Why Most Businesses Are Not Fully Optimized | Jay Abraham

On today’s episode of Strategic Edge, business strategist Jay Abraham explains why most businesses are far from fully optimized—even when they are already profitable. He argues that the biggest untapped opportunity in any company is not new acquisition, but disciplined experimentation within existing systems.

Abraham outlines a structured approach to testing that treats business operations like a continuous improvement lab, similar to pharmaceutical R&D. By isolating variables in marketing, sales, and communication, businesses can identify small changes that produce exponential improvements in performance. He emphasizes that most tests will fail, but the few that succeed can dramatically multiply revenue and profit over time.

He also discusses the importance of integrating successful tests into core operations and maintaining a consistent testing cadence to generate compounding breakthroughs. For Abraham, testing is not optional—it is a core discipline for maximizing business potential and staying competitive.

Key discussion points:

•  Why profitable does not mean optimized in business performance 
•  Treating testing as a core business discipline, not an afterthought 
•  How isolating variables can produce exponential improvements 
•  Why most tests fail—but a few drive massive gains 
•  The importance of integrating winning experiments into operations 
•  Building long-term compounding growth through consistent testing 

Transcript

Why Testing Is Lifeblood

Jay Abraham 0:00

I believe every human being is born to be be great.

Announcer 0:17

Today is one of the planets who don't have to maximize the business and it's reaching its cut. You're watching Strategic Edge with Jay Abraham, exclusively on ASBN.

Jim Fitzpatrick 0:32

Mr. Jay Abraham, I'm so happy to have you once again join me on the Strategic Edge with Jay Abraham. As I mentioned before, our viewers and our audience get so much out of your uh talks with us here. So I'm looking forward to today's talk, which is de-risking experimentation over, or I should say, for optimization. So let's kind of jump right in here. As you know, Jay, most entrepreneurs that I know, you know, treat testing as something you do when you have time. You know, kind of try something, see what happens. You've described it as a capital allocation discipline. What's what's the difference?

Jay Abraham 1:07

Well, let's let's look at an industry that is a good reference for my answer. Farm big pharma is constantly testing new medications, new, new uh, you know, new products, new new thesis, always trying to find the breakthrough that will that will supplant their existing products that are getting older and closer to being generic or being uh uh or being up upended by different competitors. The concept of testing should be to any size type or scope company their lifeblood. And let me tell you why. There's many reasons. First of all, I'm going to uh address something which I hope I do not offend, but there is an enormous level of arrogance and corresponding ignorance in any small, medium entrepreneur that believes that they have attained the absolute optimal level of performance in almost anything they do in terms of revenue generation.

Jim Fitzpatrick 2:20

It's true. I think I have fallen into that. Yes.

Jay Abraham 2:23

You find something that works at least uh at an acceptable level, and you're content thinking you have very little control above and beyond that. When in fact, the majority of SMBs who are reasonably successful, and that's a self-determined definition, you're making a living and it's still continuing, even if it's getting a little marginalized, don't have a clue how much more is possible from time, effort, interaction, uh, advertising, buyer bases, prospect bases, signage, uh, interaction with people at the point of sale on the phone. And they never test higher and better performing alternatives. Right. And uh I sent you a thesis that I've just introduced a couple of weeks ago. And the premise is you've got so much more internal upside existing just in what you already do, yeah, that you don't realize has a much more levers in it that you never pull.

Jim Fitzpatrick 3:26

Yeah, that's right. That's right.

Jay Abraham 3:28

So the first thing is that most people don't even understand how to test, what to test, why to test, and they fall into a rut of thinking, thinking it's out of their comfort zone, so I'm going to accept whatever it is, or very, very not to be critical, but they defer to a localized agency that is self-educated and has a very limited understanding themselves, and they sort of fall into a formulaic approach they do for everybody. And as long as it generates a decent return for the entrepreneur, the entrepreneurs in hog heaven.

Jim Fitzpatrick 4:06

Right,

What To Test For Real Gains

Jim Fitzpatrick 4:07

right. So, how do you design a test that actually teaches you something useful instead of just producing data you can't interpret?

