How do Lead Magnets Work? Why does Your Business Need it?

Before going too far, let’s first define what a lead magnet is:

A lead magnet is a free (or low cost) offer extended by a business to collect information from prospective customers or clients that enables follow up marketing activities.

The classic example is a free newsletter. The information collected most often is an email. 

At Mediaboom, we believe there is still a role for a well-crafted newsletter. But the days of prospects handing over their contact information with the vague promise of “staying up to date on the latest news from company X” are long over (if that ever worked at all).

In this post, we’ll deep dive into what makes a good offer and share examples of what’s working now. 

Why Your Business Needs a Lead Magnet

First and foremost, the purpose of creating an offer is attracting new prospects for your business and collecting their contact information, so you have the opportunity to follow up with those prospects and convert them to paying clients.

According to a study by Hubspot, the average web form converts at 21.5%. (As the author’s note, that statistic should be taken with a grain of salt. It’s self-reported data that is prone to exaggeration.)

That statistic alone should motivate you to start offering content if you aren’t already.  

A well-designed offer can do so much more! 

Help Convert Your Prospects Into Paying Clients or Customers

Dr. Robert Cialdini is one of the world’s leading experts on the psychology of persuasion. In his book, “Influence – The Psychology of Persuasion,” he identified 7 triggers that make prospects more likely to become paying customers and clients.

Reciprocity

Conceptually, reciprocity is simple, you scratch my back, and I’ll scratch yours. Cialdini’s research demonstrates that this instinct to reciprocate is deeply ingrained in humans (and many other primates).

You must provide something of value for free (or nearly so). The recipient immediately feels they owe you something.

Commitment

We like people (and companies) who follow through on their commitments. 

When a company delivers a promise, they have already positioned themselves as a company that delivers on their promises.

Woe to the company who fails to follow through or delivers something that fails to meet the customer’s expectations. Commitment cuts both ways.

Fail to deliver, and the chances of follow-through sales drop to near zero.

Liking

People prefer to buy from people and companies they like. 

Who doesn’t like getting something free? Who doesn’t appreciate someone who solves a problem for them and asks nothing in return? 

Your content can also further build on that feeling by deliberately pushing likability triggers.

• We’re just like you…
• We get you…
• Your problem is not your fault…

Make sure the message is genuine. Customers have a well-developed sense for manipulation.

Authority

When you provide a solution to a customer’s problem or offer useful information on a subject, you are positioning yourself as an authority.

When the customer has further needs in the same area, they will naturally turn to a familiar authority.

Social Validation

People like the reassurance that they are making the same choice as other people in their tribe.

That’s why the Facebook “like” button is such a brilliant innovation. A FB post with many likes communicates the message, “people like me, value or enjoy this post.”

A lead magnet can communicate a similar message, “people like me use this company.”

One simple way is adding a counter to your signup page “This free checklist has been downloaded 2,368 times.”  

Testimonials and case studies are excellent social proof.

Segment Your Prospects

The kinds of offer a prospect signs up for tells you a lot about that client. 

People no longer hand out their email IDs easily. They need a compelling reason. When a customer downloads your content, you know immediately that something in the pitch for that content speaks to that prospect.

As an example, check out one of these examples from our site:

When our prospects download that lead magnet, not only do we get their contact information so we can follow up with them with an email sequence, we also know at least two important things about that prospect, 

• They have a website which they suspect may need improvement.
• They need more sales.

Guess what pain points our follow up will target?

Ideally, it would be best if you had multiple lead magnets that target entirely different pain points. You send the resulting prospects follow up marketing messages customized to their specific pain points.

What Makes a Great Lead Magnet?

1. Low Friction – Prospects don’t want to give you their contact information. Their inbox is already full. 

If you have a compelling offer, they will share their info, but only if you make it as painless as possible.

2. Make it valuable – We’ve said it several times already. Your content should provide real value to the customer. Ideally, your content should solve at least one customer problem.
   
3. Provide Immediate Results – If your content is a 1,000-page treatise, chances are your prospect is not going to read it.
   
   If it is an action plan that takes 6-months to execute, they will not do it. 
   
   A great offer is easily consumed and provides an immediate positive result.

