Using a Loss Leader to Grow Your Business

Do any of these scenarios sound familiar?  What could they possibly have in common?

  • Launching a new product
  • Met a great prospect at a tradeshow
  • Want to move customers through the doors
  • Relatively a newcomer in your market area
  • Need to move product quickly
  • Need to test the grounds with a new service package
  • Desire a higher conversion rate of prospects to clients

In all of these situations, a loss leader may help you achieve the results you desire.  A loss leader is simply something you offer at a ‘loss’ in order to gain a client or increase sales.  Consider these examples:

Retail Loss Leader Sample: You’re launching a new product but have limited advertising dollars.  In this case, your loss leader may be a coupon for the product. By enticing new and existing customers into your store, you expect that increased sales on other products will more than make up for the cost of the loss leader.

Service Provider Loss Leader Sample: You’re a service provider and presenting at a trade show.  By offering 5 free hours of service or a free consultation to a ‘winner’ from the trade show, you are able to demonstrate your skills with the expectation that they’ll see the value and you’ll gain a new client.  Although you incur an initial loss, the revenue generated from a new client should more than offset the loss.

A loss leader can be a coupon, free hours, a discounted package, a free consultation, an audit of existing systems or processes, or a give-away.  A loss leader can be successful for any size company, regardless of the industry.  With a few precautions, you’re likely to experience much success.  For example, if you have a deeply discounted product for offer, place it in a location where customers must walk past other goods that may be of interest.  If you’re giving away a free service package, choose the ‘winner’ wisely.  Make sure the ‘winner’ is a qualified lead.

Once you’ve determined what your loss leader is, make some noise about your offer.  Spread the news via your social media channels, email marketing, and traditional marketing.  Be creative, be bold, and make it happen!  If you have a great product or service, everyone wins.

About the author: Autumn Edmiston is the CEO and owner of the Edmiston Group ~ The Edmiston Group provides senior level marketing management services to businesses and non-profit organizations on a short or long term basis.  Core areas of service are business development, marketing, strategic planning and public relations. The Edmiston Group has consistently delivered and implemented real-world, proven business marketing ideas and strategies for business growth.

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