The Game with Alex Hormozi - Free Stuff Sells: The Power of Lead Magnets | Ep 565

Episode Date: July 20, 2023

"If a lead magnet is not good enough that people then tell other people about it, in my opinion, you have failed." Today, Alex (@AlexHormozi) discusses the importance of offering valuable lead magnets to attract potential customers and increase sales. He also provides seven steps to creating effective lead magnets for any business.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 on his path from $100M to $1B in net worth.Timestamps:(1:21) - Lead magnet: complete solution for narrowly defined problem.(3:39) - Even if it costs, it should lower customer acquisition cost.(5:11) - Know customer journey ahead.(6:57) - Don't be afraid to give away costly stuff.(7:48) - 7 steps for creating lead magnets for any business.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

You're not making as much money as you want to make because you're not getting as many leads as you need to sell stuff too. And you're probably not getting as many leads as you need because you're not giving away enough free stuff. And not just any kind of free stuff, but enough good or amazing free stuff. Because guess what? The reason people buy is based on a prediction of future value. So they buy because they predict that they will get value from you later. What is the easiest way to get someone to predict they're going to get value from you after you buy? by giving them value before they buy. There's two ways that you can fundamentally get leads. You can, one, just make your offer to somebody and say,

hey, I will wash your car for $100. Now, you can put lots of razzle-dazzle around it. That is a offer. So products or services that you exchange money for and the terms under which you do that exchange. And so this is directly from my first book, $100 million offers. It's 99 cents on Amazon. Now, that being said, a core offer versus a league man.

What's the difference, right? Because fundamentally, you'll have something that's valuable in both of these instances. The core offer is the thing you sell that makes you the most money. If you're like, which one is it? The one that makes you the most money, that's your core offer. If all of a sudden you start making more money on your lead magnet, guess what? That's actually your core offer.

Lead magnet is the thing before the thing. Lead magnet is not a partial solution. What a lot of people try and do is like, hey, I'm going to give you the first six minutes of this 12-minute video and to get the rest, click here, right? I think that's not the right way to do it. I think you lose trust. And that's literally the opposite of the objective of lead magnet. A lead magnet is a complete solution to a narrowly defined problem.

And so think about it this way. If you're gonna do anything for a customer, there are many micro steps that happen to create a bigger solution. Let's say I paint houses. There's a lot of micro steps that have to happen in order for a house to get painted. First, you've gotta size up the house.

Then you have to give an estimate of whatever. Then you have to do the design component and you have to do the 3D visualization issue. And the bigger thing is, the more steps there are. The idea is, okay, can I pick one of these very painful steps for my prospect and solve it for them at a massive discount to attract more people to want to do it with me? And I do such a good job at this massive discount

that I increase the trust they have with me, and now they have one foot in the door. We're not giving away partially done work. We're giving complete work to a narrowly defined problem that once completed opens up the next problem. For example, you do massage, and you're like, I can't get enough massage clients. Well, it's usually because you're not giving enough free stuff away.

Because fundamentally, if you give something away for free, you almost always have demand for it. And if it's good, you'll have exponential demand for it. If I give away a $10 massage to get people to come in and then later everyone buys packages of massages from me or buys a massage subscription from me, the massage subscription or the massage packages are my core offer and the lead magnet

would be the trial offer of the $10 or discounted massage. The reason people do those discounted massages, they give those trials, they give those mini offers, the lead magnets on the front end, is because they make more money. Because if I go up to 100 people and say, let me give you a massage for a hundred bucks. A lot of people might say no, maybe one person would say yes.

Now if I then said to the same hundred people, I wanna give you a massage for $10, I might get 20 people to say yes. And then of those 20, get a third of them to buy the 100 thing after they tried my massage. And so you've got one person getting a massage for $100 versus six people getting a massage, 30% of the 20, after giving them that first trial.

And so my cost to acquire them is the cost of delivering the lead magnet. So if it cost me $10 and cost to give the massage then I break even on my lead magnet if it actually cost me 20 I might lose 10 bucks but am I willing to lose 10 bucks on 20 people so I pay $200 to get six customers that convert and are worth 2,000 probably even if your lead magnet costs you money to deliver it should still lower your total cost to get a new customer that's the secret that's the sauce of lead magnets and why they ultimately make businesses more money and why big business owners think long term about I'm willing to give more upfront because I know I'll make more in the end Big news. My next book, $100 million leads, is finally ready. Is it cool if I invite you to the biggest entrepreneur party that I think has ever happened? Right now, we have 200,000 people who've registered.

