Loss Leaders - The Must Do's

What's the best way to make a loss on inventory but make a gain in customers?

"Loss Leaders" or products sold at a loss to attract customers, can be an effective tool to draw attention to your brand, your shopfront and your webstore. Strategically placing a loss leader works best when you match it to a trend. Generally these trends are very short lived, and can align with special events and seasons occurring globally, nationally or locally. Leveraging your market share through a well structured loss leader campaign has a flow on effect of increased customer connections, and awareness through ecommerce & social media, and in-store face-to-face transactions. However this is only the beginning, and the start to a much larger campaign through cross-sell & up-sell placements, additional add-on sales and repeat sale/loyalty strategies, that you absolutely have to master if you are to make a loss leader campaign effective.

Loss Leaders - The Positive

  1. Attracts New Customers
  2. Re-engages existing Customers
  3. Encourages re-connection/loyalty and repeat sales through emotional re-connection
  4. Combined with other promotions, (i.e. go into the draw for....., aligned with other in-store specials....., part of a broader campaign), your database and strategic marketing platform will be greatly expanded.

Loss Leaders - The Must Do's

  1. You Must have a Genuine Product and a Real Bargain for your customers. Using popular products that are aligned with retail trends are always successful.
  2. You Must place a timeline on the campaign, be very specific. This also encourages your customers to make the decision to engage further.
  3. You Must have sufficient stock available for your expected campaign. This increases consumer confidence in your brand, and encourages repeat business. Including "while stocks last" puts another 'timeline' on the campaign. NOTE: (If there is limited stock you must legally disclose this, and make it very, very clear - bait advertising is illegal!).
  4. You Must limit the campaign to "One per Customer". The last thing you want is to be cleaned out of a cheap item buy bargain hunters on-selling your products for a profit.

Loss Leaders - The Pricing

A pricing structure for loss leaders is critical. If your pricing is competitive but 'not too far' from comparative goods in the same vertical (i.e. the next model up, better features), your customers have a genuine decision to make around whether they want the leader, or are prepared to look at other alternatives relative to their wants and needs. This also promotes a further engagement with your store, and allows the customer to explore more of your offerings. If your pricing is too low, there is no decision, and all the customer buys is the leader.


Loss Leaders can genuinely be a successful part of your retail marketing strategy. Used effectively with a proper, well planned and structured format, you can improve your brand awareness and consumer confidence, build loyalty and repeat sales, and increase your market share.

Happy Retailing.

Looking to fast track your growth with a smarter point of sale system? Contact the Retail Express team today on 1300 732 618.

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