Did you ever wonder why supermarkets advertise all those BOGO (buy one, get one) offers? Maybe you don’t care. If you can use two five-pound bags of potatoes or two jumbo packs of chicken legs (common supermarket BOGOs), you go for it. Or maybe you go for it even if you have to give some of that food away… just because it’s such a good deal.
Well, if you’ve been reading the marketing articles we publish in ETR, my guess is that you look at the BOGO in a different way. Because even if you’re not a marketer, you’ve been developing a marketer’s mindset. So you understand what’s at work here. You know that the BOGO is designed to attract people with big families – the kind of people who are likely to drop well over $100 every time they go grocery shopping… and have the potential to become the store’s most profitable customers.
Retailers refer to such deals as “loss leaders,” because the merchandise is often sold at a loss in order to bring in new customers and beef up sales. (Though sometimes the retailer is able to get “specials” from their suppliers so they can at least break even.)
The loss-leader tactic is used by online marketers, too. And you’ve read about it many times in ETR. We refer to it as a “front-end” promotion. Here’s an example…
I went to the Orvis website to find a gift for Craig, my fly-fishing-fan son-in-law… and right there on the homepage was an offer I couldn’t refuse: $45 worth of flies in a nice case for only $10. Including free shipping. Click! It went right into my shopping cart. Did Orvis lose money on me? Nope. Because I didn’t stop there. I kept on shopping, and ended up going a little over budget on Craig’s gift. Plus, they now have my e-mail address, so they can keep on sending me “back-end” offers for more stuff they can make a profit on.
Here’s another example…
My brother called and told me to check out Nueske’s website. “They’ve got an unbelievable special,” he said. “Two smoked duck breasts for $9.99 – with free shipping.” Wow! Their duck breasts usually go for $14.99. Not only that, but shipping on any perishable item is high – a minimum of $7.95 at Nueske’s – because it has to go in a Styrofoam container with freezer packs.
Again, it was a deal I couldn’t refuse. And it was such a good deal, not only did I order one for myself, I also sent one to my son and one to my daughter. Did Nueske’s lose money on me? Yup, I think they did. But now they’ve added me, my son, and my daughter to their e-mail list – three more people who are interested in the specialty products they sell. And there’s a good chance they’ll more than make up for that initial loss by making profitable back-end sales to all three of us in the future.
When you look at offers like these with your marketer’s mindset, you have an “insider’s” perspective on the tactics being used to attract you as a customer – and an inside track on being able to recognize really great bargains.
So keep reading those ETR articles. And not just because we keep urging you to get into the marketing side of whatever business you’re in (because that’s where the money is). Keep reading them because they’re turning you into a very well-informed shopper.