Are you using Loss Leaders in your business to increase your cash flow?
If you are in business you have probably heard of Loss Leaders. Simply, a loss leader is a product or service sold below its market price in an effort to gain a customer. Every company needs to have a loss leader if that company has a lifetime value attached to its customers. In other words if your customer who purchases from you once will buy more from you over time then you should absolutely use this technique to get customers to try you out. Many companies forget about this simple technique. Especially service companies. Keep in mind that marketing to existing customers is cheaper than trying to get new ones.
By the way if you don’t think this technique works, for those of you old enough to remember, may I remind you of Columbia House Record Club? Get 50 records or tapes for one cent… Or what about an inkjet printer. One hundred dollars for the printer and forty dollars for each ink cartridge.
How does it work?
When a customer purchases the “Loss leader” (or any item or service you sell) you must do everything humanly possible to get their information. Name, phone, snail mail and email address. (Over 18 only) Once they are in your “Marketing System” you will then market to them other products that COMPLEMENT THEIR ORIGINAL PURCHASE. Within your marketing you will let them know of other items and or services that are not related BUT THIS IS NOT THE MAIN THRUST OF THE COMMUNICATION. You want to heavily promote to your customers things they already like to buy….first.
And the answer to those who don’t have complementary products and services to sell to their customers.
GET SOME NOW!
A “Marketing System” sounds complicated but it’s so easy you would be surprised. There are many online and offline tools to accomplish this important activity. There are email companies that you can attach to a shopping cart purchase. There are list building appliances to add to your website. All with auto response capabilities. You can also implement internal non-digital procedures as well. The point is YOU MUST DO SOMETHING. There is probably a competitor that is doing this.
Here are some ideas:
Product A is one in which an “add on” or “upsell” Product B will add value to the original purchase of Product A.
If you are a photographer you could give a social media headshot for a low price and then offer the customer a package plan of photography that they could use in print, etc. This “add on” is not discounted. In addition, it’s not over priced to make up for your Loss Leader either. That would be unethical and will come back to haunt you later.
If you’re an Attorney your Loss leader could be an individuals will. They come in, you do their will and you get them into your marketing system.
You are a transportation company you offer customers a round trip ticket for the price of a one way.
You are a Dentist and you give your Patients a free cleaning or examination.
For those in retail with a store, place the loss leader towards the back of the store. This forces customers to walk through the store and maybe be interested in buying something in addition. (This is the goal.)
You cannot bring in someone to your business for an item that is advertised and then switch them to another item because this one is “Not in stock” or “unavailable” this is called bait and switch and is illegal. I’m not an attorney so consult with one.
So in a nut shell.
1) Get them in.
2) Make them a happy customer.
3) Get their contact data.
4) Re-market to get them back.
Rinse and repeat.
Do you need help? Call 732-818-0080 x 102
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