Loss Leaders — The Must Do’s

What is the best way to produce a loss on stock but make a profit in clients?

“Loss Leaders” or merchandise sold at a loss to attract clients, may be an effective instrument to draw attention to your brand, your shopfront and your webstore. Strategically placing a loss leader functions best when you match it to a fashion. Generally these trends are extremely short lived, and can align with particular events and seasons happening globally, nationally or locally.

Leveraging your market share through a structured loss leader campaign has a flow on effect of improved client relations, and awareness via ecommerce & social media, and in-store face transactions.

However this is just the start, and the beginning to a much bigger campaign through cross-sell & up-sell placements, added add-on sales and repeat sale/loyalty strategies, which you have to master if you’re going to make a loss leader campaign successful.

Loss Pros — The Positive

  1. Attracts New Clients
  2. Re-engages present Customers
  3. Encourages re-connection/loyalty and repeat sales through psychological re-connection
  4. Combined with other promotions, (i.e. go in the draw for…. . , aligned with other in-store specials…. . , part of a wider campaign), your database and tactical marketing platform will be greatly enlarged.

Loss Leaders — The Must Do’s

  1. You Need to Have a Genuine Product and a True Bargain for your clients. Utilizing popular products which are aligned with retail trends are almost always profitable.
  2. You must put a deadline on the effort, be very specific. This also motivates your customers to make the choice to engage further.
  3. You should have enough stock available for your anticipated campaign. This increases customer confidence in your brand, and promotes repeat business. Adding”while stocks last” puts another’deadline’ on the effort. NOTE: (If there’s limited stock you have to legally disclose this, and make it very, very clear — lure advertising is prohibited!) .
  4. You Must limit the effort to”One per Customer”. The last thing you need is to be cleaned from a cheap item purchase bargain seekers on-selling your products for a profit.
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Loss Pros — The Pricing

A pricing structure for loss leaders is crucial. If your pricing is aggressive but’not too much’ from relative goods in the exact vertical (i.e. the next model up, better features), your clients have a genuine choice to make about whether they want the leader, or are ready to look at other options relative to their needs and needs. This also promotes a more engagement with your shop, and permits the client to explore more of your offerings.

If your pricing is too low, there’s absolutely no choice, and all the client purchases is the leader.


Loss Leaders can genuinely be an effective part of your retail marketing plan. Used effectively using a suitable, well planned and organized format, you can enhance your brand awareness and customer confidence, build loyalty and repeat sales, and increase your market share.

Happy Retailing.

See also

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