Annual ↴

Annual is awesome

1. It will help you with ads. On average, 10% to 20% of people will just choose the annual option when buying from you to save the discount you provide them. This usually means you 2x your cash collect upfront. Which means you can advertise way harder.

2. It will decrease your churn. Annual doesn’t only increase your cash collected upfront, but it also increases your retention. Churn on annual is on average 2%. Quarterly is 5% and monthly is 10%, on average. On skool, the average churn on monthly has been 20% - so realistically annual gets you down to 4%. Still the difference is massive. 10% to 2% is a 4x on LTV. The more frequent you bill, the higher the churn. The more frequent you bill, the more times your customers question if they’re getting value from the thing they’re paying for. If you bill every week, then your clients will ask themselves: “Did I get value from this thing this week?”. People choose to stay based on the idea of: “What have you done for me lately?” - and the more frequent you bill, the more times they ask themselves that. Churn is directly correlated with billing frequency. The less frequently you bill, the less they churn. If you can get everyone on annual, they’re only going to look back at the end of the year and think “Was this year worth it?”. You have a whole year to provide value.

3. There’s a bunch of stuff you can do to incentivize people to buy annual. Guarantees, onboarding call, discount, credit towards an even higher ticket, status. There’s so much you can do. Pick 3 you really like, and have them as things they get only when they buy annual.

   

   1. The best incentive here is in-person events. People like them, people want them, and it’s easy to overdeliver and give people a great experience. 1 event a year is enough to start with, but aim to hold 4 events a year. This means that people joining all year round won’t have to wait months and months for an events.
   2. Another one is to give bonus onboarding calls. You’ll upsell a way bigger % of people if you tell them you’ll hop on more than one call. So something like: if they buy annual they get 3 more calls. Position these as something valuable they want - but at the end of the day it’s a way to sell them more on the final one. What’s more is that they’re going to have a way better experience if you actually help them out personally. And when you talk with a customer for this long, help them and make them have a great experience - they’re way more likely to buy again from you. You can double the ascension rates if you nail onboarding. 1:1 onboarding is almost always better than group onboarding - in a case study Alex did recently, switching from 1:group to 1:1 got ascension rate from 25% to 48% and reduced churn by 60%.
   3. A very strong strategy that always works is: having a course that you price at some very expensive price - but that people can get for free if they buy annual. You do webinars to teach them something about the expensive course, so you actually “sell” it for the expensive price - and you tell them they get it for free if they’re in the annual plan. This is such a strong incentive.
   4. You can also get very aggressive with the discount. It doesn’t have to get 12 but pay for 10 which is the standard - you can do buy 6 get 6 free. 50% off annual. You could also get crazy with it and give more for free than what they pay for: buy 5 get 7. You would rather lower the price for the year and just sell annual, rather than sell monthly and have people churn at month 4. This is the best way to build a stable recurring income business.

4. Annual is just overall easier to sell. You have a whole year to fulfil the big promise you make. Which also makes it more believable - leads will believe it more if you say you’re going to change their life in a year rather than a month. You make more money upfront, you get more time to deliver value, you get more customers, you build recurring revenue. It’s all super great. Exploit the fuck out of annual.

5. People don’t leave when they reach the goal. If you sell monthly, as soon as a members hits the goal - he will churn as he’s not going to get value anymore from the product. If you sell annual - they will get to the goal, but they already paid for the full year, so they will stay. This allows you to make stronger promises. You know you get people to the goal so say “I’ll get you to [goal] by the end of the year”. Which will convert better.

• Always keep in mind promise-proof-plan. It will make easier for people to say yes.

• If you’re selling on the phone - try to sell only annual, and if they can’t afford it back-pocket into monthly. If you’re sending traffic to the about page - have both options right there and heavily incentivize annual.

There’s also another cool thing to keep in mind. Your customers have a fractal distribution. 20% have 5x more spending power than the other 80%. And 20% of those, have 5x more than the other 80%. Using this, you can align the prices of the things you sell. If your main offer is 1k$, make your ascension 5k$ - and the ascension of that 25k$. Now, what cool about this - is that the 10% to 20% people who pay annually are literally those people with a higher spending power that are saying “Hey I’m one of those guys with more money”. And here you can upsell them right away to your super-premium offer, and 20% will take it. People that pay you a lot of money, want to keep paying you a lot of money. So they don’t really ever cap out. The more they spend, the more they want to buy.

Remember to have rewards in place for year 2. Just like you’d want to give out rewards month to month for people paying you monthly, give people incentives to renew once their year is up. You want to have some benefit immediately post-purchase and some that happen when they are about to renew. You still want to act as though they’re paying monthly, so you give them benefits as often as you can to keep them satisfied. Especially that fast first win, that’s super important.

• If you’re doing both a low ticket thing to a high ticket thing - you need to be careful. The low-ticket thing exists only to convert people, retain them and make them ascend to the high-ticket thing. If you can sell people into the high-ticket without the low-ticket, scrap it altogether. It’s going to be less operational complexity, and you’re going to make more money. The whole purpose of a low-ticket thing is to create customers that ascend. The point is to add enough value, get them to some clear outcome that qualifies them to buy the next thing.

The best ads

Alex did an analysis of the 2k+ ads they ran at GymLaunch, and of the top 50 ads they even ran - only 10 were ones with his face. 80% of the top 50 ads were testimonials, client stories and proof. An enormous amount of proof always beats a killer offer. You’re always going to choose the agency with a thousand 5 star reviews, rather than a newbie with an offer with 20 bonuses and urgency and scarcity tactics.

The best structure for testimonials is the bridge gap story. It’s a 6 point structure:

1. You ask for their worst moment before doing the thing. This is looking for their internal state before buying from you. If you sell to people who make less than 20k$ a month, these will crush. If you sell to a higher avatar, hooks with these won’t work.
2. You ask them some of the stats of what was going on at that point. This is looking for the stats they were doing before buying from you - in the B2B space, that’s asking for how much they were making, how many customers did they have, what was their churn. Get as many stats as you can.
3. You address skepticism head-on. You ask them what were the things that were stopping them from buying from you.