Understand Your Buyer > How To Convert > The Loss Leader Effect
What is it?
The Loss Leader Effect is an offering sold below cost to attract buyers.
Why does it work?
It works because buyers can spot a great deal when they see one. Even if a buyer knows you are working at a loss to try and sell them more in the future, it creates an attractive proposition. Having a Loss Leader can be an alternative to a Freemium model where buyers access your offering in a basic form for free. Sometimes being free can damage the perception of value, so having a low priced offering- even one at a loss – can highlight clients who have a greater lifetime value and the likelihood of buying.
How can you use it?
Identify an entry-level offering that will demonstrate the value you can deliver and encourage a buyer to buy more in the long term. Discount that as low as possible, even below cost, to attract buyers into your product/service ecosystem.
Because the Loss Leader Effect involves trading at a loss it must be used with EXTREME CAUTION and sparingly to prevent long term costly issues.
Like this kind of stuff? Want more?
84 ways to reach, engage and convert people to buy using psychology, science and common sense.
In the book we cover:
✅ How people work – 18 factors that affect client behaviour.
✅ Selling Communication Basics – 12 ways to communicate more clearly.
✅ How to get attention – 18 ways to stand out and be noticed.
✅ How to engage – 27 ways to engage potential buyers.
✅ How to convert – 10 ways to convert prospects to buyers.
Everything in the book works and is backed by psychology, science, common sense and my own testing.