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JUNE 2010

3 Steps to Making
Any Business Work
So the new business has officially launched.

We did a group interview last week, hired 20% of the people who showed up, did the
sales training also last week, and they hit the phones this week.

We!re testing a couple of different strategies using direct response (post-cards, 20+-
page "report!—a.k.a. sales letter, phone follow up) and so far we!re on pace to more
than double our original outcome for our first month in business in terms of leads.

In the process of doing all this though, I noticed something about the new business that
I wanted to share because it really can be a template for any business that!s out there.

Now the main focus of this month!s newsletter will be to go over some stuff on the
formula for Premium Priced Products. But in the meantime, I also want to share the
distinction I noticed, or master template if you will, about how to make any of this shit

So here goes.

3 Steps to Making Any Business Work

The 3-step formula is this:

Part 1: Get Leads

Part 2: Close the Leads
Part 3: Fulfill the Promise

And, then, if you want to be really fancy, you can add a fourth and fifth step, which
would be (4) sell more stuff to converted leads and (5) then fulfill the additional promise.

Part 1: Effective Lead Getting

The biggest place most people struggle is that they fall down in this area: First of all,
they don!t get enough leads and when they do get them, often they are crappy leads.

So right now, our method of getting leads in the new biz is the most labor intensive but
probably it!s the best method ever, which is to call them up and say, “Hey, are you
interested in this stuff?” And when they say, “yes,” we send them some stuff and move
on to Phase 2.

What the typical person often does, however, is try to cast the really, really huge net via
the Internet to get the lead.

Now that!s totally fine to do but what usually happens is they go after the lowest barrier
of entry lead, which is going to be something like a person driven from Twitter to an opt-
in page somewhere.

June 2010 • Page 1

This is okay but nowhere near as good as a real lead captured where you say, “Hey, are
you interested in this?” and you get the person to raise their hand to say “Yeah, sure.
I!m interested, send it to me.”

So if I were to make a recommendation based on effective lead getting, it would be:

A. Never forget the importance of a good lead getting machine.

B. You need to carefully measure and monitor like an obsessive psychopath so you
know how much you can afford to spend to acquire a lead.

Because how much you can afford will dictate how many leads you get and how
far you!re gonna go.

And more importantly, it will dictate the quality of the lead you can go after
because typically an expensive lead (a lead that costs a lot to acquire) is going to
be more valuable than a douche-bag type lead (i.e. someone you got from

For example, one of the things we!re doing that we just tested in the new biz is I sent a
two-step postcard mailing to 3,400 prospects in a given geographic region.

The postcard offered a free report on how to achieve the magical result. And, in order
to get the free report, they had to either go to a website and fill out their information or
call a voice mail line.

For the people who go to the website, they instantly see a 22-page report (sales letter)
which causes them to call in and ask for us to take their money.

Now, at this stage of the game, it costs me about $125 per lead to acquire through this

You might be sort of appalled by this price tag, but we are encouraged because our up
front collection is about $1,200 on the low end for our service. And, out of the ten
people who have gone to the website so far, one has already called in, which is a 10%
conversion rate without us having to actually do the work.

Because these leads are so qualified, I believe (we haven!t tested this yet because
we!re not in the deal closing phase yet) our conversion rate should be in the
neighborhood of two out of ten leads.

So if it cost me $1,200 to generate those ten leads and I am getting two out of ten, I!m
getting $2,400 on the low side in revenue. In other words, we!re getting $2,400 back in
exchange for $1,200 worth of leads.

That!s pretty good!

Page 2 • June 2010

Now the other way people responded to the postcard was to call a 24-hour voice mail

So far we!ve had 24 people respond this way, which is interesting to me because we
have so much tunnel vision with the Internet, we tend to get hooked on the Internet in
many ways.

Yet, the Internet is just a form of media. It!s just a way to reach people, but it!s truly not
the only way.

Key Point

Never underestimate the importance of good ol! fashioned

U.S. mail and telephones.

Part 2: Close the Leads

Step two of building a successful business is to close the leads.

In our community, all we ever think about is doing that online. And, in reality, the
Internet is the cheapest way to close a lead.

It is, however, without question, the least effective way to close a lead. Because when
you!re on the inter-webs, you!re in the ADD vortex.

