The 7-Step Lead Magnet Creation System
A complete solution to a narrow problem that creates your next customer
Hormozi defines a lead magnet as 'a complete solution to a narrow problem.' The key insight is that after consuming the lead magnet, the prospect discovers a NEW, bigger problem that your core offer solves. This is based on the Problem-Solution Cycle — every solution reveals new problems.
The system provides seven concrete steps for creating lead magnets that generate engaged leads: figure out the problem, determine how to solve it (three types), choose a delivery method (four options), test the name, make it easy to consume, make it exceptionally good, and add a compelling call to action. The framework also introduces the 12-Magnet Matrix — three lead magnet types crossed with four delivery methods — giving you up to twelve possible lead magnet variations to test.
Hormozi emphasizes that a good lead magnet should be so valuable you could charge for it. The marketplace judges everything you offer, free or not. He uses the 'Salty Pretzel' analogy: free pretzels at a bar solve hunger (narrow problem) but create thirst (new problem) that the bar's drinks (core offer) solve.
- A lead magnet is a complete solution to a narrow problem that reveals a bigger problem your core offer solves.
- You can never provide too much value, but you can absolutely provide too little.
- Give away the secrets, sell the implementation — make your free stuff as good as your paid stuff.
- The name and headline of your lead magnet matters more than its content because five times more people read your headline than consume your material.
- Making a product available in multiple formats is the easiest way to get 2-4x the leads for the same work.
- Figure Out the Problem and Who to Solve It ForPick a narrowly defined problem your ideal customer has. Make sure your core offer solves the NEXT problem that comes up after solving the narrow one. Use the Problem-Solution Cycle to map all sub-problems within your customer's broader goal.Pro tipFor real estate: the broad goal is selling a home. Narrow problems include knowing the value, staging, cleaning, repairs, photos. Pick ONE to solve for free.WarningDon't try to solve too broad a problem — the narrower and more complete the solution, the better the lead magnet works.
- Figure Out How to Solve It (Pick a Type)Choose from three lead magnet types: (1) Reveal Their Problem — diagnose an issue they didn't know they had, works great when problems worsen over time. (2) Samples and Trials — give full but brief access to your core offer. (3) One Step of a Multi-Step Process — give away one valuable step for free.Pro tipCreate multiple versions using all three types and rotate them. Results are often surprising — your worst guess might be your best performer.
- Figure Out How to Deliver It (Pick a Method)Each type can be delivered four ways, creating a 12-Magnet Matrix: (1) Software — tools, calculators, dashboards. (2) Information — courses, tips, interviews. (3) Services — audits, free consultations. (4) Physical Products — books, samples, assessment charts.Pro tipThink through all 12 combinations (3 types × 4 delivery methods). Make as many versions as possible and test them.
- Test What to Name ItThe headline is the single most important factor in whether people engage. Test headlines first, images second, subheadlines third. Run A/B polls on social media or message people directly to test names before investing in the full product.Pro tipSmall word changes make huge differences. Adding 'how to' to a headline or removing a single word can dramatically change conversion rates. If people respond to a poll and ask when they can get the thing, you have a mega winner.WarningDon't skip testing. You've spent 80 cents of your advertising dollar when you've written your headline (David Ogilvy).
- Make It Easy to ConsumePeople prefer things requiring less effort. Offer your lead magnet in every format people consume: text, video, audio, images. For services, be available at more times, more days, via more channels. For physical products, make ordering simple and delivery fast.Pro tipHormozi's $100M Offers book has a near-perfect 25/25/25/25 split between ebook, physical book, audiobook, and video — multiple formats = 2-4x leads for the same work.
- Make It Exceptionally GoodMake your free lead magnet so good that people feel obligated to pay you. The goal is to provide more value than the cost of your core offer before they even buy. 99% of people won't buy, but 100% will judge your reputation based on your free stuff.Pro tipThe easiest way to get people to believe they'll get tons of value after buying is to provide tons of value before they buy.WarningBeing scared to 'give away secrets' leads to giving away fluff, which destroys your reputation and drives potential customers to competitors.
- Add a Compelling Call to ActionA CTA has two components: what to do (clear, simple, direct action) and reasons to do it NOW. Use three types of urgency triggers: Scarcity (limited quantity), Urgency (limited time), and any reason at all (the 'Fraternity Party Planner' principle — any reason beats no reason).Pro tipUse REAL scarcity by advertising actual limitations in your business. Even a bad reason ('because it's Tuesday') works better than no reason at all, based on the Harvard copy machine study.WarningDon't try to be clever with your CTA — be clear. And do it often.
Bars offer free pretzels (lead magnet) that solve the narrow problem of hunger. Eating pretzels creates thirst (new problem). The bar sells drinks (core offer) to solve the thirst. The drink revenue more than covers the cost of the pretzels.
Without a lead magnet: $1,000 per sales call, 1-in-3 close rate = $3,000 CAC. With a $25 lead magnet: $75 in ads per call + $25 delivery = $100 per call. 1-in-10 close rate from lead magnet consumers = $1,000 CAC.
Hormozi tested multiple titles for his book using social media polls. 'How to get strangers to want to buy your stuff' beat 'Get strangers to want to buy your stuff' (adding 'how to' won). Removing one word ('more') also won. Real photos beat cartoon images.
Hormozi developed this system through building multiple businesses and observing that businesses with strong lead magnets consistently outperformed those advertising their core offer directly. He crystallized the approach after seeing the pattern of the Problem-Solution Cycle play out across industries — from real estate to fitness to software. The 'salty pretzel' analogy came from observing how bars use free food to drive drink sales, realizing the same principle applies to any business.