Scarcity marketing can best be described as FOMO or Fear of Missing Out. We know about it thanks to Robert Cialdini, a much-cited expert in persuasion research, and his book, “Influence: The Psychology of Persuasion” published in 1984.
“The way to love anything is to realize that it might be lost.” ― Robert B. Cialdini, Influence: The Psychology of Persuasion
Consumers are more likely to purchase something if they believe it’s in short supply, so marketers frequently use tactics to exploit this. The law of supply and demand says that low supply and high demand will increase a product’s price.
But there are methods of using this marketing concept in ways that don’t involve breaching ethics. And the fact that consumers are becoming more aware of the likelihood that they’re being exploited by advertisers is just one reason it’s better to take the high road.
This means staying honest and open with potential buyers.
A Working Definition of Manipulation
Psychological literature tells us that intellectual manipulation is a kind of social influence. But it’s one that wants to change other people’s behavior or perception using abusive, deceptive, and underhanded tactics.
Indulging in false scarcity marketing to boost your brand could severely damage your customer relationships and in a worst-case scenario, land you in legal trouble.
It’s Best Practice To Tell the Truth
One way of using scarcity marketing ethically would be offering transparency on how much stock is left of a certain item. Another would be providing information on how many products have already been sold.
Doing this will make your item more valuable to potential customers, but you’re not distorting the truth or telling an outright lie. If there is only a limited supply, informing people about that is a good thing.
While it may incentivize customers to purchase more quickly and with less thought than they usually would, you’re not manipulating them unscrupulously.
Procrastination is the Enemy
Simply put, procrastination kills sales.
Hesitation is the biggest enemy of selling, particularly online. The chances of a prospect staying on or returning to a website to buy something after hesitating to do so initially are slim.
“Without a sense of urgency, desire loses its value.” – Jim Rohn
Over time, it has become obvious that great content is not supposed to incite action in an online world. However shocking that concept may seem, your product’s job is not to get people to act. It is actually meant to prevent them from procrastinating. Your items are not meant to sell people or pressure them.
They are there to help people buy what you are offering and to stop customers from making the wrong decision. Procrastination is a decision, it is just the wrong one for your company and the opposite of what your marketing should achieve.
People go online first and foremost to get information. They’re looking for something specific, so they will get to you via research, through affiliate advertisements, promotions, or an offer made elsewhere.
They are Already Interested
This means they are pre-qualified, already in the market for what you are selling.
So, scarcity marketing, used properly, should help them buy, but not pressuring them to act.
Non-manipulative scarcity marketing is all about getting people to take action at once. And this translates into you shaping your offer, not just your product and service, in an event-based, quantity-bound, or time-sensitive way.
Keep Your Sales Tactics Honest
The most important thing to remember when applying ethical scarcity marketing tactics is the reason that you’re giving people to buy your item must be believable, logical, and reasonable. It has to justify your sense of urgency or it will rightly come across as disingenuous and will get instantly discredited. This can have a knock-on effect and lead to customers questioning the core values of your company or the reliability of your brand.
If you advertise a product as a limited edition, selling the same product when the ‘limited’ line has run out will destroy trust, as will regularly restocking one-offs that were previously deemed exclusive.
The Proper Application of Scarcity Marketing
The three best ways to apply scarcity are:
1. Limit the Offer
The way to do this is to restrict elements that are a part of the proposal. You could give a longer or more favorable guarantee, but only for a certain number of units or people, or by a particular point in time.
A great option applies to bonuses or premiums and works especially well when the extra is provided by a third party. The reason it works in the latter case especially is that perks can be limited or changed without negatively affecting the sale of the core product or service. Limiting them at the third party’s discretion is also good because it projects more believability.
The perception that things are under your control regarding the limitation is reduced, and so is the idea that the whole thing is manipulative and self-serving. It’s even better if the bonus is available elsewhere. It’s therefore inherently scarce by being added as an extra. This is without even considering the fact that the third party has put a limit on how many to give away.
This is known as the “Higher Authority” or “Third Party” gambit in Negotiation Skills Training because the limitation appears to be out of your control. The scarcity marketing aspect remains true because it’s not a manipulative ploy. The decision is not being made by you!
So, if you’re going to add a deadline, you need a real end-date to the offer. Limit how many products you’re selling, or how many new members you’ll allow to join, or design your offer so that some aspect of it is finite in a rational way.
For scarcity marketing to work, customers need to see the rationale behind a limited offer. You need to substantiate every claim you make, so really think about the why before you go full throttle on a new ad campaign.
Good Reasons for Restricted Offers
If it’s related to price, you could posit that an increase is forthcoming, maybe to cover the additional costs that have more customers to deal with will create.
In terms of packaging, you could bundle the product with other ones or different components that won’t be available after a certain amount gets sold. And then there are always extras, like free installation, free shipping, or free support for a limited time.
