If you’re stuck wondering whether you should use a free lead magnet or a paid offer, you might be asking the wrong question.
I share why one course creator built a 10,000-person email list that never led to sales, and why another low-ticket funnel struggled too. The real issue wasn’t free versus paid. It was what happened after people entered the funnel.
Listen now and find out what your leads are actually worth to your business.
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I was on a discovery call recently with a course creator who had built up a 10,000-ish person email list. I mean, congratulations. Using a free lead magnet, she had about 47 cent cost per lead, hundreds of leads per week at the height of her ads, doing quite well. By most metrics, her ads were working beautifully. But on our call, she didn’t mention that until I had questioned what she had done. She actually only mentioned that she was running ads towards a paid seven dollar thing, and those ads weren’t going well. So when I asked a few more questions, she told me about the free thing, and she had actually changed the free lead magnet into a seven dollar low-ticket offer. So then she admitted something. She was getting all those leads, but she wasn’t doing anything with them. There was no funnel on the back end of that lead magnet to convert the leads into buyers. So that email list got cold. She ended up having to purge or scrub like 2,000 people from it because deliverability had tanked. And so she needed to start fresh. So she was thinking about running ads with me so she could continue to prove out her low ticket offer at $7 because her initial attempts had her at a cost per sale of 40, let’s just say around $47. So it was not liquidating. She was losing money on ads and she needed my help. And she had also said that she couldn’t remember exactly like why she didn’t decide just to keep using the free lead magnet and try a different funnel instead. Here’s what I told her and what I want you to take away from this video. The free lead magnet versus paid low-ticket offer is not the real question. The real question is what does your funnel actually do with those leads or buyers after they come onto your email list? Because she had not really answered that question fully in either direction. And if you spend time answering that question, your online course business will make a lot more money. So I understand what you have probably heard, which is that if I run a free lead magnet, my email list will be filled with lower engagement tire kickers. And if I go and run a low-ticket offer and can run ads to that profitably, then my email list is filled with high quality leads. They’re all buyers. This is the holy grail. See, look, everyone has a strong opinion. Almost nobody is doing the math, and that math friend, well, that’ll
Do The Math On Lead Quality
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set you free. Here’s some quick math. If your free lead magnet brings in leads at 47 cents per lead, and your funnel converts 2% of those leads into a $297 offer, you’re spending $23.50 in order to make $297. That is a strong return. The free leads weren’t an issue here. It was the funnel that was converting those free leads. Now let’s flip it and do some more math for a low-ticket offer. Your paid low-ticket offer brings in new buyers onto your list at $47 per purchase. And your funnel converts 10% of those buyers into a $297 product. You’re now spending $470 to make $2,970 from 10 buyers. Also a strong return. But again, it’s the funnel that’s converting that makes this math so good. So again, the lady who I was on the call with, her situation was not a free lead magnet problem. It was a what do you do with the lead type problem? She had built a 10,000-person email list and didn’t have a funnel ready to receive those leads. So the cheap leads were worthless. Not because they were inexpensive, but because those leads had nowhere to go, no offer to purchase. So I’m going to share with you three questions that you should ask yourself before choosing a free lead magnet or a low-ticket offer, a paid low-ticket
When Scaling Ads Actually Works
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offer. Quick pause though, think about this if you already have a funnel that’s converting quite well organically. Maybe your deal is posting reels on Instagram with a comment to DM type function and it’s selling a lot. And now you want to put paid Facebook and Instagram traffic through that funnel to quickly see how well it converts and then begin optimizing that funnel better further so that it converts leads even more profitably for you. That’s the exactly the kind of situation that I work best in, i.e., with you, an online course creator who has a business that’s already working, and you need somebody to run ads for you and optimize your ads for you while you focus on the other areas of the business that only you can do. Head to theartofonline business.com forward slash Facebook-ads-management, or click on that link to apply in the show notes below. Before
Two Questions Before You Choose
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anyone can make a decision about free lead magnet versus paid low-ticket offer, here are the three questions you want to ask yourself. First, do you know your lifetime customer value and what is it? Not your average order value, your lifetime customer value. If a free lead who comes in eventually buys your $297 product and then they upgrade to a higher tier offer later on, that lead could be worth, say, $600 to your business over the next 10 to 18 months. And a $47 cost per lead is completely fine. By the way, disclaimer, I am by no means giving you exact advice that you can go and blindly implement into your business. Running Facebook and Instagram ads is not like this get rich quick. It’s not a guarantee that they’ll work for you because it’s testing. You improve through testing. But if somebody buys once and they never come back, then the math looks different. So you can’t evaluate your lead magnet strategy without knowing this number, lifetime customer value. Second question you need to ask yourself is does your funnel have a proven conversion mechanism? This is where we’re talking about a repeatable, let’s say, webinar that you do every, let’s say three times a year. And you know reliably that when you market that webinar to your list, you bring in X number of leads or registrants into the webinar. Those came from your email list, and that when you sell whatever you’re selling off the back end of that webinar, it converts at whatever percentage. Uh, that would be called a lead-to-sale ratio, like whatever percentage of registrants that sign up usually buy that offer, and that makes you so much revenue, usually, and also gives you a earnings per lead of XYZ amount. If you know that math, then you can reliably say how much new leads to your email list are worth. Actually, on the fly, we’re gonna leave it to those two questions. Just those two questions are powerful and can print you money if you ask them, answer them, and work those answers.
Funnel Strength And Final Takeaway
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You know what I mean? Free lead magnet or paid offer, that’s just like the front door into your business. What really matters is the strength of your funnel that converts those leads into buyers, or those buyers into buyers of more stuff. Because selling is serving, you can serve more people if you learn how to sell right in a funnel. And if you already have that funnel working really well organically and you want to scale up that funnel profitably, then contact me via the link below to apply for ad management. That’s it for this episode. Until the next time that you hear from me or see me if you watch over on YouTube, take care, be blessed, and I’ll see you in the next one. Bye.
