Gary owns a parking lot sweeping service. After hours he comes in and cleans parking lots of garbage and rocks. Overall Gary’s business is pretty successful. He has steady customers and enough jobs to keep him busy all year but he has hit a plateau. For every customer he gains he loses one to his competition. This led to Gary thinking of what he can do to keep his customers. His prices are fair and in line with his competition, his service is a bit better than most, but he does nothing to stand out. So Gary wanted to add a few services to his business so he can stand out and move his business forward.
Gary came up with five new services.
- Gum spot removal from sidewalks.
- Graffiti removal.
- Paint touch ups for both parking spots and other.
- Weed removal.
- Pothole fixing.
Instead of charging for every service Gary decided to break them down into three categories: Freebies, Loss Leaders, & Up-sells.
- Freebies are things a company does for free with no expected return. The cost and time should be minimal. This is more for marketing or to add extra value to other services.
- Loss Leaders are products or services done at a discounted rate or for nothing in hopes that the customer will buy other products or services. The difference between a loss leader and freebie is, a freebie could be a sample of a product. A loss leader is selling a product at a heavily discounted price and then pushing the customer to buy all the expensive accessories.
- Up-selling is introducing the customer to other, usually more expensive products or services. Read the last part of the line of the Loss Leader, “pushing the customer to buy all the expensive accessories”, that is up-selling.
Freebies, Loss Leaders, and Up-selling all work with each other. When done properly can help you turn a greater profit by building your customer base. You use the freebie or loss leader to get the custom aware of your business, products and services. Then you up-sell to make more profit. It is business 101.
In Gary’s case he is going to offer non customers 1 free parking lot sweep (for smaller parking lots). This is to market his core businesses and make them aware of his business. His loss leaders will be 1/2 off one of these services, gum removal, paint touch ups, weed removal, or pothole fixing, then up-selling his parking lot sweeping service.
For existing customers he is going to throw in freebies to add value to his service and help him stand out without diluting his core business. He will do one of the following, paint touch ups, weed removal, 1 pothole fix, graffiti removal, or gum spot removal. And again up-selling his other services.
There are a few things to remember, 1. Make sure you are awesome and professional at your core business services first and foremost. 2. Don’t take on any new extras that will dilute your service/take you away from your core business. 3. Know the difference between freebies for using your service, loss leaders, and up-sells. 4. If your freebies, loss leaders, and up-sells don’t work, then change them until they do.