You know what I mean? The dude at his computer has got the allure of the porno site
that!s constantly nagging him; he!s got Facebook in another browser and one of his
friends just started a chat; his friggin! IM just went off; and a pop-up just showed up
promising a 4,000 foot long penis if he takes three of these pills which can be shipped to
his door on a free trial for only $2.97. And so on and so forth.

So you have all this bullshit going on and in the middle of it, you!re trying to coax this
poor bastard out of some money.

The key question for you is:

What other methods can you use to close your leads?

Here are the main methods out there that I!ve personally used in order of effectiveness.

Least Effective: The Internet

Third Best: Mail / The Actual Mail Box

Second Best: The Telephone

All Time Best: In Person
June 2010 • Page 3
So we always tend to focus on the Internet and that!s probably due to the fact that
everyone I!m talking to right now comes into the "make more money! funnel from the
Internet. Because we call ourselves “Internet Marketers.” It!s also probably because it!s

But you have to say, “If we really know that without question, the Internet is the least
effective way to close a deal, then why wouldn!t we do something else?”

And here!s one more justification for the fact it!s the least effective.

If I have a list of 180-something-thousand prospects, and I sent them an email and get
100 of them to buy something, I consider that a very successful promotion from a one-
off email.

If I were to call all of those people, I could probably get 10,000 of them to buy

If I were to send them some direct mail pieces prior to calling them, I could probably get
even more of them to buy something.

Now, our dependence on the Internet probably comes back to a couple of things:

First, the blame goes partially to the teachers, because we come in on the Internet
Marketing angle and we just get married to it and addicted to it.

Another reason, however, that people don!t expand beyond it is because it could be
considered cost-prohibitive.

For example, if you!re selling a $47 downloadable product, it!s not going to make a lot of
sense for you to send a direct mail letter to your prospects, but if you could figure out a
way to deliver enough value to sell a $2,000 product, you can send 1,500 letters at a
cost of a dollar per letter to your prospect base.

If you get one sale, you!ve just turned a profit. In fact, if you did that every day and you
only made one sale a day, your net profit would be roughly $15,000 a month.

And, unless you generated leads improperly, or you!re the worst copywriter in history, or
you!re selling something nobody wants, you should be doing a lot better than one sale
out of 1,500 leads!

So now we go to level two, which is one step closer to the top of awesomeness, which
is closing on the phone.

The reason you wouldn!t close on the phone (barring the fact that you don!t have their
phone number) would be because (a) you don!t want to talk to anybody, which is
completely understandable. (I hate talking to people and will not do it personally.) Or (b)
you haven!t made a decision to get someone else to talk to people.
Page 4 • June 2010
If you!ve got a program that!s worthwhile to do this—let!s say it!s a $2,000 product—and
you want to get into the “calling people up on the phone and selling your stuff game,” it
would behoove you to hire a couple of people on a commission only basis to go through
your database and offer to sell it to them.

If you did this, you could just give them something like $500 a sale. And when you
consider that most affiliate commissions are 50%, it!s really like having the hardest
working affiliate in the world working just for you, taking half as much money as most
crappy affiliates take, which is a good thing!

Now, the pinnacle of it all is the person-to-person sale in terms of effectiveness and the
likelihood of you making a sale.

This is also (to me) the most painful and the most labor-intensive way to do it, so I don!t
do it ever. I don!t recommend that you do it unless you!re selling something extremely

And, if you!re going to do it, you should do it in a group setting, such as at a live event.

For example, at the List Control event, I invited Jordan Belfort to speak and he did. He
asked if he could sell something and I told him he could.

(Normally speakers will split all of the sales revenue with the promoter. In the case of
Jordan, however, I really didn!t care, so I told him he could keep all the money. I didn!t
do List Control as a pitch-fest and as a means to make money. I did it as a means to
have fun—and if you were there you clearly got the picture! !)

So the bottom line is Jordan probably sold about $250,000 worth of stuff in a group
setting to a room full of around 600 people give or take.

Now I challenge anyone to be able to send an email or a direct mail piece that!s going to
get $250,000 out of 600 people. So it!s time to expand our horizons!

How do you set yourself up for being able to use

any of these top three methods?

The easiest way is to start sending direct mail and calling your existing customers to sell
them more stuff.

Whatever you!ve got, tack on some more cool shit and write a sales letter and mail it to
your customers. Your likelihood of selling them something is very, very high because
they already know, like, and trust you. It!s also high because you!re probably going to
be the only one sending them a letter.

