The Game with Alex Hormozi - 5. Free Promotions | $100M Lost Chapters Audiobook

Episode Date: November 14, 2025

Welcome to The Game w/ Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Wanna scale your business? Click here.Follow Alex Hormozi’s Socials:LinkedIn  | Instagram | Facebook | YouTube  | Twitter | Acquisition 

Free promotions. If it's free, it's for me. Free is the most powerful offer of all time and will never expire. Why? At its base, it's something for nothing, or value in advance. In fact, researcher Dr. Dan Ariely demonstrated something that he called the penny gap. Basically, he showed that nine times more people would take a free Hershey kiss than one sold for a penny. Imagine getting nine times more people by lowering your discounts from one cent to free. That's a big difference, and we're going to harness it. Most marketers have experienced this firsthand. Getting a page to convert on a $1 offer versus a free offer can be a landslide of a difference. That said, making a free offer is just the fastest way to see if anyone wants your thing.

Because if your free offer doesn't work, it just shows you that prospects either, number one, don't want your thing, which means you should change what you're giving away for free, or how you describe it. Two, don't believe you. Three, aren't actually seeing it because you are fishing in the wrong pond. This can be a targeting issue. Example, running a single lady's promotion to an audience of married moms. A famous marketer actually tested number two to prove the point. Once every few years, he would run an offer in the newspaper that said,

for every $100 you give me, I will give you $1,000 back. Call 4-4-4-4-4-4-4-4-4. No one ever responded. He did it to illustrate the point of believability. It's an amazing offer, but it was so good, it was unbelievable. That's why whenever you create a crazy free offer, you will always have to answer the next question. Why?

Give a good enough reason, and people will believe you. Going out of business, all products must go in 30 days, is a very good reason to have 90% off all products. If you just said 90% off all products, you likely wouldn't get the same response. So as long as it's true, give them a good reason. I go into more depth on this in $100 million leads. Engage your leads chapter.

See fraternity party planner, my favorite. Make up a reason. Now, let's break down some of the pros and cons of free offers. We're going to flip the script to keep it interesting. Let's pretend we're starting a lemonade stand together, and you are my mentor, and you'll be teaching me the ever-hungry student all about free promotions.

Pros of free offers. Number one. Highest lead volume. Me. So if we want the most leads, we should lead with a free offer. You. Exactly. If we need volume, nothing works better than free. It gets the most leads per eyeball, and that's always useful, especially in a small marketplace, like a local market. And this should make sense. If we only have X eyeballs in a market, then we want as many people to show interest as possible. Free offers get the most possible people interested in your thing. Me. All right. So if I want to get the most potential,

such a leads, free is the way to go. It gets the best, the middle, and the worst caliber people on one shot. Then I get the opportunity to sell as many of them as I can. Number two, lowest lead cost. Me. So not only will we get the most volume, we'll also get the cheapest leads? You. Yes, just by the same logic. You pay for the same amount of eyeballs, but get a higher percentage of those people raising their hands. Your cost per raced hand is less, making free the source of the highest volume and by extension at lowest cost. Me. Sounds like my kind of play. Groovy. Number three, massive companies become massive and viral by learning to monetize free. Me, but won't this make us not legit?

You? Nope. Some of the biggest companies in the world use free front ends. They rely on how good their stuff is to get people to keep buying after they try it. Here are just a few examples. Facebook. Free to sign up and always will be. YouTube. Watch and create videos for free.

Dropbox. Free X storage. Uber. Free first ride. Netflix. Free 30 days. Free ear piercings. Clares.

Free wax. European WACC Center. Free month, public storage. The list could go on. Me. Okay. So the point is, learning to profit from free offers will lower cost of acquiring customer, KAC, and return higher on ad spend, Roaz for our business. Basically, how much it costs us to make money. Got it. Then what's the downside? Cons of free offers. Number one, volume can be a double-edged store. Me, so won't all these leads create some other issues for our business? I don't even know if I could handle calling all these people. You, for some businesses, free can attract too many prospects. So we may need to add some friction or make the offer less appealing. We also might not be able to handle the volume operationally.

For example, if we have a manual process like you meeting with X people per day, it could be a problem. So we add friction. Friction increases lead quality. The more hoops someone has to go through, the higher the quality of the lead becomes. So the key with free is learning to find the sweet spot on friction to maximize the quality of volume. Here are a few examples of friction to increase the quality of prospects. Examples of friction. Number one, increase qualifications. Example, to take advantage of this offer, you must be over 25 years old, employed, and a homeowner. If you list out qualifications, it decreases your volume but increases your quality. This is friction you can add to your advertising at all points. You want to repeat the same qualifications everywhere.

