What Are Your Loss Leaders?

grocery store aisle with cold cases full of products

A few years ago (pre-pandemic), I had the chance to attend an invite-only business book launch event with a room full of (other than me) pretty high-level people. Puzzlingly, the author, rather than giving their book away to all these influential people, opted to try to make this a sales event, and sold maybe ten books. This was unlike the model that we’re more familiar with in the association industry, from our keynote speakers: You GIVE the book to the hundreds or even thousands of people in the audience.

Sometimes, the association has paid for all those books (making them a loss leader for the association). Sometimes the author donates them (making them a loss leader for the author’s other business lines). But the point is: Get them into people’s hands.

What’s a loss leader?

Most of us are familiar with the concept from grocery shopping. Loss leaders are the products that are featured in the weekly ads and in the aisle end caps that are being offered at ridiculously low prices on the theory that, once you’re in the door (for, for instance, your virtually free turkey offered on special the third week of November), you might as well shop (for everything ELSE you’ll be needing to prepare your Thanksgiving feast).

Associations have loss leaders, too, programs, products, or services we offer below the COGS (Cost of Goods Sold, aka direct costs, including staff time, to produce that particular thing) either for the good of the profession or industry (like student memberships) or the good of the order (like government advocacy work) or because it serves the mission.

And that’s a good thing. There are absolutely programs, products, and services we SHOULD offer below cost for the good of the profession or industry, the order, or the mission.

But EVERYTHING can’t be a loss leader.

And this is where it gets tricky. It’s tempting to argue that a program, product, or service that loses money but is favored by someone among The Powers That Be (the board, influential volunteers or members, the senior paid leadership, that unexpectedly powerful long-term mid-level manager) should be maintained for the good of the profession or industry, the order, or the mission.

Remember: no money, no mission.

Last week, among the questions I posed you should be asking about your membership model right now, was: “Have some programs, products, or services outlived their usefulness?”

That’s a really critical question for associations to be asking right now, as our members and their goals, challenges, and needs continue to evolve. To create those new solutions your members need, you’ll have to free up resources. That might require a certain degree of ruthlessness.

In other words, don’t assume that just because cheap turkeys got people in the door in November, those same cheap turkeys will still keep them coming in July.

Photo by Eduardo Soares on Unsplash

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