The way you do this is to type a letter, just like any other sales letter, stick it in a plain
white envelope and for the love of God, spend the money or take the time to hand
address the envelopes and put a first class stamp on them!

June 2010 • Page 5

The last time I did this was when I did a two-part promotion.

The first one sold the private client letter and the second one sold the long-term partner
thing. They were about 30 days apart.

This was the single most profitable campaign I!ve done in ten years!

It worked too well actually. We had so many responses for private clients that we had to
create the $10,000 a month long-term partner application just to deal with the thing.

So easiest no-brainer way number one is to then just friggin! call the people.

The easiest no-brainer way number two is if you don!t have enough customers to make
it worth your while, give away something for free. (Just ask them to pay shipping, with
the sole intention of getting the name, address, telephone number and a valid credit
card of people who like your stuff enough to pay two or three dollars worth of shipping.)

The best thing to give them is a free CD or DVD.

We did this with the Magic Bullet launch earlier this year. We generated about 4,000
addresses this way. Now, being the lazy bastards that we are, we never actually sent
them anything in the mail or called them, but it was incredibly easy to get the addresses
and phone numbers.

In fact, we accidentally turned a profit because we charged $9 for the shipping so I think
we made something like $2,000 or $3,000 in accidental profits doing it.

But the main goal was we got a direct mail list of 4,00 people who raised their hand,
said they!re interested in my stuff, paid a very small amount of money, and in return
received something very good from me.

So if you can engineer the same situation, you will create a herd of people that like you,
have demonstrated their interest, have already gotten good stuff from you, and have
proven they have the money to spend.

Part 3: Fulfill the Promise

For this part, all you have to do is just do it better than anyone else. You don!t have to
hit it out of the park and be unbelievable.

If you just do it in a sense where you!re not an idiot, it!s going to amaze them.

Now, the way our new business works is we!re currently in Part 1 of lead getting as I
write this.

So I can!t give you any actual sales conversion data yet because we don!t start trying to
sell people stuff until about 72 hours from now.

Page 6 • June 2010

But the way the business works is we!ve got people on the phone, we!re cold calling
businesses and we!re seeing if they want us to send them some information about
getting them some new customers. We ask them some qualifying questions so we!re
not just pissing in the wind.

Doing this, we generated about 500 leads in the past two days.

Now, I don!t know if anyone has noticed, but apparently there!s some big recession
going on and it!s hurting American small business.

So you!d think, if I were to be able to go to a company like let!s say “hypothetically”

FedEx Kinkos and say, “It looks like I!m going to have to Fed Ex about 200 or 250
packages per day, forever and ever, the end, that the person behind the counter would
be willing to help me.

But lo and behold, this is often not the case.

Taking our “hypothetical” example again here, let!s say I go to Kinko!s with 300 or so
pieces of stuff to send. We!re generating about 200 leads a day so on this particular
day, I!ve got about 300 packages to send out at probably about $11 per packet.

And, all I!m asking the guy to do is give me 300 envelopes and shipping labels.

I had just set up a corporate account with them using a black American Express card
and I!m literally several blocks from their location.

Point being, there!s no question at all that this is for real and I!m not just some jackass
trying to get free Fed Ex envelopes.

Yet, not only do I have to spend about 45 minutes trying to coax them out of every little
piece of shipping stuff that I can (which still wasn!t enough), but I have to ask them to
Fed Ex me some equipment so I can use their services even more.

Of course, it!s now mid-afternoon and they are now late in delivering that.

Anyway, I had to go across town to get envelopes and labels from another store, not
even a Fed Ex (it was like a little Mail Boxes, etc. kind of thing) and after going to three
different locations, I finally get enough envelopes to get it all done.

And then Fed Ex tells us they can still deliver overnight but it!s probably going to cost us
a little more than we originally thought because of some unforeseen bullshit that!s not
really my problem.

The lesson being that most of your competitors are friggin! idiots that are incapable of
doing even the most mundane tasks.

Most of your competition have people working for them who are just praying to God that
their shift will end before the next customer comes in and they have to do anything.
June 2010 • Page 7
In this case, for someone to win my considerable amount of business away, all they
would have to do is not be idiots and I would consider them the greatest shipping
company in the history of the world.

