I was driving the other day on a hot Melbourne afternoon and passed three outlets advertising a big frozen coke for just $1. I saw many kids and parents armed with their new found friend as they accompanied their hot journey with a cool reprieve and importantly a stack of sugar to really keep them going. Heavily influenced by both the lack of AC flowing forth from my hot car and the satisfied looks of the passer by’s, I too fell prey to the power of suggestion.
Now on my return journey home, equipped with said sugary delight, it made me think about the clients I am working with and the relevance of loss leading in small business today. ‘Loss Leading’ originated in the US but was originally termed; “nail down” strategy. It was always a product at a ridiculously low price. The term nail down evolved from retailers literally nailing the product to the shelf so it could not be sold. The idea is a customer would come in and then the salesperson would “step” the customer to a higher priced item.
For many of us reducing your prices on your products or services automatically raises the blood pressure and fear of setting a precedence. You set your prices because you think they are commiserate of what you are worth and or what the market will allow you to charge for it. The only problem is that when comparing apples to apples – your business will lack a possible edge that could successfully get the client over the line.
Some examples I thought of to put things into context were items that were possibly easy to do or to offer or that you bought cheap to begin with. Your time can be one of these valuable tools woven into your acquisition strategy – ‘free consultation’, ‘no obligation quote’, ‘free assessment’. Or perhaps if you have 200 leather straps lying around, sell one with every watch sold, or if you have 4 spare tubs of Ice Cream, give every child under 5 a free ice cream with every purchase.
Loss Leaders are a great way to sharpen your strategies, experiment, see what works and what doesn’t, generate feedback, see where these products actually do lead customers when in store. When I extrapolated the use of this simple but effective sales technique it made me realise just how complacent and one dimensional we can become as business owners. Engagement is the key to sparking interest and convenience serves the flame for a bigger sale.
Ref – The Balance –January 07, 2018