Marketing Lesson: When To Advertise Loss Leaders.

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Advertising Experts say to advertise loss leaders to get people to call.
So which initial offer is better? The ""Here's my best stuff. Buy it now" approach, or the ""Start very small and we'll build the relationship" approach.

The answer is "Both". You have to understand the most profitable goal of advertising. You want to attract your most desirable customer....the customer that is the most profitable, and will continually buy the most from you.

So you use the "Buy my best stuff" approach when;
You are advertising to the masses in broadcast media that is relatively expensive. Direct mail, newspaper, radio, cable TV.
You want your advertising to pay for itself immediately. (my goal usually)
You want to select out the low end customer ..for a variety of reasons. For example, you have a limited amount of time, and you want to concentrate of the more profitable clients/patients/customers. In our store we still get people wanting to buy the low end product, and we still get buyers of our $1 products...but we'll get those anyway...they'll find us anyway… I just don't want to spend advertising dollars attracting that business.
A sale can be made quick because they visit you personally (in your store or business), where the real decision can be made while you are in front of them.

You use the "give them something free just to get the name, and up-sell as you create a relationship" approach is more useful when;
The media is practically free (like organic search listings on the internet)
Your cost of the front end product is either very low or free (like an e-book download, or a sample that costs very little compared to the value of a prolonged business relationship)
You can target your ideal customer from the start. And almost nobody else will even see your ad.
You can target your ideal customer from the start. And almost nobody else will even see your ad.
If you know for a fact that the people seeing your ads are very likely high profit prospects, then you should do almost anything (with out losing money) to attract them in the first place. They are heavily pre-qualified.

For example;

You sell speed boats. Only high end speedboats that cost $50,000 and up. (I made up the price. I have no idea how much they cost...but the example is valid)

If you advertise in the local newspaper or use "marriage mail" direct mail advertising...mailed to everyone with an address…
You would want to tell all about the speed boat you sell. Mention the price. Give as much information as the space will allow. Your goal is to attract the 3 or 4 real prospects for your speed boats. Giving away hundreds of toy speed boats, hot dogs for the kids, and brochures with a "leader ad" will cost you a fortune in freebies and not convert non-buyers into buyers. And you will still end up with the same 3 or 4 real prospects at the end of the day.

If you do direct mail to current owners of high end speed boats...or advertise in the local "Speed boat club" newsletter….then you are already only seeing the highly probable prospect. You want them to contact you by any means available to you.
After they contact you, and you have their name and contact information;
Send a Free small gift, maybe a free report on "Selecting The Best Speed Boat For You". You might send them a DVD of your speed boat being in a race, blowing away the competition...a DVD of you showing the speed boat, feature by feature, building desire for that speed boat. Make a trade-in of their current speed boat so lucrative for them, that they would have to be brain dead to ignore the offer.

Continue contacting them with reasons to invest in your speed boat, testimonials from other owners, articles about speed boats.

Eventually, these people will either buy...or say "Stop!"

I want to be more clear about these two groups of prospects. The first group is unqualified except for very few people. You are sending your message to a hundred thousand people in the hopes of finding the ten that will be ideal prospects.

The second group is only made up of ideal prospects. Maybe you only need 30-100 contacts to get the same ten sales that the "shotgun" approach would give you.

The exception to all this is when your cost of customer acquisition is Zero….and the cost of contact is Zero.

For example, I target my ads for my free advertising book to small business owners who buy local advertising (or buyers of books similar to mine). But the book download costs me nothing...the follow up e-mails cost me next to nothing. So if 50% of my e-mail contact list is going to 6 year old video game enthusiasts, I don't much care. If I were paying $1 per e-mail, I would care a lot.

So the rule of thumb is ;
Advertise high end to the masses. You want to select out the best customers to up-sell, cross-sell, and re-sell later.

Advertise a freebie to pull prospects in, if it's a targeted list of desirable customers. Both approaches get you great customers.

Don't advertise the freebies to the masses, you'll end up with a store full of "Yeah, these free hotdogs are great! Where's the relish and beer" people.

When I talk about a "desirable list", I don't mean anything sexist, racist, or classist. I mean "desirable" in that they are highly likely to be the demographic of your proven profitable buyers….it's just math.

Article Source: http://depositarticles.com/

Local Small Business and Marketing expert Claude Whitacre is author of the book The Unfair Advantage Small Business Advertising Manual. You can purchase the book for $19.95 at amazon.com. You can also download your Free copy of the complete book at local-small-business-advertising-marketing-book.com/

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