Finding the ‘lost leader’ for Business

Finding the ‘lost leader’ for Business

One of the most common business strategies for growing a business network and engaging with new customers is through promoting the ‘lost leader’.

The business ‘lost leader’ is generally the most common service/product that the business bases its operations around.

The strategy is that while the customer is given a competitive and rewarding experience when they choose the (lost leader) product/service, that they are enticed to build on that experience by choosing other (less lucrative) options….. this is exactly what the business wants people to choose and this is where profits are generated.

So how do we use the ‘lost leader’ to promote and grow the business?

Depending on the business type, I have listed a couple of examples which should help people understand how this works:

Tech Startup

Generally tech products require a lot of front end work/effort from a small group of people. The product is created as a MVP (minimal viable product) and then it can be released for people to purchase…. from this point the best strategy needs to be implemented:

  1. Tech products only become utilised if they are either incredibly useful, incredibly engaging, socially interactive and generally it is by ‘old fashioned word of mouth’ that you hear about them,
  2. Tech products rarely make a ‘million dollars’ overnight,
  3. Tech products rely on people to download the product and utilise it, share it and write about their experience.
  4. To be lucrative the product requires profit, to generate profit it needs sales……

For us to succeed we need to define a strategy for the product that will create sales and thus profit (remembering that the product dynamic can change in the future);

  • Is the product a single function product or are there add-ons to the product?
  • Do the target market users subscribe or buy the product?
  • Does the target market provide opportunities for significant sales growth?
  • Does the forecast sales revenue come from the main product or through a structured method for receiving revenue? – the lost leader approach

The ‘lost leader’ in tech:- Develop an MVP, make the product freely available for all users to download and use, create a platform for revenue growth with engaged users of the product (for example: advertising, product add-on functionality, ability for improved sales of their own) and then integrate other useful and accommodating extras to broaden the brand/product for which other revenue streams can be created.

The skill about using the ‘lost leader’ in tech is bringing customers into your business (the product), engage their curiosity while they are intuitively learning and then build a revenue stream based upon the customer/user dynamics. Build the user database and create revenue opportunities in the future. While the brand awareness grows the business grows with it and so do the opportunities for creating sales and profits – tech business need to be making money while the owners are asleep.

This is how we use the ‘lost leader’ to promote and grow a regular tech startup business.


Generally shopfronts require paid up capital in the products that they offer to customers, they have a regular stream of overheads (rent, power, phone, wages, supplies etc.), they rely upon customers physically walking into the shop to purchase a product and/or service. There are countless opportunities to disrupt the standard shop front ecosystem and make it a better customer experience….. from this point the best strategy needs to be implemented:

  1. The shop will only be utilised when people need something (health, food, convenience, social interaction etc.),
  2. The business will only thrive when they recognise what it is that people really want (for example: a coffee shop is really about relaxing and enjoying a coffee at the same time),
  3. Shopfronts have standard hours of work, it is important to recognise the times that are busy and those times that are slow,
  4. To be lucrative, the shopfront needs to entice people through the door, give people the experience they are expecting, and if possible, make them feel rewarded.

For us to succeed we need to define a strategy for the shopfront that will create customer awareness to increase sales and thus profit (remembering that the shopfront product environment can always change in the future);

  • Who are our perfect customer and what will bring more perfect customers through the door?
  • What product do those people rely on most, are there complimentary products/services for the product?
  • What opportunities are there to diversify our mainstream products to entice more customers?
  • Are there opportunities to subscribe, become actively involved with or receive product updates (so that our customer is personally attached)?
  • Does the target market provide opportunities for significant sales growth?
  • Does the forecast sales revenue come from the main product or through a structured method for receiving revenue? – the lost leader approach

The ‘lost leader’ in a shopfront:- Develop a viable business based around the core cash-flow certainties, engage with the customers to seek what makes the “perfect customer” (regular purchases, loyal, guaranteed revenue, important to the business, introduce friends etc.) and what specifically do they want.The lost leader is providing the customers with the ‘best option’ for getting what they want; the price, the environment, the simplicity, the social interaction, the quality etc….. once this is established, then entice that customer to pursue their interest with more products, more purchases and greater involvement that can be shared with their colleagues, family and friends.

The skill about using the ‘lost leader’ as a shopfront is bringing customers into your business, engage their attention by providing them with a perfect solution to their problem, then build a revenue stream based upon the customers future wants/needs without having to forego too much equity to retain an ongoing business relationship.

Successful shopfronts encourage customer involvement through satisfaction and create revenue opportunities based upon a growing customer base. While the brand awareness grows the business grows with it and so do the opportunities for creating sales and profits. Shopfronts have the opportunity to create integrated revenue streams through the different product offerings introduced by ‘lost leader’ products.

An example of a disruptive Shopfront would be: operating on a slight profit to entice people through the door, this is only to generate ‘face to face interaction’ with the business and its customers and provide ‘face to face brand awareness’ for the customers to share with their colleagues, friends and family….. the actual focus of the ‘lost leader’ in this situation is to direct its customers to engage with its online products, by increasing its online sales revenue stream the business will increase its 24/7 trading structure (sell when you are sleeping approach)

Identifying the ‘lost leader’ can be hard…..

It can be awkward to understand what items should be lost leaders, and, what items are not lost leaders…..

Generally, the ‘lost leaders’ are products or services that people utilise the most, or, engage with the most as a consumer/user is normally a good area to start. Visit competitors and seek what their business is using to guide them strategically for growth.

Here are a few examples:

  • A supermarket special is normally what gets people in the door and normally it is something that most of their ‘perfect customers’ will want – so this is why they want you to buy from them…… and while you’re there, well you can purchase something else. This is what supermarkets want.
  • A phone company will give you a deal for signing up and then lock you into a fixed term contract…… and while you are in the contract it begins to feel normal, so why not just renew the contract when it come time. This is what phone companies want.
  • A service company will give you a quote for repairs….. and while they are there, it is likely that other work is required to be completed so they get the job. This is what service companies want.
  • A coffee shop will give you opportunities for loyalty – buy 5 and get the 6th coffee free….. the effort to get a free coffee is easy, it keeps you engaged with their business, and, while you are waiting for the barista you are more likely to purchase a pairing option to coffee. This is what a coffee shop want.

There are many ways to try and entice new customers and the ‘lost leader’ approach is very common; by introducing ‘lost leaders’ into the business it can make it easier to find the right avenue that gets customers in the door to begin the customer relationship….. from then, it is all about maintaining the customers relationship.


Written by Geoff Pike, Entrepreneur, Speaker & Business Mentor


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Geoff founded a sole trader plumbing business in a remotely located and vastly underpopulated location in outback Australia. Starting business with only enough money to pay 4 weeks wages, Geoff persisted by growing the business into a multi-disciplined trade services company. Over a period of 12 years, the company Geoff established grew to employ a workforce of over 300 personnel covering an area almost half the size of Europe, receiving international award recognition with an annual revenue of over $30mil. Geoff knows what it takes to overcome adversity.

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