Loss Leader Strategy & Ideas to Build Your List and Gain Sales momentum
The concept of a “loss leader” has been a smart marketing hack for decades. You don’t necessarily have to take an actual dollar loss, but your margin should be razor-thin. The whole purpose of a loss leader is to build that email list and gain momentum in sales.
Why does this work? Because when you have a large, growing email list and sales momentum, it means more and more people will be open to your regular offerings at their more profitable prices.
This can be a slick-sounding, uncomfortable venture for new business owners artists who just want to sell their products and services. But it’s usually a winning strategy that’s worth pursuing.
How to price & CreatE Urgency
Your ideal normal margins should be at least 50%, but for a loss leader, it’s more like 0 - 10%.
The ideal loss leader price is under $10 (yes, even in these inflationary times) and includes free or very cheap shipping (as in a few dollars at most … but free is best).
Whether it’s online or in-person, it’s okay to have a $5 or $7 piece prominently displayed next to your more expensive items. Envision:
If you only have your pricey products displayed, odds are that most visitors will dip in, admire, and leave.
But if you have a $7 offer next to that more expensive option, the contrast in prices indicates a fun, charitable side as well. Visitors will admire your products and feel like they can get something (and be more eager to join your email list at the same time, which is the goal).
Remember, your best chance of getting an email address to add to your list is during a sales transaction.
On occasion, consider a cause to support with your loss leader. However, it has to be genuine and not gimmicky. Be prepared to explain why you chose that cause, and then follow through with the donation.
Your loss leader may or may not be a continuous offer. It’s something you can adjust and turn on and off as you see fit. However, creating a sense of urgency, such as a limited-time offer does help. Set a deadline of 1 - 2 weeks at most and stick to it. This could be something you offer a few times per year.
Be Resilient and Keep Testing
It might take a few attempts to get it right. If your loss leader effort doesn’t result in sales, it needs adjusting. Be resilient and keep testing new ideas. Better yet, ask a set of trusted buyers or friends what they would feel absolutely compelled to buy and at what price.
Your loss leader should feel like something the average person would want to give as a gift (to others or themselves), and a slice of your regular offerings.
IN CONCLUSION
Keep in mind that having a loss leader is a short-term strategy and not meant to define you as an artist. It’s simply a way to build that extremely important email list and gain some sales momentum.
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