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The Loss Leader Effect

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.

 

 


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84 ways to reach, engage and convert people to buy using psychology, science and common sense.

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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.

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