I've put a million dollars into this event already just to honor entrepreneurs and entrepreneurship. And also deliver real tactical, money-making stuff that help you grow your business. Not tomorrow, but today. It's going to be Saturday, August 19th, day after my birthday, my way of giving back. 9 a.m. Pacific, 12 p.m. Eastern. I have never put more time into any project in my life. And so I'm incredibly proud of this book. I think that when I die, people will still continue to read this book.

And as a side note, I've been working on something else since 2019 that I just finished that I were releasing to everyone live there. And to give you a little bit of context, it's more than a gift card and it's less than a Tesla. And I'm giving it to every single person who's there with me live. You're not going to want to miss it. Acquisition.com forward slash leads. I'll see you there.

A lot of people get really afraid of giving away free stuff because they're like, if I give away all this value, then what would I do? It's like, give more value. And if you don't know how to give two types of value, then get good enough to be able to give value on the front end before someone buys so that you can give value on the back end.

One of the beautiful things about business in life is that when you solve problems, you create more problems. If you're broke, being broke sucks. When you have money, taxes also suck. Now, you may prefer those problems, but they are problems nonetheless. What we want to do is always know

what the journey of the customer is going to be ahead of them. And we should because we're the ones who've done this 100 times. And so we should know what next problem is going to come up. And if we put our thinking caps on, we say, hey, well, if there's six steps to this problem, why don't I solve the first? first two, and then they're going to encounter problem three, and then I make that my paid thing. Now, I completely solved problem one and problem two, but it naturally leads itself to problem three,

which I can then charge for. So for example, if you're trying to lose weight, there's a lot of steps that have to occur. And the way that I like to think about this is before, during, after, for everything that has to happen for a customer. So if a customer wants to lose weight, then they're going to probably have to eat better, work out better, and they'll probably need some sort of help along the way in terms of accountability to keep them on it, right? Eat better, but what does that mean? Well, they're going to have to, buy their groceries differently, prepare the food, eat the food, the food's gonna have to taste good,

they're gonna have to get the right macros. It's like, oh wow, there's like a lot of little things here. Can I say, hey, how can I make grocery shopping easier? Here's a list. Here's a preloaded Instacart grocery list for women who are at this weight, women who are at this weight, women who are at this weight, men who are at this way, with this goal, right? And you're like, wait, that's a lot of those.

It's like, yeah, but it's one-time work that you can set up for 100 different types of people, and then they have their grocery list for you. Now, that's just problem one. What if after that, what's the next problem they're going to have? Well, they're going to bring it back. They'll be like, what do I do with all the shit? How to clean and prep all of the food that you just bought it in under 60 minutes.

And I'm going to solve it for them. Then what am I going to do? Well, how to store it and portion it in a way that you can bring it with you so you don't get that weird jelly in the bottom of your chicken breast, Tupperware, which is nasty as hell, which they pump in there, by the way, to increase the way. If you solve them very well, people are like, oh shit, but I also need this, and you're like, aha.

Well, I want me to tell you about that since you got such a good experience with this one, and because I had value, I will have a prediction of future value because you provided me value before I bought. Now, one thing that a lot of people are afraid of giving away is stuff that actually cost them money. But I can assure you that if it actually costs you money, it usually will be valued at a significantly higher percentage to the marketplace. So, sure, you can have a free PDF. Sure, you can have a digital video series, whatever it is. But normally, unless it's exceptional, people aren't going to value that because that's what a lot of people do. Sometimes giving away actual free work that you will incur cost on, a lot more people will take.

take you up on. And if you do the math, you will ultimately make more money. And this, what I'm talking about is the difference between small business owners and big business owners. They can incur a calculated cost up front for a much bigger back end. Your free stuff should be better than their paid stuff. Everyone makes that cool, but they don't actually do that. What your competition actually builds as their core offer and you do such a good job of it that you can give it away for free, then you become unstoppable. And you're like, wow, that takes work. Duh. Also, so does becoming a multi-millioner. So did you think it would be easy? Let's round this out with seven quick steps that I think through when I'm actually trying to create lead magnets for any business that we have.

Step number one, figure out the problem you want to solve and who you want to solve it for. If you know who you're trying to solve it for, you will name it differently, you will approach the problem differently, you'll market it differently, you'll package it differently, and ultimately you'll deliver it differently if you're very clear on who and what. Number two is figure out how you want to solve it. So inside the book, I talk about three different ways that you can solve an actual problem for a lead magnet. So one would be like, if I give a free assessment of any kind, I'm revealing a problem to somebody. A different way would be giving a trial of something. They are usually more problem aware. They know their back hurts.