All they would have to do is the basic, mundane, no brainer stuff they should be doing
anyway, like I don!t know, giving me friggin! shipping labels or envelopes to use to ship
my product and a means for me to give them ten to fifteen dollars per piece of mail I!m
sending out per day, to the tune of about $4,000 a day in shipping expenses.

So in terms of the fulfillment of product, while it!s ideal you do it impeccably, if you even
just do it period without being a moron, you!ll probably exceed the customer!s
expectation to such a degree that they!ll be an evangelical fan for the rest of their lives.

Now the only thing I can think of that could screw all this up, is if your actual product
isn!t of high quality or more important, if you don!t have a good market to sell it to…

The Golden Rule of Product Creation

Now, the point of this is to create awesome products that you can sell for premium

And, let me start by saying that actually the product itself is really irrelevant at this point.
(This is not to say you shouldn!t make an absolutely kick ass product).

But what I!m trying to tell you is that you should never put the cart before the horse.

In other words…

Key Point

Before we even begin thinking about the product,

we need to be thinking about the market.

The market is the most important factor in all this stuff.

So real quick to review, there are three qualities that I!ve been teaching for years
that determine a good market:

1. Irrationally passionate
2. Great in number
3. Easily reached

Now the best way to tell if your market is irrationally passionate is to look at their buying

Page 8 • June 2010

For example, if you look at the Internet Marketing community, it!s irrationally passionate
because there is a launch roughly every 45 seconds and it always sells out.

Weight loss is also irrational and we know this because there are a gazillion pills being
sold that claim you can melt fat in four seconds and if you take them you!ll look like Brad
Pitt in Fight Club.

The dog training market is another one. Believe it or not, it!s a $38 billion dollar a year
industry, but you can tell it!s irrational by simply observing behavior.

In fact, right here in La Jolla, CA, there are not one, but two retail store front locations
called “Metropolis” where you can buy things like a $100 dog bed, you can bring your
dog in so he can eat out of a fancy bowl, and you can purchase other various dog
related sundries…irrationally passionate!

So the number two criteria, after irrationally passionate, is that the market needs to be
great in number.

This is really easy to determine because you can just go to Google and see how many
searches are done for their obvious key words.

Examples of this are golf—I looked up even just the term “golf swing” and it gets 1.2
million searches a month.

Dog training gets 2.2 million searches a month.

So it doesn!t take a rocket scientist to figure it out.

(By the way, I found this by using this newfangled tool called “Google.” It!s part of this
new Inner-webs fad that!s sweeping the nation. ! If you go to Google and type in
“google keyword tool” it comes up… www.Google.com/AdWords.)

The third thing that determines the quality of your market is if they!re easily reached.

For this you basically want to make sure that you can run PPC ads in the market; you
want to make sure there are websites where you can buy banners; e-zines where you
can buy solo ads and stuff like that.

A great resource for this is Smart Brief (Jeff Mulligan told me about this)—just go to
www.smartbrief.com. They basically publish eight billion newsletters about all kinds of
shit and they!ll let you advertise in them and give you all kinds of data.

At the end of the day, you need to make sure you have these three things before you
even think about what product you!re going to make.

In fact, let!s take a moment for you to defend that you have a quality market in your field.

June 2010 • Page 9

EXERCISE: Write down why you know your market meets these three criteria (hint:
use empirical data). And, if you don!t have these things in your market, what!s another
market you can go after where these are in place (and where you know you could put
out a quality product)?

Now, once these golden rules are established, you can move into creating your actual

The Master Equation

To start, I!m gonna go over the pre-framing and marketing that you need to set yourself
up to create your kick-ass product.

Now, of course, I can neither confirm nor deny that I have pulled this equation
completely out of my ass, but here it is:


Which of course, stands for: Intrinsic Value + Actual Value = Premium Priced Product.

Page 10 • June 2010

So the definition of Intrinsic Value is the perceived value of the thing that!s intangible.
And, it!s often completely unrelated to the end result provided to the user by the product.

It!s also fueled by emotion and irrationality.

Actual Value is just the actual value of the thing. For example, does the BMW get from
point A to point B? Not nearly as fun as Intrinsic Value.

Going back to my infamous Paris Hilton phone number example, let!s say you could get
her phone number delivered to you in an email or through the mail. Or, on the other
hand, she could deliver it herself.

