The ‘Loss Leader’ method – at least use it properly!
What do you know about Loss Leaders?
Someone asked me last week: “Why do some people pay for FB ads to give away their Book for FREE?”
What a great question!
Whenever something is offered for free in the business world, it is usually a lead generation tool or item. This means, whatever the ‘free’ thing is, it is intended to bring back clients, orders or at least, questions from prospects.
Unfortunately, quite often those lead generation items are not well thought out and end up being a loss leader, rather than leading prospects to the business.
(a loss leader, in case some don’t know, is something the business sells, offers or gives away and loses money on. In the Jewellery Industry, a lot of Jewellers used the ‘loss leader’ method to bring customers into their shop. I know this, because I owned a Diamond Jewellery Shop in 2002 and saw loads of Jewellers around Australia follow this method. Not a single one of those Jewellers ever increased their customer numbers or turnover using this loss leader method! I know that, because I was part of a Jewellers Buying Group and other members reported their losses in the group!)
Let’s stay with that Jewellers example for a moment, as we explore the FREE book method some people use for their marketing.
The main reason the Jewellers did not increase customer numbers or turnover when using the loss leader method is simple:
The never actually measured the activity nor the outcome of the activity. By that I mean, they would buy in two hundred 9ct gold rings at $10 each and then pay for local ads that advertised the rings for $1 each (just an example, of course!)
Then the Jeweller would get all excited when people rushed to their shop, squeezing each other around the counters, looking for the $1 rings.
Extra staff had to be engaged on that day (usually such a special was done within a short timeframe) and all eyes had to be kept not only on customers actually wanting to buy those $1 rings, but also on people who’d come for a ‘light finger’ opportunity, in other words, to steal something, which is not too difficult to do, in a crowded space!
In some of those ‘loss leader’ events, the Jeweller would note a slight increase in takings that day but not usually anything dramatic. Why? Because they had targeted people who wanted ‘cheap’ Jewellery, a ‘bargain’!
They’d console themselves by saying: “Now these people know we’re here, they’ll come back and we’ll make sales!”
As I said earlier, most of the Jewellers would not keep track of actual sales, ad costs, staff costs etc
They’d also NOT keep track of customers’ details, like names, contact details or anything so they could get back in touch with these people again!
They had truly ‘lost’ on that loss leader marketing activity!
(Using the loss leader method is something I never followed. Because of my Marketing background, I applied very different methods to reach, keep AND re-connect with customers. These methods are part of my Write & Publish a Marketing Optimized Book in 6-Weeks or less Program, now.)
And here is how the loss leader method is connected to advertising the FREE book method:
Most people who offer the FREE book via a FB ad will ask for full name and mailing address details and they may ask or position the ad, in such a way that you are asked to pay for postage.
So, the book is free, you only pay for postage. That is a clear lead generation marketing activity.
The benefits to the person offering this are to get somewhat committed leads. People are prepared to pay a small amount, the conclusion is, they probably will pay more to get more. (so very different to the Jewellers’ loss leader method, where with ‘cheap’ Jewellery, they got ‘bargain’ hunters!)
In some cases, the postage may even cover the book print cost and therefore it is not a loss leader but makes a return. If that return is enough to cover the FB ad depends on how many higher, or next level, sales the person who uses this marketing method, gets.
Most people who do use this method to promote their book will keep a close eye on the data, meaning they will keep records and measure exactly what return on the investment of such a marketing activity they get.
So, to answer the question: “Why do people pay for FB ads to give away their Book for FREE?”
…is, it is a lead generation marketing activity. The person giving away the book for FREE gets in exchange somewhat committed leads, the leads’ complete details, namely, name, phone AND address, and possibly makes a small amount of money from the postage, if they ask for that.
Two specific benefits for the person giving away their book for free with this method are:
#1 – They build a list of potential, and potentially, at least somewhat, committed leads. Using FB ads to do this, increases the reach to build this list.
#2 – They can reach and re-connect with these leads in a range of ways, such as, by phone, by mail, by email. This increases the chance of reaching the right person at the time they are looking for the higher value offer the writer of the book has and it increases the chance to reach the person with exactly the method of contact they most prefer.
The question now is, is this a good marketing method for any book?
…and I assume, you will have guessed it already, this is ONE method but not necessarily the best one, nor the right one for everyone!
I shared some outcomes people might want from writing their book – check it out here:
Each coach and consultant who joins my 6-Week Write & Publish a Marketing Optimized Book, has a different outcome in mind. Each writes their book for a different reason.
The clients that come and work with me, understand that marketing does is not one size fits all. My clients work with me because they are excited to draw on my long standing, practical and personally experienced marketing and marketing knowledge. And they are looking forward to optimizing their book for it to be bringing them the marketing outcome they wish to achieve.
If you want help to write your book and prepare, or, marketing optimize it, so it fulfils your outcome in mind
ls your outcome in mind. That outcome might be to bring warm leads to you, that are ready to take your offer, or you might want to show your expertise and authority in the field your get outstanding results with your clients, or maybe, you want to open new doors to industries you’ve not yet been able to get in, here is my full offer statement:
If that resonates with you, message me to discuss working together.
We do that via messengers, I ask you a couple of questions to make sure we are a good fit, and if so, enrollment is fast and easy and I get you on your one-on-one call and working on your first step towards your book, the very same day and schedule the following, weekly 6 session (which can be in a small group, max 5 people) within a week.
Do you have a Question?
Or would you like to Comment?
Easiest Way – Join my FB Group:
Prefer to Connect on LinkedIn?
Simply Click Below and Send a Message
Looking forward to meeting you!