Loss Leaders Helped Grow My Business: A Case Study
When Enzo and Linda Rossi decided to move out of London they didn’t realise that their customers would be so different when they moved to Suffolk. Having owned a coffee shop in central London for many years, serving lunches to hordes of office workers everyday, their change of location also brought with it a change of pace.
A New ChallengeEnzo explained, “Linda and I had loved running our sandwich shop in Soho but we were looking for a slightly slower pace. We weren’t ready to retire but we didn’t want to keep up the hectic London life into our sixties, so when our son and his family moved to a market town in Suffolk, we decided to join them.”
Enzo and Linda sold their business and their North London home, leaving them with a tidy profit to invest in a new business in their new home town. They bought a small café in the centre of town after checking that the local clientele considered the place a good spot for buying lunch or afternoon tea.
Linda continued, “We certainly did our homework before we bought the café and we made a number of visits at different times of the day to see that it was popular. What we didn’t really notice was what people were buying! Once we had been there a few weeks we realised that all the sandwich fillings and fancy coffees that were our best sellers in London – sun dried tomato, pesto, macchiato and so on – were not at all popular.”
Introducing New TastesThey found that customers would tend to order the same thing everyday, with old favourites like cheese and pickle or ham salad selling the best. The couple were keen to know if these were actually what people wanted, or if they were just not sure if they liked the other choices that Enzo and Linda were offering.
Enzo pointed out, “We were happy to give customers whatever they wanted – after all, the customer is always right! – but first we wanted to offer them some new ideas to see if they wanted a change.”
The couple decided to have an ‘open house’ day where samples of their more unusual sandwiches were available for free – samples of rocket and emmenthal panini, Parma ham and sun dried tomato ciabatta and shots of strong, dark espresso were all set out on platters for customers to try.
Linda told us, “We set up a trestle table outside the café and had bunting in the colours of the Italian flag. We had a stereo with Pavarotti and Italian classics playing and really tried to make an event of it. We knew it was going to cost us quite a bit, but we thought it would be worth it to introduce customers to something new.”
Great Return on the Loss LeadersAs it turned out, the exercise earned far more than it cost, with many customers enjoying the new flavours. The promotion also brought the café to the attention of the local newspaper and it had a full page write up with photographs showing the menu and satisfied customers.
Enzo concluded, “Offering free samples as loss leaders was one of the best business decisions we’ve made because we realised that no one was going to buy the new products unless they knew they liked them. It also helped us to get to know our customers better and gave us great publicity.”