Which has the higher value?

So regardless of how you get it, the phone number is the phone number. It!s 10 digits.
But you pay five bucks or get it for free if it!s just delivered via email, right? But it!s
$10,000 if she brings it to you directly.

Another example is the exact same meal cooked at home vs at an exclusive, fancy
restaurant. The fancy restaurant charges a lot more for the same meal because of the
Intrinsic Value of it—the experience of receiving the product.

Intrinsic Value is important because it will always drive up your price into the premium

Part 1: Intrinsic Value

So here are some ways you can manufacture Intrinsic Value.

1. Manufacture and Create Fame.

To do this, you want to both “be somebody” and “be everywhere.”

To put this delicately, it!s physically impossible to manufacture fame by being a

meek little pussy.

You have to deliberately take a stand, be somebody and say, “Look at me. I stand
for this. This is what I am all about.”

Back to Paris Hilton, she!s an example of someone who is largely famous for being

In fact, when I was preparing some of this stuff for List Control, I actually read where
she was paid a million bucks to appear in a Vegas nightclub called “LAX” on New
Year!s Eve in 2007. A million bucks just to stand there!

June 2010 • Page 11

So fame is important to engineer. Here are five ways:

(1) Facebook

Now you probably know by now that all social media is a giant “Do as I say, not as
I do” phenomena for me. To be honest the jury is still out on it as far as I!m
concerned, but for me personally, my current goals aren!t aligned with it right now.

But for y!all, absolutely, it!s a fame builder in the sense that when somebody
becomes your fan, it posts on their wall, and all their friends know about it.

So if you hit that little “like” button, all your friends see that you "like! someone or
something and they!re going to go check it out. It grows virally.

Here!s an example:

On the welcome page of his Facebook fan page, he!s got the “click the "like!
button above” thing (I circled it for you) and then he!s got a little thing to Learn
Guitar Now which is his website.

Then, if you go to his wall, you!ll see all this social proof and the viral spread of it.
For example, he asked “Any interest in blues guitar rhythm lessons?” and the
comments are from some other dudes saying things like, “Yeah, man, great to
hear you have more stuff. I can!t wait to buy more stuff from you.”

And of course, everyone (he!s got over 1,000 fans) is seeing that he wrote to this
dude and told him he can!t wait to buy more stuff.
Page 12 • June 2010
So one of the things you can do (not as your main method of marketing and
certainly not if you!re just starting and don!t have a product), is drive PPC traffic
to a Facebook Fan Page just for the viral fame-building component.

It!s a great way to start building buzz before you have a new thing coming out.

Remember: Fame equals money. Paris Hilton proved it by getting a million

bucks to stand around.

(2) Twitter

Okay, a little more irony here considering that Trey and I killed our Twitter
accounts a couple months ago, but again, it depends on your outcome.

I!m all for using Twitter intelligently, as long as you don!t become one of those
douchy “Twitter people” who tweet every 10 minutes about what they ate for

Twitter is best exploited as a means to leverage other people!s efforts.

In reality, you don!t even have to have a Twitter account to use it, but you do
need to encourage people to tweet about you.

See the little link I have below my video that says, “Click here to re-tweet this
video”? That got me 4,517 free visitors from Twitter. And, if you assume the
click through rate is something like 10%, that would mean 45,000 people saw this
re-tweet message, which was “Awesome new video by Frank Kern.”

You need to be doing this kind of stuff all the time, constantly and deliberately.
June 2010 • Page 13
(3) YouTube

Keeping with our guitar theme, there!s a San Diego company called
“NextLevelGuitar.com”—they teach guitar lessons over the Internet.

And they appear to be, based on the empirical evidence I!ll share with you in a
moment, making what is commonly known as a shit-load-of-money-on-the-

And I say this because if you go to their YouTube channel which is called
“rockongoodpeople”, they have 563 videos, which to date have received over 56
million views.

So again, you can use this smartly to deliberately create fame to drive Intrinsic

You put stuff up there on Youtube and they!ll all watch it and they!ll do what you
tell "em to do!

(4) Syndicated Content

Now, this is different from syndicated traffic. What I!m talking about here is
getting your stuff spread around for you.

For example, you want to be a guest speaker on as many webinars as possible.

And, just by the sheer virtue of being on the damn webinar, it looks like you know
what you!re doing.

