have a domain, there's there, they're going to stick. If they integrate SMTP, uh, like an autoresponder into it and they stick, um, for the other, the other big ones, Todd,

AI assessment note: “we found out if they set up a custom domain... they're going to stick.”

Q Okay. What about, uh, what about churn? If a hundred people are in click funnels today, how many are going to stay next month?

A Yeah. Um, I wish I had the numbers all in front of me. I know that, um, we've been the biggest drop off cause we have a free trial. They put in a credit card, but it's free trial in the 14 days. And, and as of like six months ago, uh, only 40% stick through the rebill. Uh, we did a whole bunch of optimization. Now we're up to like 63 or 64% to make through the first rebill. Uh, after that, it drops down to like from month one to month two. I wish I had the numbers in front of me. It drops pretty dramatic. I think it's like, um, Like seven or eight percent drop then, and then drops to like three or four, and then it stays down like one or two percent each month after that.

AI assessment note: “Now we're up to like 63 or 64% to make through the first rebill.”

Q You got to keep your brand consistent, right?

A Yeah. Yeah. And it's, it was actually, cause we had just launched click funnels and, um, and we're first in the initial launch click funnels. Like, There's a group of people who got it and they just went and got it, but there's a lot of them that didn't understand like the whole funnel concept or why or anything. So it, the book was kind of like the bridge between our coaching and the software. Like here's, here's how I think about funnels and, and how they work in the process. And I kind of, that's what the whole book's about. And he would get that book and they see it now, like it makes us very clear, like, wow, this is what I need to be doing and how I need to be doing it. And so it was kind of, um, you know, an information piece to indoctrinate people into the The whole world of funnel building and, uh, for whatever kind of business they have. So that's what the book was for to kind of bridge that gap between, uh, between the consulting and the software.

AI assessment note: “Yeah. Yeah. And it's, it was actually, cause we had just launched click funnels”

Q You know, you know, I'll use Facebook again. You know, they've been very public. They're running, you know, over a billion tests almost monthly, right? It's incredible. How have you guys built up the system for launching and running new tests? What sample size do you want to have go through every test before you say, yes, that's the clear winner. Let's stick it and create a new B version.

A The game's kind of fun. So what happens is I, at least on the front and sales size, I build like the best thing I can dream of based on all my experience. And I try to make it as good as I can. And then Todd will come in and try to beat me. In fact, we wrote a whole book that's just showing all of our split tests where I'd make my best thing. Todd is going there and whack away until he beat me. And, um, it's, that's kind of the process is I do my best, like the best thing I can dream of. And then Todd tries to beat it. And he usually does eventually.

AI assessment note: “I do my best... and then Todd tries to beat it.”