Jay Abraham: Exclusive Interview for the Martial Arts

In Part 1 of this interview, Jay Abraham is one of the world’s foremost marketing gurus, and he’s granted us this exclusively martial arts-oriented interview. Here we present martial arts marketing with a real business grandmaster. Meet the genius who’s consulted for practically every type of business known to man including martial art schools, at $5,000 an hour! Abraham has seen and dealt with every type of industry you can imagine, including the martial arts. He conducted extensive work with Educational Funding Company in the early ‘90s. A small sampling of his other clients include Microsoft, AT&T, Baskin-Robbins, Century 21, Chevron USA, Charles Schwab, GTE Sprint, General Electric, IBM, Monsanto, Sears, Texas Instruments and many other corporate behemoths.

Martial Arts Business: Jay, let’s get started by talking a little bit about your background. How and when did you get started helping others with your amazing marketing strategies?

Jay Abraham: I started about 25 years ago and worked for lots of different companies in totally unrelated fields. I had a number of massive and really almost amazing successes. Upon reflecting one day, I realized that the reason I had done so well was because I was able to take totally unrelated strategies, methodologies, selling, marketing and customer client-generating approaches from all kinds of unrelated industries and apply them to industries that had never heard of them. And because of those approaches, their success just skyrocketed.

After I realized how massive these successes were, I stopped working for other people and basically started counseling — first of all, privately. I counseled private clients that make a lot of money. Then we started really trying to help people who couldn’t afford $5,000 an hour or 25% of the profit, people who couldn’t pay enough to make it worth our time. So we started selling training programs, expensive tape programs and $400 books, things of that nature that I sort of migrated into.

Martial Arts Business: You’ve consulted with practically every type of business known to man including martial art schools. What do you think are some of the weak spots in martial arts marketing and what can school owners do to overcome those weaknesses?

Abraham: You know that’s a really barbed leading question, but I will do my very best to try to answer it in a instructional way that everybody can really gain from.

The first thing is that you have got to understand from the get-go what a student — I’ll call it a client — is worth to the school, to your business, over the course of his or her expected life. Most people don’t look at marketing or advertising in the right light. They say, “I’m going to spend $1,000 a month or I am going to spend five percent of sales on advertising.” That’s ludicrous! You have to know how many of your students convert to $500, $1,000 or more, and how many of those students train for a year or two or three years. Until you know what the cumulative implications of every body coming to your system is worth in dollars and cents, you don’t know how much you can afford to invest — not spend, but invest — to bring people in.

So, I call that “marginal net worth of a lifetime value.” You have got to learn that first. Second of all, you’ve got to learn that marketing is a continuous, strategic process. It is not an episodic, tactical process. Everything has to be designed to advance, enhance and achieve a continuous progressive goal.

Martial Arts Business: How would you describe most martial arts school owners when it comes to marketing?

Abraham: Most people in your field are, at best, episodic; they are totally tactical; they run ads that don’t make any sense. They don’t run things continuously. They don’t understand any of the process of integrated marketing. When you understand that, it makes you many times more successful very quickly. Probably over six or nine months, you can double, triple, quadruple or improve your esults by 10 times! It can be quite profound.

The next thing is you must be able to clearly, definitively, immediately define, describe and articulate what your “unique selling proposition” is. You must be able to explain instantly to somebody the reason why he/she is foolish not to avail themselves of your school, of your training, of your courses. What’s in it for them?

Martial Arts Business: In your own words, for our readers today, Jay, please explain what a “unique selling proposition” is and why every martial arts school owner should create one.

“ You must be able to clearly, definitively, immediately define, describe and articulate what your unique selling proposition is. You must be able to explain instantly to somebody the reason why he/she is foolish not to avail themselves of your school, of your training, of your courses.”

Abraham: Why don’t I demonstrate it, rather than explaining it in a technical or an academic sense? When Federal Express first came out, it was a really gruff, scruffy, undependable environment. The company came out and said, “When it absolutely, positively has to be there overnight by 10 a.m., Fed Ex guarantees it.” That’s a unique selling proposition.

When pizza was only available if you called in and came to the store to pick it up, Domino’s came out and said, “Hot, fresh, delicious pizza delivered to your door in 30 minutes or less or it’s yours free.” That’s a unique selling proposition.

When Nordstroms department stores came out, they built their own business on a very simple positioning, a unique selling proposition. It was: “If you are unsatisfied with any purchase for any reason, at any time in the future, you can have a refund, you can have a credit or you can have a replacement — no questions asked.” The next thing you’ve got to be able to do is systematically, strategically and continuously mine and harvest a constant and qualitative flow of referrals, and it’s not episodic or intermittent. When I look at companies in all fields, but in the martial arts field particularly, I ask, “How much of your business comes from word of mouth or from referrals?”

Unless you’ve got a terrible school, unless you’re really abrupt and rude and coarse and call us with your students, I would say that most schools would probably have somewhere between 20% pecent and 100% of their business, of their students, emanate from referrals or word of mouth.