If you remember, back in 2001, I created a product called “Instant Internet


Now, it got me in a shitload of trouble because I didn!t mean to do it, but I sold
the reprint rights to use it and a company started spamming the damn thing out.
And, in their spam, they used my name.

So this really sucked as it!s not my mode of operation to spam anybody. But on
the other end of the spectrum, I became immediately well-known and by virtue of
being well-known, people assumed I knew what I was talking about.

From there, I started getting invited to go to seminars.

For example, I got invited to go to Armand Moran!s first big seminar in 2002 and
was received there as if I was a famous Internet Marketing guru.

In reality, I was a friggin! dude in my laundry room with a product called “Instant
Internet Empires” that I literally sat down and wrote the sales letter long-hand on
a yellow legal pad while I was in real estate class learning how to be a realtor.
Page 14 • June 2010
I was just sitting there in class thinking, “God this is so friggin! boring. Maybe I
should have a product called “Instant Internet Empires…holy shit!” And then I
wrote it out.

The lesson from this (besides making damn sure no one can spam your stuff
using your name) is that fame equals knowledge.

Take every opportunity you can to be on someone!s webinar, to be a guest

panelist, or even a guest columnist in someone else!s newsletter (which would be
the best).

Another example is I just bit the bullet and did an interview for Success
Magazine. Why? The syndication! So people read it and think, “He must be a
good person. He!s in Success Magazine. It says so right there on the cover!”

(5) PPC

This one!s a bit different, but PPC, especially during a launch or when you!re
building buzz deliberately can help fuel Intrinsic Value.

What you do is bid on your complementary competitor!s names and products.

Just don!t do it in a douche-bag way. Don!t go out there and say, “Before you buy
this dude!s stuff, buy my stuff!” That!s lame!

Instead, let!s say I!m doing a launch and I want to leverage Tony Robbins! name.
I would bid on the word Tony Robbins in every single one of his products and
then say, “Tony Robbins fans love this.” Then, I would take them to a page with
a picture of me and Tony Robbins talking about my stuff and how awesome it is.

I!m stealing that spotlight a little bit and putting it on me and also creating
association. Most important, I!m not being a dick in the process!

So never be uncool or lie about stuff, but if you!ve got a good relationship with
somebody or if your product is complementary to theirs, by all means, play that

(6) Internet Billboards (aka Banner Ads)

During the buzz building phase, right before you release a new product, put up
banners with your stuff on aspirational websites.

Now what I mean by aspirational sites, are those that represent the end goal of
the customer.

Remember the ol! Results in Advance (by God, as I!ve taught it about 4 gazillion
times by now!)? Well, there are websites that will represent to them the end
result they!re after.
June 2010 • Page 15
For example, if we!re serving a group of people whose main end goal is to make
money, an aspirational website to them would be Robb Report. Or Forbes.

You don!t want to do this all the time, but right before you unleash your stuff, you
can use it to manufacture fame.

It doesn!t take years to get famous anymore. It only takes a couple of weeks and
a couple of thousand dollars on a well-spent ad budget to get you in front of
virtually everybody. And, it only takes a few minutes!

So now let!s apply this stuff to your own business.

EXERCISE: Take a minute or two to write down the following:

1. Write down three people whose crowd you want to get in front of via content
syndication and why.
2. Write down two aspirational websites where you want your name to be displayed
and why.

Okay, now onto technique numero dos to manufacture Intrinsic Value…

Page 16 • June 2010

2. Social Proof

Social Proof is fueled by and implied by fame. So all these things feed off each

So you want to deliberately exploit social proof at every opportunity you can.

Now, have you ever heard the expression “Make a mountain out of a mole hill?”
Well, you want to do that whenever possible with social proof. (Of course as long as
you don!t make stuff up.)

Now according to Robert Cialdini (the dude that wrote “Influence”), social proof is
defined as:


If enough people are doing something, we begin to perceive it as acceptable and

potentially appropriate behavior for ourselves as well (especially in situations in
which we are unsure of what is appropriate and acceptable).

How do you do this?

(1) Referrals, ideally from people they respect or perceive to be like them.

(2) Testimonials, ideally from people they respect or perceive to be like them.

You can use just about anything (that!s accurate) to do this.