And so I just need to solve it for them. But unless they keep paying me, it'll come back. And there's other versions and you can combine them, which I talk about more in the book. You figure out how you want to solve it. The third step is figuring out how you want to deliver it. There's lots of different delivery mechanisms. Do I want to do it with information?

Do I want to do it with a service? Do I want to do the physical product that I'm a send them that demonstrates it? All of these are different ways to deliver on that one promise. And the question is which of these is going to be perceived as the highest value from the prospect and increased the likelihood that they ultimately buy from you the most that would mean that you get the most amount of people interested and the most amount of people taking the next step then it's like okay well how am I going to package this thing the first thing that

someone's going to see in order to make the decision to consume your lead magnet is how you package it so for example this book I had the title that I tested I had the sub headline that I tested and I tested the image that I was going to put on the cover itself the first test I ran was one hundred million dollar advertising versus one hundred million dollar promotion and advertising won 69% to 31. I was like, huh. So then I ran advertising against $100 million leads.

Leads won 58 to 42. I was like, huh. Then the next round, I said, okay, $100 leads or $100 million marketing? And leads won again. And so I was like, all right, well, leads is going to be the headline of the book. A couple different images that I ran,

and then I ran different versions of the image. That was the one that ultimately won. And so there's a story of a book that went out on dating, and it tanked. And they went back, and they changed the cover of the book and the headline. nothing else inside the book. And then it went on to sell over 10 million copies

just by renaming the book. So you're gonna put all this time in delivering an amazing solution. And so if there's ever a most important step, it's this one, which is how you name it and how you package it. So step five is making it fast and easy to consume. People learn in different ways.

Have an audio version. Have a written version. Hardback version they can hold in their hands. Have the digital reader version. Have the video version. On my last book, 100 million dollars, which now is, I think, 350,000 copies sold. So I have a decent data set.

It's almost a perfect quarter, quarter, quarter quarter split in terms of where people consume it. It's so much effort to write the book. And so little effort to just double and triple and quadruple how many more people consume it simply by making it available in more ways to more people in more places. Six is you have to make it fucking good.

The reason I say that is because so many people give away sucky fluff in their lead magnets and their free shit and I use shit as the emphasis there because they're afraid or unable to give away more value. If you're afraid of giving away more value, consider the alternative. you give away sucky fluff. 99% of the marketplace only consumes your sucky fluff

and then makes a decision of how much value you're gonna give to them in the future. And they're gonna say, oh, he gave me sucky fluff. Why would I ever work with him? And then, here's the shitty part. They then, other people are like, hey, do you know Jason's so-and-so? And you're like, oh yeah, I can sit one of his things.

It was shit. And so what happens is not only did this person not buy, they actually get other people to not buy your stuff who otherwise would have. You can reinforce your reputation in the marketplace by continuing to over deliver to people who will never give you money. And that's okay, because they know

people who will. If a lead magnet is not good enough that people then tell other people about it, in my opinion you have failed. Put 100 hours into something. If you've never put more than 10, put 100 in and see what actually happens to the quality of the work you put out. And your audience will appreciate that because people can tell quality. And step seven is that you want to make it easy for them to take the next step. All right, this is so important and people forget about it. It's like we do all this work and then we forget to make it easy for them to tell us that they want to buy more. When you're making call to actions, Don't be clever, be clear.

Just say, go to Amazon, search my name, and you'll find the book. Go to my website, acquisition.com, watch the videos. Be very clear about what you want the people to do. And if you want, give them multiple ways to do it. It's the same concept as making multiple ways of consumption, but making multiple ways for people to take action. Just like the book consumption,

you can double and triple your response rates on CTAs by making it available in the way that is convenient to them. Is their preference? Some people like phones. Some people like typing in the URLs. Some people like scanning. It just depends on the person and you wanna make yourself available to all of them.

And believe it or not, we can read about 20% of one chapter of this book. I'm gonna have a big launch party for my book and if the book's already out, either it'll still be the same URL, which is acquisition.com forward slash leads. Go there and there'll either be a training or there'll be a registration

for the biggest event ever. It's gonna be awesome. I put two years of life into this and so I'm gonna make it badass and I want everyone to talk about it. So I will do everything in my power to over deliver like crazy for everyone to attend.

So you can be there, or be square.