Blogs as Loss Leaders

cash register Chris Voss gave me the idea for this post. He was talking about his blog as a loss leader, meaning, something that doesn’t exactly earn revenue, but that is a lead in towards other things that make money. Stores use loss leaders all the time. Sell nylons to ladies at cost and get them to buy the high markup stuff, too. That’s how Sam Walton (Wal-Mart fame) made all his money, by the way. Loss leaders are as old as retail. So, what about blogs as a loss leader?

Blogs As Loss Leader

Blogs do an incredible service: they let people understand what you are into without those people having to engage you directly. For instance, if someone’s thinking about hiring me as a professional speaker, they need only to read a few posts on my blog to get a sense of what I might talk like, what topics matter to me, what’s of use to them.

I post my blog for free. Most people do. In that way, you can see it as a kind of loss leader, because if you give away great free information, like 50 Power Twitter Tips, for instance, people might see a glimmer of something that will encourage them to do more work.

A lot of us do some or a great deal of what we do for free, and then we charge for other bits to make up for it. You want specific advice from me? I give that to you in Third Tribe Marketing, which isn’t free. You want the general stuff? That’s a “loss leader” for the possibility of future work.

Value Chain Disaggregation

Another way to look at it, instead of as a loss leader, is that I’ve placed financial weight on certain parts of the value chain and accepted that there’s not as much financial opportunity in other parts. For instance, blogging my information to you is a way to share the parts that I think most people could figure out, given enough time. Then, I can sell the larger parts, like customization and the management and all the details, through my marketing company, New Marketing Labs.

There’s a value chain, meaning several links where someone might or might not add/subtract/derive value. I choose specific points to extract value, and I create price points along the way so that I can help at different levels.

In Either Case, There’s a Plan

Chris Voss extracts value at different points than his blog. Thus, it’s a loss leader for larger opportunities. I do the same. You most likely do as well. But there’s a plan to it.

Knowing where to extract value and where to charge for that extracted value is the whole trick of it all. Knowing where to charge and what to keep free is the whole story. In all businesses.

What’s your plan for value? Where are your loss leaders? How do you use them to bring business forward?

Photo credit steven snodgrass

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