Taking the NextlLevelGuitar.com guitar dudes, if you go their website, in the upper
left corner it says, “447 Premium Users online now”. (And if you go back there, this
number fluctuates, so it works pretty well.)

My all time favorite line comes from Gary Halbert.

“My name is Gary Halbert. I am the greatest copywriter in the world and you know
this is true because it says so right there on my website.”

God I miss him. So in the spirit of the amazing Gary Halbert, flaunt every single
thing that you can!

3. Go Viral

Take advantage of every opportunity you can to go viral with your stuff.

For example, in the Good Karma List Machine campaign that Trey and I did, I gave
away a report called “3 Easy Ways to Double Your Money This Summer.”

June 2010 • Page 17

This darn thing is STILL getting tweeted about! If I really wanted to do this, I would
release a new thing every week and use Good Karma List Machine to get it out there
and put the whole re-tweet and Facebook buttons on there.

4. Association

Here!s a key point to remember…

Your reputation, and therefore to a large degree your identity,

and therefore to a large degree your perceived value in the
marketplace, is largely created and maintained by the people
you hang around with.

For example, there!s a Grateful Dead song called “U.S. Blues” and in that song,
there!s a lyric that says, “Shake the hand that shook the hand of P.T. Barnum and
Charlie Chan.”

So association is a very big deal, but it can also blow up in your face!

If you associate with the wrong people, it!s more damaging than the goodness that!s
acquired by associating with the right people.

Association is also very powerful in reverse.

This is also why you don!t want to just let anybody promote your stuff. I, for one,
don!t want any sketchy dickheads promoting me and therefore turning me into a
sketchy person.

That being said, there are some different things you can do to get positive

(1) Implied Association

This is when you deliberately imply association between you and someone else.

Now remember, you never want to imply endorsement; only association. There!s
a big difference.

And if you use implied association, you should always be able to back this up by

So for example, let!s say I want to make myself look like a big deal.

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I could pre-frame this implied association technique with this statement:

“Frank Kern is the highest paid direct response Internet marketing consultant and
copywriter on the planet. He is routinely pursued by celebrities, authors and high
level CEOs.”

Then, the next thing you would see is a picture with a caption under it saying, “Bill
Clinton thanking Frank Kern after Mass Control generated a windfall.”

Of course, backed up by fact. Mass Control did generate a windfall for the
Clinton Foundation. I sold Mass Control and donated 100% of the profits.

So it!s true, but it!s also a little bit implying that Bill Clinton is associated with me.

(2) Borrowed Association

Let!s say you!ve got a way to maintain a healthy lifestyle and lose a lot of weight.

Now, the magic that fuels the thing in this case might be a raw food diet. So what
you want to do in this situation is determine who else uses the same magic and
then make a case around it.

For example, you could say, “Yes, the raw food diet is sweeping the nation. In
fact, Rick James is on the raw food diet. Charlie Murphy is on the raw food
diet…” And you would list all these celebrities who are on raw food diets.

Then, you say that your stuff uses the raw food diet and this is how you!re gonna
get healthy.

Never, of course, saying that Rick James actually uses your stuff, just that he is
on the raw food diet.

So that!s borrowed association.

Now if you remember, there was some recent shit with the FTC over a borrowed
association used by an acai berry powder product for putting pictures of Oprah
and Dr. Oz up there (because Oprah had talked about acai on one of her shows).

This is an example of borrowed association gone a bit too far. But the concept is
valid. Just don!t be stupid about it and of course, tell the truth.

I mean this other company pushed the envelope too far by saying things like,
“This hot new product Oprah is talking about…” Nowhere ever did Oprah or Dr.
Oz saw that acai was going to make you lose weight. It!s an antioxidant for
God!s sake!

June 2010 • Page 19

(3) Direct Association

So you can do this two ways.

You can just make a big list of people you want to be associated with and then
just contact them and say, “Hey dude, I want to do this for you so I can have
bragging rights…”

Or, you can use method #2 which is a bit more evil.

Let!s say you!ve got a book about growing your penis longer, for example. And
let!s say you want to create a bit of direct association.

You can make a list of celebrities you want to be associated with and you could
buy one of those $20 things with all their addresses in it and then you could Fed
Ex them a copy of your book and make them sign for it so you have proof they
have a copy of your book.

Then you could say, “the following celebrities are known to have copies of this
book in their homes.”

