Creating Lead Magnets That Convert

Videos

Video 2 - Larger Market Formula

In this video we’re going to drill down into the Larger Market Formula and why it’s so important for every step in your sales funnel, including creating a lead magnet. Basically, it breaks down your audience into four categories, arranged in a pyramid shape. 

At the top of the pyramid you have people in buying mode, meaning they are ready to make a purchase. This is the group of people that the majority of ads you see are targeting. Let’s use a company that sells an electric toothbrush as an example. 

People in buying mode are ready to purchase an electric toothbrush. Maybe they already had one and it broke, or they just had a dentist appointment and were told they need to get an electric toothbrush. They are ready to purchase, so you just have to convince them yours is the best for what they need.

These are the easiest people to sell to, so you can see why so much attention is focused on getting their business. They don’t have a lot of objections and a high percentage of these people can be converted to customers.

The problem with this group is that your competition is going to be going hard after these customers just like you, and this group only accounts for 3% of buyers, so your split of that small group won’t be very much.

The real group you should be focusing on are buyers in the next two stages. These two groups account for 37% of buyers. They are in “information gather” stage or “problem aware” stage. In the electric toothbrush example, these are people that have at least discovered that their basic toothbrush isn’t doing the job, so they’re problem aware, and potentially they have started looking into electric toothbrushes to decide if they want one. This would be the “information gathering” stage.

Now, while these two groups are the bread and butter of an effective sales funnel, you don’t want to forget about the last group, which is the group of customers not aware of their problem. They account for 60% of your potential customers, so the upside is huge if you can move them up the pyramid. In the electric toothbrush example, these are the people that are happy with their basic toothbrush and have no idea how much better an electric toothbrush is for your teeth. 

So, why is it important to understand these stages of a buyer’s cycle? Think of it like dating. On a first date, what would be the reaction if you asked your date to marry you? That’s what it like when you go straight for the sale on someone that isn’t aware of their problem. You need to build up the relationship first. Asking them to marry you on the third date is kinda like going for the sale on a person in the problem aware stage. It’s still too early in the relationship. You haven’t built up enough trust. You could say dating is like moving somebody up the pyramid, hoping they’ll eventually reach the buying stage, but you’re the product. I know that sounds weird, but you get the point.

Now that we understand the basics of the larger market formula and the buyer stages, we can use this knowledge to help us build a sales funnel that actually converts because it is focused on buyers based on where they are in this formula.

In the next video, we’re going to discuss the attributes of an effective lead magnet, so stay tuned.

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