Jay Abraham 4:15

Well, the first thing is to determine all the things you could test, because most people don't understand. Right. If you run ads, you can test many things in an ad. Depending on where you run it, you can test the headline or the equivalent, the big idea that is the first thought. And that that is an ad that is a subject line for a uh an email that is the title of a webinar. Changing that alone, I have seen multiply results five to ten times. No. So what I'm saying is you send out an email. Yeah, it's not a boring or a marginal topic. So X number of people open it. You change the topic, the subject line, you don't change anything else, but it's much more engaging or provocative or benefit-oriented, and all of a sudden, three times open. Well, it's axiomatic if you get a return from one-third of them, if you triple it, no more time, no more effort, no more activity, just a change. You can change the proposition, which is the whole premise of whatever your communication is. And this is universal, it applies to ads, emails, sales approaches. Right. You can change how you prove the performance or the advantage or the point. That can be done with with uh data, that can be done with contrast, that can be done with testimonials, that can be done with um uh with uh providing the um the bios of all your team members, or that can be done with identifying the authority of the sources you're getting the product or the components from. You you you can test the uh the the adding, you can test what's called risk reversal, how you make it easier to say yes or no. By the way, everything I'm saying separately, not combined, has an enhancement capability of from 50% to five or 10 times. Pretty profound because you just is it's not additive, it's multiplicative. You can test adding a bonus. That's just in an ad. You can test what your salesperson says when someone comes in on the phone, when a salesperson greets somebody at a trade show. Speaking of trade show, I have I have changed signage and 10 times the the the deals that came from a trade show. Most people have a sign that has their name. Yep. Yep, you know, the Fitzpatrick Company. But until you know that you have something people want, they don't give a, you know what about the Fitzpatrick company. Rather, if you said we have a media, say media that reaches your buyer and makes you more profit, right, is probably a lot more compelling than the Fitzpatrick company, don't you think?

Jim Fitzpatrick 7:19

Yes, it is.

Protect The Core While Testing

Jim Fitzpatrick 7:20

In fact, that's a perfect segue to my next question, which is one of the real fears that small business owners and business owners in general have about testing is that it disrupts what's already working. How do you experiment without putting the core business at risk?

Jay Abraham 7:35

Well, let me say this. What's working is almost a uh it's it's a fallacy. What's what's working means that you have something that's generating a profit.

Jim Fitzpatrick 7:48

It doesn't mean you've been it's working to the optimum effect.

Jay Abraham 7:52

Yeah, yeah. I mean, it's so the first thing is you have to realize you have a moral responsibility if you want to be preeminent and if you think your company offers a better outcome for your buyer than your competitor or then your buyer doing nothing, you've got to get you've got to be able to help the most, the maximum number possible. So you start with that kind of a driver. Yeah, and you've got to you've got to acknowledge that very probably, unless you're a sophisticated world-class marketer, advertising, digital marketing expert, psychologist, you haven't come close. So you should always we tell everybody that every month they should allocate time and budget to experimentally test a bunch of different hypotheses. We say at least two, we say at least two a month. Why? Because most of them won't be meaningful, but at least 20% will. So we say, first of all, if you run ads, you should you should understand the purpose of an ad. The purpose of an ad is to convey a superior benefit advantage that is so attractive and uh preemptive, meaning it's so much more compelling than the competition that it begs for somebody to want to know more and take an action. Right. The whole concept of direct response marketing is it evokes a direct response, a call, a visit, a purchase, a registration. So we try to say, okay, let's look at what you're not really uh trying out, what you're not really testing. You're accepting your ad. If you don't run ads and you have people just come because you're in a shopping center, you got a good location, and you haven't tested anything, you should test first of all making different offers right there at the point of purchase. Usually, if you make an add-on offer, some number of the people will buy it, and that's just going to double or redouble your profit each sale. You should signage because sometimes signage captivates people. You should test moving products to different places. I happen to have had extensive experience with the largest um retail multivariable testing agency in the world, and they would move different SKUs, different parts of the aisle. They would put different signage up, they would check, they would test three SKUs, five SKUs, the same product, and the differential that you get is profound. They would they would put different things on the counter and it might be three times more purchased. You should put signage in the window, you should test making offers, different offers to your list. But most people don't test any of that. That's for a small one. If you have salespeople, you should test different ways of communicating your value proposition in the beginning. And different sales type situations

One Variable Tests And Wildcards

Jay Abraham 10:58

are different. Some are out calling Cole, some are basically receiving in calls, some are following up on uh an inquiry. I mean, so you got to test all those dynamics. Now it sounds very confusing, but it's the opposite. If I told you that every time you test a different hypothesis, and each one should be testing just one variable. Okay. You know, right. If you test a lot of different things together and it works, you're not going to know really which one was the driver.

Jim Fitzpatrick 11:29

Right, right. If you just yeah, if you change four different things in the ad and it works, yeah, I could totally see that.

Jay Abraham 11:36

I was I was weaned. I haven't been very blessed. I've had probably a hundred mentors in my life, and everyone should have mentors, they should have masses. Uh, but but one of them that was the most profound was the top guy in the whole country on helping financial service companies blow up. Okay. He had he had an absolute mandate. He made people sign in writing before he would accept them. They would set a benchmark of where he had to get them to minimally. And when he did that, he insisted that every month they allocated a modest amount to test two different, he called them wildcard bonanza type experiments. But his point was you're gonna probably lose on 80%, but you're not gonna lose 100% of your money, so it's not gonna be very profitable. And he said, but you're gonna win on 20, and that means you're gonna have five winners a year. And some of those winners will be singles, some will be triples, some will be numbers, and and uh, if you're lucky, one will be a grand slam. But if you do this every year for five years, you'll have 25 breakthroughs that your competitors don't. That's right. And it's like now in testing, you can test very modestly. I mean, you can test definitively, which is something that absolutely you know with certainty, or you could start modestly testing indicatively, which is so like let's say you tried a different, a different um opening phrase for a week with one salesperson over a different one. And let's say that it seems, but it's not certain to show life. Well, then you expand it and you try it with two or three salespeople. Or let's say you try a certain kind of sign and it looks like it helps, but you don't know. Well, you do it again and again and you expand on it, or you send an email to a segment of your list with a certain kind of offer and you send a different one with a different offer. But there's very easy ways to do this. We might do maybe a whole segment on this one time, but it's it's easy. But the fact is, if you assume that everything you do, every way you do it, everyone you're doing it with is the maximum way it can be done. Um, you are either ignorant or arrogant, and I don't mean to offend.

