Loss Leader Marketing – How to Use this Retail Marketing Strategy in Your Internet Business

Loss Leader Marketing is a marketing strategy that retail stores have been using for decades. If you open the Sunday paper and take a good look at the advertising mailers, you’ll come across quite a few products being sold at or below cost in order to entice you into the store. Their hope is that once you get there you’ll end up buying other higher priced items.

And chances are pretty good that you have fallen for this marketing ploy numerous times. Seriously, think of all the times you went to the store for just one thing and ended up with a basket full of stuff you really didn’t need. That’s the power of loss leader marketing.

But this marketing tactic isn’t only for retail stores. Loss Leader Marketing can also be used as a part of a marketing strategy for your internet business. Even service oriented companies, such as consulting firms and web designers, can use this tool to attract customers to their online store.

You see this all the time in the freemium marketplace. Internet business owners offer a product for free in exchange for a link back to the site or an email address. However, a person who is looking for something free isn’t always your ideal customer. You want someone who is willing to pay for the solution to their problem and using a loss leader can help you build a list of proven buyers that you can sell to over and over again.

You can also cement your relationship with your customer with loss leader marketing. Buying a loss leader allows them to experience what it is like to do business with you firsthand which will make them more apt to purchase from you again rather than seek out an untested competitor.

Using Loss Leaders Effectively

The Benefits Must Outweigh the Loss

Using loss leader marketing to attract buyers means that in order to benefit from the sale, you need to make money some other way. Put a system place that up-sells your customers on other more profitable products. The system can be a prompt at the point of purchase that encourages them to check out other items you have for sale or an option to receive your newsletter which can contain enticements for them to buy.

It should be Attractive to Your Target Market

This goes without saying but the loss leader should be something your target market would be interested in buying. For example, if you were a life coach, selling a CD of New Age music at half price probably isn’t going to interest a customer who needs someone to help them achieve their goals. On the other hand, giving 50% off one consultation would encourage people to try your service and could lead to the purchase of a coaching package.

Use a Non-Stockpile Item

This isn’t as much of a danger for internet businesses as it is for retail stores but you want to make sure people are not able to buy your product in bulk and stockpile it for later use. That defeats the purpose of having them visit your site on a consistent basis. If you issue a coupon, make sure it clearly states the number of times it can be used to avoid any misunderstandings that could cost you a customer.

Track Your Results

You must track how well your loss leader marketing is going. If it is costing you more money than you make then by all means abandon it. However, if things are going well, you can consider keeping the campaign going for awhile or rotating it with similar promotions.

In this competitive global market you need every advantage you can get. Used correctly, loss leader marketing is a smart way to attract the customers your business needs to thrive.
What are some ways you have used loss leader marketing in your online business?

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