This is Risky…
Sometimes a loss leader can be risky - but is it worth it?
A Loss Leader is one of the more powerful brand building strategies that any business can employ.
And statistics, for what they're worth, usually bear out that you'll always earn more money per customer AND create a larger customer base if you're prepared to sell a product for no profit, or even a LOSS in order to create a relationship with a customer.
But it's Risky.
It's Risky for a few reasons:
1 – To sell at no profit or a loss means that you're sometimes selling low-value stuff.
Right? You've seen the Big Box Retailers offer crazy deals on low-end electronics in order to get people in the door. The problem is, the offer is usually "LOW END". And the customer experience that follows doesn't, shall we say, build the most loyalty.
2 – Also, it means that you MUST have a system to follow up with those new customers – meaning, you need to be ready to walk them up the "Ladder of Intimacy" to create future sales.
"Ladder of Intimacy?" Picture one of those A-Frame Ladders. You're on one side and your customer is on the other.
At first, you're far apart and low on the ladder – meaning, you've offered SOME value, and you've only asked for a LITTLE bit of a financial commitment for it.
The trick is getting them to climb that ladder. Each rung is a more expensive offer, but it also brings YOU closer to that customer because you're providing MORE value as you climb together.
Sexy, eh? 
The problem there is, the first thing you're offering (because you need to keep it inexpensive for cash-flow reasons) is also probably of lower value to the customer.
There's the rub.
What if you could invert the ladder? What if you could deliver AMAZING value for a low price, and begin your relationship with your customer in a place where they are already confident that doing business with you will result in great things for them?
So, if you've ever asked why StomperNet makes free videos to promote its new products, the answer comes from customer comments like this:
"If this is what you are GIVING away, I can't imagine how good the stuff is that I get when I buy".
WIN. Profound WIN.
And it works, every time.
This Video is a text book example of how to structure an Inverted Ladder.
In one of my last newsletters, I de-constructed and reverse engineered Frank Kern's Mass Control Video – it was very well received for one very important reason:
"SHOWING" details, not "Telling" Details.
It's one thing to TELL YOU how to do something, it's another thing to SHOW YOU what it looks like, then talk about it why it works after.
This is the definition of Kinesthetic Learning. See it, Understand it, Do it. And it's why Medical Schools employ that kind of education – because it's CRITICAL when you're saving lives.
So, check out the video, and come back here to StomperBlog.com and tell me what kind of VALUE Propositions most appealed to you.
Thanks!
Andy Jenkins
P.S. Here's the Video Link again.
P.P.S. Next week, it's all about SEO here at StomperNet….
Advanced SEO, that is.
Stay tuned for a Video from SEO Expert Leslie Rohde. He's gonna tell you why LSI is lame.
Yes. Lame.
(I love causing trouble).
Great article Andy. This is just what I have been looking for to offset some crazy theories here.
Hi Andy,
We also subscribe to the Net Effect magazine. Mike normally provides some good information. The 'running out' tactic is a little lame though.
Keep up the good work!
Cheers
I agree with Jeremy about Mike's magazine and also canceled. It felt like he was "just going through the motions" of extracting money from me. To make it worse..the "easy to cancel" claim proved false with the customer service loop giving me a run around going from Recorded message to support portal.
To make matters worse…some outsourced staff member then sent me back to the phone number….When I showed my bank the proof of the runaround, they said that I would have to cancel my credit card in order to stop the payment. Two more payments got sucked out of me before the subscribtion was finally canceled. I didnt bother try and get the money back and MF probably
knew that while he was designing his customer re-around system.
Quite a damage to my trust in Mr.Filsaime. Any business owners here reading this?
If you are reading this and plan to run a lost leader, my advice
to you as a customer is this ….> dont get lost while you are leading
and make sure you take care of me…then I may spend more money with
you.
I also agree that "the showing" rather than "telling" is what
separates real trust and rapport building from merely taking me through
a mental exercise.
If you tell me…I still have to turn that into meaning, design a system and action….
If you show me….I just have to follow the steps & take action.
@Jeromy
I see the Net Effect more as a journal rather than a magazine. Academic journals, trade journals are all specialist and contain highly specific information, often cutting edge and not readily available. Journals aren't often sponsored by ads unless it's a trade journal so this understandably raises the price. Rarely does a magazine without ads cover costs.
I'm all for having an internet component though. Delivery to Australia is often a dismal experience and timings mean people in the US are talking about the next magazine before you have seen the first so being able to get to some of the information before the physical product arrives eases the anxiety. After a bad experience twice from different IM businesses I worry each time I am looking at a physical product. Amazon and other bricks and mortar business don't usually suffer this problem though.
Hey Andy,
I have bought into one of Mikes launches, and it was set up pretty much the same as this one. I ended up canceling on the magazine, simply because I didn't feel it was worth $40/month. Regardless of content, is a magazine subscription worth $40/month? I don't think so. I have tried three different subscriptions and yours, The Net Effect, is by far the best for quality actionable content. I was a bit disappointed with Mikes previous mag as I felt he should be producing better, actionable content. He claims that he recognizes this and has "gone back to the Drawing board" to produce a better mag, which I admit I would like to see. I think when this launches, I will give it a shot, $10 for shipping is cheap. Everyone knows how successful Butterfly Marketing has been. I will take the first step on this ladder because it is a lot of value for very little. Wither I will choose to remain a subscriber is unlikely, but we'll see. Personally, I would love to see a magazine subscription (Internet Marketing) that is comparable in cost to any other magazine we might subscribe to. The only way to justify a higher cost is if something of considerable value is also included, such as tools, private members forum, and other regular and constantly added to, list of goodies that help with your internet business. This could be content, templates, software, etc. So when I get my mag, I know that I should also sign into the site and see what new goodies have been released this month (or quarter). Seeing as how it is an Internet Marketing publication, why not have an internet component as a companion to that mag? I think something like that may get this type of product and price point more widely accepted.
Regards,
Jeromy (AKA Hillbilly)