2. Limit the Quantity
Again, the reason for the circumscribed quantity of the sales you can make has to be logical and real.
One option is a Fire Sale on the products that are minimally damaged in some way or on the old stock you’re clearing out to make space for new items. To add a feeling of exclusivity, you could advertise the sale to customers on your marketing database by sending an SMS or email inviting them to shop at a specific time.
If you sell a service, scarcity marketing could include limiting the number of people you’ll take on. This could be because you don’t have time for more or because you can’t overextend your client base without diluting the quality of the service. Neither of these reasons is untrue and will be accepted by potential purchasers.
Getting some aspect of exclusivity and secretiveness is another great tool because of how intrinsically curious we are. And who doesn’t love having some kind of inside information that no one else does?
3. Limit the Time
An Experian study showed that marketing material that conveyed a sense of urgency had around 14% higher click-to-open rates and 59% higher transaction-to-click rates when compared to promotional material that lacked a time-sensitive CTA.
Putting a deadline on your offer is a great idea, but it has to be a real one and not subject to change for any reason. People aren’t stupid and will eventually catch on if the date keeps getting extended. The value of your product will then plummet, and you’ll alienate clients. Your deadline could be linked to a price-change, no more availability, or even just temporary inaccessibility.
If you’re adding a deadline, limiting the number of sales you make, or putting a cap on how many clients you can take on, you’ll need to explain why. You can be a bit vague, but this won’t work as well as a bold statement will.
Reasons in Action
A good example would be streetwear brand Supreme, a label that’s turned scarcity marketing into an art form. During the fall/winter and summer/spring seasons the brand drops a limited range of merchandise at exactly the same time every week.
A huge number of people flock to the online and retail stores to see if they can get their hands on a limited edition item before it sells out. The carefully timed drops keep customers engaged, and if they buy an item they know that it’s sought-after due to the high demand.
This type of marketing works especially well in retail, but limiting numbers and retaining that exclusive feel can be extended to services too.
If we look at a personal trainer, the explanation behind a limited offer is also very reasonable. There are only so many hours in a day, so there are a finite number of people who can be taken on. Guaranteeing acceptance of the first six respondents, for instance, makes sense and is a huge motivator.
A waiting list can serve a good purpose with this kind of scarcity marketing. It exponentially increases the value of the product or service, because other people have it already. Displaying some counter on your site indicating how many people are in front and behind a potential client will incentivize them to return too. Even if it’s just to check on these numbers! It’s a great way to sustain interest.
Another example is offering a pre-set number of bonuses along with the core product by a certain date and time. You’ll need to explain that these extras come from various third parties, naming them, and relay that you have no control over when the perks will no longer be available. Say that you’ve got permission to give a certain amount away with your bundle, but the only way to make sure people get one is to act immediately.
You will get the same outcome as this example offers by tailoring your sale to include a special backend or alternative extra to non-buyers after they’ve seen the original.
Motivate Action, Don’t Manipulate It
Ultimately, the key is adding some kind of constraint. And even if it comes down to just injecting a sense of urgency into your offer, do it with integrity and truth.
These kinds of limitations, while motivating customers to take action immediately, do not directly push anyone to do anything; and do nothing underhanded to motivate purchasing behavior.
The key is backing up whatever limitations you institute with an authentic, credible, and reasonable explanation. This is how you remain a tenable choice without creating a reputation as a business that stoops to exploitative advertising to sell a sub-class product.
The more you make people feel that it’s the procrastination that’s the bad decision, the more they will feel like it’s a good idea to buy what you’re selling. But of their own volition, and not because you’re pressuring them into a purchase they don’t want or need.
We’re Drawn to Exclusive, Hard-to-Come-By Items
“I refuse to join any club that would have me…” – Groucho Marx
Scarcity marketing works so well because human beings have evolved to assume that items more difficult to obtain are usually more valuable than those we can access easily.
As a Species, We Link Availability to Quality
It doesn’t matter how true this is; we believe it. That’s why we need to apply this concept in the business world.
Scarcity marketing can be presented with integrity in essentially two ways, limited-number, and limited-time, but one-of-a-kind festivals and events work too.
Things that our counterparts are competing for are also given more value, and this phenomenon is part of social proof. Owning items or receiving services that are in short supply makes people feel powerful and unique. This is because they have access to something perceived as more exclusive and thus more worthwhile.
If you want to use it to improve your sales and marketing, think about implementing:
- Limited edition items.
- Low stock notices.
- Next-day shipping countdowns.
- Purchase countdowns.
- Sale price countdowns.
- Seasonal offers.
- Showing activity in real-time.
- Spotlighting customer behavior.
- Using numbers that show demand and popularity.
But whatever route you take, remember the cardinal rule of transparency. Only then can you engage in scarcity marketing that’s not manipulative.