I personally wouldn!t do this, but if you can live with yourself, this is an example
of how you could do it.

Another example (that!s more cool) is a hairdresser who lives in Macon, Georgia.

And when my mother, when she had to go get her hair done, it was like the
biggest deal ever; like she was going to see the Pope.

The reason is this dude did all the hair for the people at Kevin Costner!s wedding.
So now, boom, he!s immediately hairdresser to the stars.

Now this was way back in the late 80s but it just took one time and shazam, he
just doubled his prices forever.

5. Intentional Marketing

So the last way to build Intrinsic Value is through intentional marketing.

(1) Have a Gimmick

Everyone loves a good gimmick, especially me. For example, do you have a
Tempurpedic mattress in your house?

I!ve got one too. (Reese has the celebrity model. I went with him to pick it out
and I was like, “why are you getting the celebrity model?” and he!s like, “Dean
Jackson has it…”).

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So I looked at the price of this damn mattress. I forget the exact price but it was
something like $4,000 for a friggin! mattress! And of course I had to have one.

Why? They put them on the damn Space Shuttle. It!s the gimmick! The
"memory foam.!

(2) Proclamation

Now, if you don!t want to have a gimmick, you could reframe your premium
pricing into a benefit by way of marketing, which is just by proclaiming it loudly.

One of my favorite examples of this is the American Express Black Card.

It!s several grand or something stupid like that to get one (I got it because Reese
didn!t have one).

But I kid you not. As soon as they came out in like 2004, I went on this mission
to get it because it was like this card that no one else could have. Reese had
gotten the Ferrari first and held it over our heads constantly so I was like, “all
right, I!ll get the black card then.”

So many buying decisions are fueled by idiotic shit like this.

You might as well take advantage of it, embrace it and exploit it.

Part 2: Actual Value

Remember, our master formula? IV + AP = PPP?

Let!s talk about how to create Actual Value now.

And, this is a really novel friggin! concept. Here it is…

I hate to be the bearer of bad news,

but your product actually has to deliver on the promises.

And thus concludes this discussion of Actual Value in a product.

Okay, so I!m being a little tongue in cheek here, but not by much.

Now one of the best things you can do, especially in positioning the premium pricing is
to have an obvious and immediate solution to a glaring, horrible, nightmarish, end of the
world, God-awful problem.

Remember last month!s newsletter about my annual (dreaded) trek to Disneyland?

Those guides were a premium priced solution to what to me was a God-awful problem.

June 2010 • Page 21

So the best advice I can give you is to find that for your market.

And when you find it, you won!t even have to sell. I mean, friggin! Bin Laden could have
been the Disneyland guide and I!d have been like, “Just don!t friggin! blow me up; just
get me outta this line!” “You!re gonna blow me up now? Okay, whatever. Just get us
onto Space Mountain first.”

So your goal is to find a big problem (or a big benefit), make the bold promise in your
marketing, and then back it up with factual demonstration that your stuff works.

Because all the Intrinsic Value in the world doesn!t mean shit if you can!t demonstrate
that your stuff works.

Parting Shot

Remember the story of the tailor from last month!s newsletter? The guy who didn!t
charge enough and who was selling on his heels?

Well, here!s the label I had him sew in the inside of my suits.

Every word is true.

Incidentally, I had to wear another suit the other day that I had made in Hong Kong back
in 2004 that said “Victory or Death” on the inside label. (It still fit by the way, thank you
very much! !) .

I bought that original suit on a trip with Ed Dale and John Reese and right after we
bought the suits, Ed and I sat down in a coffee shop and mapped out the entire launch
for our Underachiever Mastery product.

So I was thinking about how funny it is that five or so years of “Victory or Death” led me
to evolve to be able to say that I!m now a “Bad Motherfucker.”
Page 22 • June 2010
But really, if you think about it, that!s what it takes. To be a true “Bad Motherfucker”
you!ve got to have the “Victory or Death” standard to none other.

You!ve got to take consistent, intelligent, immediate and massive action and be willing to
put yourself on the line at that level.

If this isn!t for you, then you!re better off to stay at your job and let someone else write
your paycheck for you.

But I know if you!re reading this, you!ve got that “Victory or Death” standard within you.

So it!s time to tap into that motherfucker and go for it.

You!ll be glad you did.

Talk soon.

June 2010 • Page 23