I'm gonna kick this off by saying that I think Hormozi has shown himself to be a great marketer...

... but recently, some of his advice feels too much like cheap money grabs.

I read something the other day around his advice on how to "maximise LTV for recurring fee customers".

The advice is completely trash IMO and will do nothing more than ruin your rep.

His advice was to add an annual renewal fee onto people's recurring fees.

Let's say you run a community like GM+ and your monthly fee is $50.

Hormozi's advice is to then also add a renewal fee onto that subscription every year.

So, on a $50 / month subscription, you might have a renewal fee of $150, taking the potential yearly value of that customer from $600 to $750.

The question I have is...

Why?

You're not offering any more value for that fee. You're just charging people because you can.

And I reckon you'll lose more people than you get to pay this fee.

Look, I'm all for increasing LTV.

I don't hide the fact that we're all running businesses; revenue and profit are top of mind for us all and that's OK.

But this is not the way to increase LTV.

What is the better way?

Here's something I recently helped a coaching client implement to increase LTV of their recurring fee.

​(FYI - you can still apply to get 1:1 Coaching with me through this form - got a spot left).​

Let's imagine for easy maths that your monthly fee is $100.

And let's also imagine on average, the lifetime of a customer is 8 months.

So, the LTV of that customer on that product is $800.

Here's the thing.

That's the average.

Some people will stay longer than 8 months, but a lot will not stay that long.

So, when someone joins your monthly fee offer, you send them a sales equence that mentions they can upgrade to a yearly membership instead.

The price of the yearly membership?

$800 to bring it in line with your average lifetime value.

The user is getting a heavy discount for signing up for a year.

You're getting someone at the better lifetime value for your offer (this usually increases overall revenue and profit for you).

It's a win-win.

And add another win as yearly churn rate is often much lower than monthly.

What it all comes down to is cash collected today is better than potential cash tomorrow.

This is an ethical way of collecting more cash without exploiting people with crappy "add-on" charges.

In this instance, everybody wins.

Pete "don't be a scumbag" Boyle

​P.S - Here's that link for 1:1 coaching again.​