Think the copy, the creative, the landing pages they see, etc. Number two, increase information requirement and types of questions. Example. Please fill out this 20 question application before booking time to speak with our team. The more required information, the more friction you add. Not only that, the type of information you request increases the friction. For example, first name is not as heavy of an ask as a cell phone number or an income-related question. Beyond that, the format they use to answer can increase or decrease the friction. For example, multi-choice creates less friction than open-ended long-form questions. Number three, increase number of steps. If you make someone take more steps, fewer people will take them. Prospects will drop off at

to each point. So you'll get fewer high-quality people. And you may lose otherwise qualified people. For example, a one-step email option will get more people than a five-step form. This counts double if they have to certify their age, fill out a form, watch a video, and then schedule themselves. That's why finding the sweet spot is so important. You want just enough to weed out the weirdos, but not so much that you lose some lazy whales. Number four. Force consumption. Forcing a prospect to consume sales material is my favorite way to increase quality, but it cuts volume. With technology, we can force a prospect to watch a 40-minute video before any call-to-action appears on the page.

By doing this, we only allow in people who have been pre-indoxygenated. This is a good strategy when you advertise to a large audience and eyeballs are cheap. That said, in other settings, the volume is just too low to justify this friction. You can also add it in between steps later once you've already earned a little more attention from the prospect. This accomplishes the same goal a different way. Example. Between a first and second meeting, no matter how you do it, forcing consumption cuts volume but increases lead quality.

Number five. Advertisement length. This is a close cousin of forced consumption, but different enough that it's worth outlining. The length of your ads, copy, and videos before they see the call-to-action increases lead quality. The simple time command alone increases friction. Example, watching a two-hour video instead of a 30-second video increases friction. You'll get fewer clicks, but those clicks will be worth more. Me. Oh, my.

What a thorough answer you provided me here. I can think of a whole host of ways of increasing friction to dial our lead process to get it just right for selling her offer. Number two, some people have no intention of buying. Me, but won't people just be here for the free stuff and not want to buy? You, yes, this can waste resources if we're giving something away that has an actual cost. Ideally, we avoid these situations, which is why offer design is so important, but it still always comes down to math. Free money math.

If you spend $1,000 on ads, get 500 leads, half are unqualified, 250, and the other half are qualified, 250, compared to $1,000 from ads, get $200 leads, 80% are qualified, 160, and 20% are unqualified, 40. Which campaign was better? Our team may feel better about number two, but according to pure dollars and cents, number one is better. So make sure to provide value without overextending ourselves. This way we can use the higher volume and let friction skim the cream off the top. This is how we harness the power of free. Me. Got it. So as long as the math makes sense, I'll still probably make more sales, I'll just have to wade through some tire kickers. But I can create some friction to reduce those guys, and worst case, I'd just make sure my my free offer doesn't overestend us, but it's still valuable enough to get them to want it.

Exciting. Free brings broke people myth. Hopefully you saw some of the pros and cons from the free little example. Personally, I'm a huge fan of free offers. A friend one stroke to me, everything you sell is free and yet you somehow end up making all the money. Because I'm such a friend of free offers, I want to take a moment and pound any limiting beliefs you have about free into dust. When we show gyms how to use free offers, they'd say they're all going to be freebie seekers

and not by ideal customers, right and wrong. We've run four independent split tests of free versus premium offers. Each test had 10 representative markets. You know what was the same between both? The gym's sales closing percentage. As in, if they had 10 free offer responders versus 10 non-free offer respondents, the close rate was the same. So being non-free offered no advantage in close rates or average ticket size over free. But you want to know what wasn't equal between the two, the volume and cost of the leads.

Most times going from a non-free to a free front and decreased leads costs by five times or more. Pro tip, free makes more money. The reason the math is in favor of free is that most times people want to run a premium offer and sell at free offer prices. That's where you get messed up. If you know the lead cost is going to be five to ten times higher for a premium offer, your prices should be at least five to ten times higher. This may be hard to grasp emotionally, but it's just math.

You need to make what you're selling worth more if you want to play with the premium offers. It is the number one mistake I see when people are comparing them. They are not fair comparisons. The price, prospect, process, promotion, and product all reflect a free offer structure or a premium offer structure. You can't just mix and match. They're entirely different acquisition strategies. But despite this, I've run the test with the same price point.

Free breeds premium hands down unless they've truly mastered the art of high ticket selling. That being said, I'm not saying freeze for every offer every time, but I am saying that if you learn how to harness it, there are some ways to layer free into a powerful money model. bottom line if i only had one offer to make to convert or my family would be killed it would be a free offer i'd rather wade through crappy leads than figure out how to add friction than look at an empty calendar now that we've covered free in the next chapter we'll explore the pros and cons of discount offers