Jim Fitzpatrick 13:50

Sometimes people need that tough talk, which was a perfect segue to my next

Turning Winners Into New Controls

Jim Fitzpatrick 13:55

question. What happens after a test works? Because I've seen businesses, you know, win on a test and then somehow end up, you know, back where they started six months later. What's that all about?

Jay Abraham 14:09

Here's the the tragedy of many, not all, but many SMBs. They got into business for a driving reason that really wasn't to optimize their capacity to uh you know to uh commercially generate revenue, build and and and contribute to clients. They got into it because they either didn't want to work for anyone else or they had a life trauma that uh they had to find something else. They're not really formally well trained in in what I would call uh uh exponential business growth theory. They don't know all the leverage points that already exist that are available. So, and I'm telling you that because they also don't know how to integrate higher performing winners in test into their whole theory, they might get a winner and go, I don't know what to do. Well, the thing to do is have an integration system where let's go back, we had it, we did a show a little while ago on self-liquidating. If you find that instead of trying to sell your most expensive thing first, that if you bring a lot more people in for a lower priced offer to start a relationship, you're gonna convert not all of them, but many times more than you are right now for your higher price. You either or, and this is where it gets a little bit daunting, but it's cool. Optionality, meaning all the different ways you can do something, is fascinating because you can replace your current system that way, or you can have two systems running parallel because different people are going to respond differently to different offers. But the point is when you find something that works better than what you are doing now, right? It can be ads, it can be approaches, it can be offers, it can be uh sequences, it can be media, it can be sales um systems. You have a moral obligation to yourself to make that there, there's a concept. I'm having an ADD moment. In in direct response marketing, there is what you call a control. A control is the most successful uh application you have in an area right now, but a control is only a temporary type, it's what you're trying to constantly improve. There was a very famous uh in the automotive market, they know at Deming, who was the father of process improvement and optimization and highest and best use theory. And he used to say, your goal is to take your control and constantly raise the baseline. So challenge yourself to the realization that you're nowhere close to getting the maximum result, uh, response, profit, repurchases that you could out of the same buyer base, the media, whatever you're doing. And when you realize there might be two, three, five, 10 times more that you can get out of what you do and how you do it, and where you do it, and who you do it with and for, to me, that's liberating, even though it might seem a little abstract.

Jim Fitzpatrick 17:30

Absolutely. Uh, and and these are the types of things that business owners often, you know, overlook in their in their marketing strategy, right? I mean, that this is something that takes more time and more of a focus. That's why for the business owners that are listening to us have this discussion today with Jay. Um, I I just I ask you to take a closer look at some of this type of testing that that we're talking about doing here. That this is this takes a little bit of time and a little bit of effort, but it pays off in the long run, right, Jay?

Jay Abraham 18:01

Well, I mean, I've changed a headline for a client and quid tupled five times the result. Wow.

Pricing Tests And Final Takeaways

Jay Abraham 18:07

I've I've shifted how they they they uh articulated the risk reduction and made it easier for somebody to take action and gotten a 50% boost. I've added a bonus in the situation. Yeah, by the way, you can even test prices. This will blow your mind. We've tested $4,995 uh dollars against $5,000 and $49995 was 20% better in many cases. We tested $15 against $19 with certain products, and 19 was five times better, but in some products it's one half as good. So you need to know, and if you assume assumption is really a dangerous way to operate a business. That's right. You don't know how high is high, and you should demand it because here's what obsesses me, Jim. It's not about spending more money, it's about producing far more yield out of what you're already doing. Right. No more cost, no more time, no more anything, just a lot more revenue, a lot more profit.

Jim Fitzpatrick 19:18

Yeah, yeah. Out of something so what seems so simple, right? It's it's absolutely crazy. Jay Abraham, thank you so much for once again joining me on the Strategic Edge with Jay Abraham. We're so honored to have you on the show. And uh, I know that as I said before, all of our audience members get so much out of your visits here with us. So thank you so much.

Jay Abraham 19:40

You're infinitely welcome. It's always my privilege.

Announcer 19:47

Thanks for watching Strategic Edge with Jay Abraham, exclusively on ASBN.