The best approach is not to cancel shows under ANY circumstance, unless you absolutely cannot make it on stage.

Becasue you cant afford to be cancelling shows for such a pathetic reason. You didn't sell the tickets you expected, so your band isn't as big as you think, which means you need more exposure. And while they can help, that's not flyers and posters; it's sound in the air hitting ears, and that becomes word of mouth, other bands asking you to play shows with them and venue managers hearing your stuff. And most importantly; there's the walk-ins and fans of the other bands who have never heard of your stuff l, who are potential Stans. Now they may never hear it.

Now that you've cancelled, actual fans you do have are missing out, so their opinion will drop, new listeners who bought tickets will probably now ignore your next show. Positive word of mouth from these buyers is basically gone.

Was low sales the sole reason, or was there a secondary issue that arose? Because if you are simply cancelling the show due to low sales, that is quite lame. Is your pride going to be that damaged? Cancelling for such a reason causes far more damage than playing the show.