Martial Arts Business: Many schools we work with get a ton of referrals.

Abraham: And what is the average size school? What is its annual revenue?

Martial Arts Business: The average size school is probably about one-hundred-fifty to two-hundred students, but in the NAPMA organization, we work with everybody from the small-time instructor to school owners that are grossing millions a year.

Abraham: Would you say that, reasonably, a school that does $200,000 a year is average, low or high?

Martial Arts Business:That’s tough to say because all schools are very different. Let’s say that’s about average.

Abraham: Okay, so let’s take the $200,000 a year. Let’s say that 40%t comes from referrals. Is that reasonable? Martial Arts Business: It depends on the school. Some people we know have eliminated most of the advertising and they’re getting most of their new students just from referrals.

Other people report the opposite.

Abraham: It should be 40%. You can have a by-referral-only business that virtually dispenses with advertising. But in order to do that, you have to be very strategic in your ability to structure proactive, systematic, formalized, continuous referral systems.

Let’s say the referral rate is 40%. At seminars or when training groups, I ask, “Stand up if at least f40% of your business is referral-generated.” And then all of them would stand. Forty percent of $200,000 — if that’s the average revenue a year — is $80,000. Incrementally, you could argue that figure is almost all profit, if the rest of your business is coming from your advertising.

But then I say to these groups, “Stay standing if you have in place at least one formalized, systematized, ongoing, referral-generating system that really has worked every day, all the time, in every scenario, with all your students?” This includes positioning them from the beginning that your business is based on referrals. And after you teach them what you have promised and they see the transformation of skill and character, they agree from the beginning that they will refer two or three like-minded families, friends, parents, children, whatever. When I pose this question, almost everyone in the group sits down.

Martial Arts Business: How many referral systems should a school have in place?

Abraham: Unless you have at least one ongoing, referral-generating system in place, you’re dead. Most people don’t even have one. They do it intermittently. They do it just through organic growth, which is stupid.

We actually studied 7,137 unrelated industries. We found 93 unduplicated referral-generating systems that almost nobody knows about! Of course, you don’t need ninety-three systems. Most martial arts schools, however, don’t even use one system regularly.

If you used five or six ongoing, referral-generating systems, you could double, triple, quadruple your clientele. And the kind of clientele that emanates from a referral is the kind that you can close quicker, they argue and negotiate fees less, they come more often, they are more qualitative, they are more enjoyable, they refer more people and they are far more profitable.

Martial Arts Business: Yes, the least expensive and highest quality source of new business. That’s a fact. Abraham: In terms of advertising, I would say that if you were going to run the ads, make sure the ads are designed to be direct response. Make sure you know what your goal is. Make sure that they’re designed to be focused strictly on the reader and what is in it for him or her, the reader.

Make sure that you have a call to action. Make sure that you have some offer of information or an experience or an observation or something that will really give them a benefit relative to some area of their life or their family’s life they are looking to reach. For example, you want to transform your child’s confidence? You want to find a way to build your health? Reduce your stress? Open your mental acuity? And, have a great time to boot. Martial Arts Business: While we’re talking about advertising, Jay, what are your thoughts on Yellow- Page ads, since this is really one of the most common ways that martial arts schools advertise?

Abraham: I think the Yellow Pages can be useful. However, most people run terrible Yellow-Page ads that are static. They don’t really understand. Somebody is only going to look in there when they’re looking to take action. The headline is 80% to 90% of the whole impact of any ad that you run, including a Yellow Pages ad. The headline, you could say, is the ad for the ad. Half of the ads don’t have a headline. The rest that do have headlines have terribly weak, tepid, anemic, self-serving headlines or they’re just not benefit oriented headlines.

The difference between the right benefit-oriented headline [in an advertisement] and the wrong one could be 21 times more or less effective. Martial Arts Business: That’s an amazing difference!

Abraham: Yes, 2,100% greater yield from the same expense. Yet, when I’m perusing 20 or 30 of them, most advertisers don’t have anything in their headline to denominate what’s in it for me. It should read, “We will turn you into blank and blank.” Or, “It’s free!” Or, “We will let you experience it before you ever have to pay!”

Whatever the benefits are, they should appear in the headline. You are selling benefits, you are not selling features. It is not about you.

There’s a constant rub called the “you attitude.” When I’m working for a client, I don’t care about the client’s needs or desires. I care about the people they are trying to serve. It is all about them; it is not about the client. The client is enriched only after he fulfills, satisfies, enriches, enhances, protects, expands, entertains, whatever, by rendering the service.

Martial Arts Business: Like any membership-driven organization, a martial arts school is constantly trying to enroll new members but in a cost-effective manner. What are some of the low-cost marketing strategies that you believe would work well for instructors that are on a limited budget?

Abraham: Well, I’m going to go back to what I said at the beginning of this interview. “Cost-effective” is a relative term. If you find out that every time you get 10 people to start an experience, four of them convert, and the average person spends $2,000 a year and stays for four years.

