Do you use lost leaders especially if you deliver professional services? Did you realize that this marketing strategy has a secret advantage that increases profitability?
Before I share the hidden fact, I believe it is necessary to understand how to effectively use this marketing approach. First, it is really essential to understand the essence of this tactic.
A simple marketing model called AIDA helps to explain why lost leaders can work because they:
- Attract Attention - Think Black Friday, the day after Thanksgiving with all those special gifts for Christmas or those weekly specials at the local grocery store
- Build Interest - With competitors hanging their shields left and right, you need to differentiate your business from everyone else
- Develop Desire - Saving money is always a good thing and how much better does it get when you as the purchaser believe you really have a good deal
- Action, Call to - Try it you'll like it from the warm pizza bites at the end of the frozen food section to the whiff of that exotic cologne at the cosmetics stand all are calls to action
Next, accepting that this strategy works differently for retail versus business to business is crucial. Retail stores bank on the economy of scale. They look for hundreds if not thousands of people to stop by their stores. For them there is profit in numbers.
Business to business individuals especially those engaged in consulting or executive coaching services do not have the traffic of retail stores. So these folks must be more selective in their freebie offers. By offering this "lost leader" to only qualified potential customers (a.k.a. prospects) or clients increases the likelihood of converting the individual to a customer.
The effective use of this strategy reveals this secret - disqualification. A qualified prospect has these four (4) buying criteria:
- Decision maker
- Need
- Budget (allocated)
- Urgency
However, without commitment (the 5th buying criterion) to take action no action will be taken. The ability to sample your services will indicate to you the level of commitment within that potential customer. For example, if you provide a free Internet assessment valued at $250 to even $1,000 that takes 15 minutes to complete and it takes the individual 3 or more days to complete the assessment, this suggests a weak commitment level. When someone completes the assessment in less than 24 hours, you probably have someone who is more committed to taking action.
When you understand the level of commitment, you can use this as the fifth criterion. Let's be honest, who wants to work with someone is not willing to take action? This just makes the engagement far more difficult. Life is hard enough, why make it any harder? Of course, there are always exceptions to any rule.
Through this disqualification process, you will have invested far less time attempting to "sell" you and therefore your services. This increases profitability because you can focus on those other potential qualified customers who understand the value of what you bring to the table. Today, sales success is truly about working smarter and not harder. A lost leader when executed effectively can maximize your resources and your profits.
Are the sales behaviors of your team or even yourself where you want them to be? If not, then you may discover an easy read on how to increase sales in this book, Be the Red Jacket in the Sea of Gray Suits, the Keys to Unlocking Sales Success including looking at your individual behaviors.
Free sales skills assessment by Chicago Sales Coach Leanne Hoagland-Smith who helps with sales coaching, leadership to sales management development.
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