Wikipedia defines “loss leader” as “a product sold at a low price (at cost or below cost) to stimulate other, profitable sales.” I thought about this subject because I was looking through my inbox the other day and ran across an email from a local restaurant here in my city. One of the most delicious items on their menu is corn fritters. Sounds strange but people will travel for this little item.
What surprised me is that they were offering “Corn Fritters for All” if you booked a private event at their establishment. I thought it was extremely bold because it is one of their more popular items but their strategy is clearly to get people in the door, book spaces with minimums and get them to buy other things. Something tells me that corn fritters are pretty cheap to make and other dishes they can sell at a profit. Below is the email.
Do you have a “loss leader” you can get people excited about where they’ll buy other things? You don’t have to give it away for free, but you do have to think about pricing it below market to attract your visitors.
Obviously it works with retail, where you offer something so low or free just to get foot traffic in the door. Then you can sell them more profitable items.
But it can work online too. You just need to include other products or services strategically around your loss leader in your email marketing so your overall order size is larger and more profitable.
Platforms such as Groupon work so well just because it’s a platform for local businesses to lose money to get people in the door, and it’s working! Some of the most popular loss leaders have been necessary grocery items (milk, eggs), computer printers (sell more ink) and cell phones (sell subscription plans.)
What’s your loss leader strategy? Is it working?
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