Every week, thousands of grocery stores across the country
send out their store flyers with some unbelievable deals. Toothpaste for $.99.
Cleaning supplies for a fraction of their value. Tuna for pennies. When you see
these unbelievable sales, you may be asking yourself, “How do they make money
selling at these prices?”
The answer is, they don’t. These items are called “loss
leaders.” The store actually loses money on the sale of these particular items.
They sell them at these ridiculous prices as a lure to pull shoppers into the
store, knowing that once they’re there, they won’t just buy four cans of tuna
for $1; they’ll pick up mayonnaise, pickles, relish, and a dozen other items
that will allow the store to more than make up for the deficit from the
tuna.
As mentioned earlier, the first “yes” is the toughest. Once
someone’s going through the hassle of driving to the store, standing in line,
and paying, they may as well pick up a few more things to make the trip
worthwhile. The same is true for your business. If you can get a customer to
open his or her wallet with an unbelievable deal, you have a good chance of
expanding the order.
This is different from an add-on sale, because you’re using
a really low price initially to get the customer into your “store.” So the
related products you present don’t need to follow the same guidelines they
would for an add-on sale. Instead, keep these hints in mind:
- The initial “loss leader” needs to be jaw-droppingly
great. 10% or even 25% off is not going to cut it, unless the total cost
reduction is huge, or it’s on an item that NEVER goes on sale. Reductions
of at least 50% are usually the strongest lure.
- Choose an item that might be better used in
conjunction with something else. For instance, reduce the price of a
particular shade of foundation to 50%, and then encourage the purchase of
a set of brushes or the compact to hold it in.
- Use add-on sales for loss-leaders. The principles you
learned in the previous section on add-on sales can be used for loss
leaders, too! The hot dogs are half off, but of course you need buns to go
with them…
- Select a loss leader that ensures you repeat
business. Refillable items are great because once the customer has
invested in the original package, they’ve got it sitting their in their
garage, bathroom, or kitchen counter, just begging to be refilled.
- Don’t do it too often. A monthly special is great, as
are seasonal items. But if you offer too many loss leaders, or put things
on sale too often, people will just wait for it to go to half off before
they buy.
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