Four students times $2,000 per year is $8,000, times four years of training equals $32,000. You could probably afford to spend a non-inconsequential amount of money to bring them in, couldn’t you?

Martial Arts Business: Well, it depends on your expenses.

Abraham: Yes, as long as you know what they are worth, you know how much you can expend in ads, sales commission, joint ventures, etc. So, I would advertise more but more effectively. Now that you know what each new student is worth, I would approach organizations that already have a strong affinity with the market and work out joint ventures with them. You could have a deal where an organization invited all their members to come for special private classes, or a three- or six-month preview or for a discounted rate. You just want to get a lot of people started, and your goal in life is to lower the barrier of entry and to accelerate the buying process so people get into the groove faster. Consequently, you start making more money over a longer period of time. It’s very logical, but most people in your field don’t do this.

Most of them are pretty dedicated, and have very high integrity. They are very qualitative people. Many of them are spiritual. They’ve got incredible character and they do a lot of good.

But I don’t think they’ve got a clue about marketing and the business dynamics and how to really make a lot of qualitative and ethical money in this business. You’ve got to start by taking a deep breath and looking at dynamics like that.

Martial Arts Business: On that note, on a scale of one to 10 — with ten being the best — how would you rate most of the martial arts print ads you have seen?

Abraham: They are not very good. And that is not the right question. Let me give a little primer in Lead Generating 101. Lead Generating 101 is about the quantity of people you bring in — the quality, the convertibility and the residual value. What they buy the first time, and how long they stay with you. Most people that I’ve seen in your field don’t have any kind of strategic, integrated, systematic approach.

We have found, in all the clients that we’ve worked with, that today people need to be respectfully, benevolently approached numerous, sequential times to maximize the yield. We conducted an experiment where we did a mailing to a list that pulled nothing.

Then we did 25 subsequent communications over four months and brought $5 million out of the same list that didn’t do anything in the beginning.

What we found is that most people don’t understand the lead generating and conversion process.

You run an ad, you get leads. Some people come in and some don’t.

Some call, some don’t show up, some try it, some leave. Most people in your field feebly follow-up or don’t follow-up at all. They are very super- ficial. They are very limited. They are very episodic in what they do.

I did a seminar about nine months ago and I had 700 people pay $5,000 to come. You can do the math: That is $3.5 million.

But that’s not what is impressive. I wanted to prove to people the point I just made. I had done about 25 different sequences of communications, promotions, advancing and enhancing processes to move people through the migration path to closure for that seminar. At the seminar, I named everything that I did and I had people attending stand up and go to the wall who were finally impacted to action by that particular communication.

I started with the first one that I did, and I’d say about 50 of the 700 people there went to the wall. So, if I had stopped my promotional campaign there, I would have only made a quarter-million dollars instead of adding $3.5 million in revenue. I announced the next one and another 60 people moved to the wall, and so on.

The point I am making is most people in your field give up prematurely.

Martial Arts Business: Well, here’s a scenario. I’m a martial arts school owner and I’ve got, say, a variety of different marketing strategies in place out there in the field.

Roughly, how many times does a potential student have to hear my name or see my ad before he or she finally takes action and calls my school? Abraham: Until it stops being profitable. You see, I believe in polarization. We believe in the philosophy called the Power Parthenon of Geometric Business Growth. We believe in accessing a market from as many sustainable focal points as possible. We believe in advertising, strategic alliances, e-mails, joint ventures, space advertising, radio joint ventures, preview weeks.

Martial Arts Business: So, you’re generating a lot of different leads from a lot of different sources.

Abraham: Because it’s very easy for people today to procrastinate, equivocate. Ask yourself this question: Is there anything in your life right now that you have wanted to do, but you are procrastinating on it? Martial Arts Business: There are a couple of things.

Abraham: Like maybe going on a trip, getting a brochure about a good locale maybe finding out about a new hotel, to do a seminar in, or interviewing or monitoring a speaker.

Any of a million things.

Now, is the reason that you put interested or because it really isn’t somewhat important?

Martial Arts Business: No.

Abraham: Did you then put it off because it was easy to procrastinate because it wasn’t top-of-mind awareness?

Martial Arts Business: Exactly.

Abraham: The job for the promoter is to, first, keep your proposition aware at a higher level than anybody else, and second, to understand the Baskin-Robbins theory of marketing.

It’s bulletins, benefits and hot buttons. If the whole world just loved vanilla and chocolate ice cream, there wouldn’t be a Baskin-Robbins.

The variety translates to different stimulus, different reasons why people might be interested. You might write to me and say, “Hey, how would you like to have your character built?” Well, maybe that appeals to some people. Then you write me again or communicate, “Jay, I know character-building is important, but I’ll bet health is just as important to you.” Or, “I’ll bet confidence is important.” And then you write to me again and say, “You know, a lot of people tell us that the character and the confidence is really high-ranking, but they really love the stress relief.”

Look for part two of this interview with Jay Abraham in the Winter 2010 issue of Mastering the Martial Arts Magazine, and at MartialArtsProfessional.com