4. Be Specific – Your content should speak specifically to your ideal prospect.
   
   Suppose an accounting firm in Memphis has a great lead magnet for planning retirement, and a person in Los Angeles downloads it. In that case, that prospect in LA has zero value. (Unless they offer their services nationwide.)
   
   To better attract meaningful prospects, this hypothetical firm might call their tool “Retirement Planning Calculator for Memphis Retirees.”
   
   They will get fewer signups, But the signups will be local prospects.
   
   Even better?
   
   “The Must-Have Retirement Planning Calculator For Easy Retirement In Memphis On A $1 Million Or More Portfolio.”
   
5. Demonstrate Your Expertise – As mentioned earlier, one of your goals  is positioning yourself as the authority. Provide content that clearly supports that conclusion.
   
6. Highly Relevant To The Follow On Sale – The ideal lead magnet provides real value and leads naturally to the paid service or product.

What Types of Lead Magnets Work Best?

Everyone’s inbox is full. Prospects are increasingly reluctant to share their real email ID.

The days of the $1 off coupon or generic free newsletter are over. 

Here are some examples of what’s working well now.

1. Tools

Digital tools that help calculate or track something are excellent lead magnets. They are useful, and the prospect uses them multiple times instead of an e-book they may read once.

As an example, check out the Vault from Guardian Jet.

The Vault tracks aviation assets for private jet owners and helps them plan for replacement when appropriate. At which time, they’ll surely remember to reach out to Guardian Jet.

2. Discounts and Coupons

Discounts and coupons are the oldest strategies in the book. They still work. Just make sure it is significant enough to catch the prospect’s attention and highly relevant to the final sale.

This coupon from Qazi Clinic is an excellent example.

The prospect can see the value immediately, $108, and it’s substantial. It is directly relevant to the sale, and (bonus) the prospect can only realize the value IF they buy the service.

This positioning is more powerful than if they had offered the same discount off the service itself.

A discount off the service, would communicate that the service was worth $108 less than advertised.

This coupon for a related product is perceived as a generous bonus.

They’ve also effectively segmented this customer. Because she’s interested in Lip Filler procedures, their follow-up should focus there to start. If she doesn’t convert right away, they can expand the offerings from there.

3. Free Demo / Free Consultation

Sometimes a prospect doesn’t understand how your offer addresses their pain point.

That disconnect may be resolved with a demo lead magnet.

Healthcare Software provider Clarity pulls off the free demo flawlessly.

Their demo signup is longer than most, but it’s clear and to the point.

4. Join A Community

The rise of social media proves that everyone wants to be part of a community of like-minded people with similar aspirations and needs.

Creating and hosting a specialized community of your prospects is a golden opportunity to build a database of leads. These leads engage with each other in a forum that inherently reinforces your authority in the space.

St, Clair CPAs in Philadelphia do that with a monthly Zoom where their prospects make connections, share news and coach each other.

St. Clair is also pulling the trigger on another one of Cialdini’s influencers, scarcity.

Their zooms happen every month. But they don’t say, “Drop in any month.” They say, “Join our zoom this week on the date, xx-yy-zz.”
 
That provides immediacy, one of the hallmarks of a good offer, while pushing the Fear Of Missing Out (FOMO) button, aka scarcity.

5. E-Books, Special Reports, Digital Guides

We mentioned e-books as potentially outdated earlier. But, that doesn’t mean we don’t see a place for them. They still work if they are specific, actionable, and speak to a real pain point.

Note, it’s hyper-specific, “Luxury Digital Marketing.” 

If we’d said just digital marketing, it would not call out to our target audience, and we’d get no segmentation of the leads.

When someone downloads this e-book, we know to follow up on digital marketing for luxury brands and highlight our experience in that space.

A hyper-specific e-book or e-report is low cost to produce, screams authority and effectively segments the leads. Win, win and win!

Close The Deal Without Saying A Word

Famed management consultant and author Peter Drucker said, “The aim of marketing is to make selling superfluous.”

At Mediaboom, we believe the aim of a lead magnet is to collect your ideal prospects’ contact information while simultaneously positioning your offer so well that further selling is superfluous. 

Imagine how a lead magnet like that would transform your business. 

We can help make that happen. Contact us for a free consultation.