The scarcity principle, the 6th of Dr. Robert Cialdini’s Principles of Persuasion, is based entirely on the fact that people don’t like the feeling of missing out. They don’t want to feel like they should have gone for something that is no longer available. Essentially, people don’t like FOMO, or the Fear of Missing Out.
What is the Scarcity Principle?
Scarcity works based on psychological theorems whereby people, in general, consider goods and services to have higher value when they are limited in supply.
To borrow from almost every MMORPG game in existence, items that are deemed to be common are seen as having low value, uncommon items slightly more valuable and rare items even more valuable. We won’t dig into epic or legendary items in this particular article.
Consider a scenario where you, a potential customer, are walking through a mall. Upon entering a store you spot that some items are marked as Limited Availability or Limited Edition. Suddenly you feel like you need to grab these items whilst you have the opportunity to. It’s worth noting that, in marketing, the Scarcity Principle is often referred to as feigned scarcity.
It’s incredibly normal to see any number of these statements adorning the aisles of stores, supermarkets and emporiums:
- Buy now! Don’t miss out!
- For a limited time only!
- Final few items!
You’re made to feel like it’s now or never and that you have to act immediately and, sometimes, impulsively. The same goes for the online world of shopping. There are pop ups, there are timers, there are small notes and stickers. Each and every one is designed to make you purchase.
“When it comes to effectively persuading others using the Scarcity Principle, the science is clear. It’s not enough simply to tell people about the benefits they’ll gain if they choose your products and services. You’ll also need to point out what is unique about your proposition and what they stand to lose if they fail to consider your proposal.” Dr Robert Cialdini
Simply telling people that there’s a limited number of the item usually isn’t enough. Unless it’s a purchase where there’s only one of that item (think a house purchase in a buoyant market), you’ll need to also let them know exactly what they’ll be missing out on.
🛒 What do supermarkets and #ecommerce shops have in common?— Chris Tweten 🍁 (@ctwtn) July 7, 2021
They both leverage scarcity to drive sales!
In this thread, I’ll go over the psychology of scarcity and how to use it effectively 👇
4 Ways to Use Scarcity to Drive Conversions
There are four core ways to drive more conversions towards your business making use of the scarcity principle. Each one of them has been proven and will work in some way, shape or form. But be wary of leveraging scarcity too often or relying on it too heavily in your business. It can, instead, lead to adverse effects on your conversion rate and revenue.
Scarcity can lead to people making the wrong choice and poor decisions that can lead to major negative consequences for their lives. This is something to be especially wary of if you’re offering people high ticket items. It has been proven that those in poorer mental states (lacking financially, lacking physical or mental health, lacking affection and friendships) are far more susceptible to scarcity tactics as their desperation increases. The last thing that you want is to be seen to be praying on society's most vulnerable.
That said, used correctly and morally, scarcity remains one of the most effective marketing tactics:
In these instances, the actual supply of the product has a limited, tangible number. This is at its most powerful when used with physical acts where people can explicitly see the number of products is depleting in front of their eyes. The key element is that the consumer has to genuinely believe that there is a limited supply. Once you sell out, the illusion will be immediately (and irreparably) broken if you just bring out more stock.
There aren’t many people who genuinely remember the days when Spotify wasn’t mainstream and everywhere. But these times did exist. Rather than open up their platform immediately, Spotify’s marketing team decided to create a system of invites where you simply weren’t allowed to join the platform unless you received one. The genius in this tactic was that the invites only applied to those wanting to use the free version of Spotify. If you were willing to pay the subscription then you were able to skip the queue and join immediately. This tactic drummed up massive amounts of interest, intrigue and sales.
Subscribe to GrowSurf
Get our weekly newsletter for our latest referral marketing guides.
Error subscribing! Please try again.
The hospitality industry is another sector that makes great use of the limited supply version of the scarcity principle. If you were to head over to Booking.com or Agoda or Hotels, you’ll immediately see that there is “ Limited availability for your dates! Book Now to avoid disappointment” sprawled across almost any place, area or city that you’re looking at. They’ll also put this into numerical figures to make it even more real. They’ll let you know that there are, “ Only 2 rooms left on our site” or that “85% of all rooms in X are booked for your dates.”
Rather than limiting the amount of products that you can sell, you’re limiting the window that the product is available for. These are the flash sales that we all know. In fact, as this article is being written Prime Day is drawing hundreds of thousands of customers hoping that they’ll be able to get hold of some flash deals across a mere 2 days. Don’t act quickly enough and it’s gone.
Seeing as video games are, effectively thanks to downloads, unlimited in number and quantity the only real way to develop scarcity is through limited time sales. Steam has a habit of this through their legendary Steam Sales. The principle is that for a limited time only there are massive discounts on games across the platform and these are genuinely massive discounts. Their sales tend to tie in with holiday events such as Christmas and Summer.
Amazon, alongside the Prime Day sales, also make use of the limited time scarcity on a more granular level. They also offer merchants the opportunity to put their products into limited time daily deals with added discounts. Their sales are particularly effective thanks to the small, but noticeable timers which sit next to each product, inevitably counting down to when the deal is no longer available.
One of a Kind Specials
One of a kind specials come in a variety of different forms, but they are pretty much as the name suggests. They are products, items, services or events that are genuinely one of a kind. These could be through collaborations for a short period of time, anniversaries (that happen once a year or landmark anniversaries that happen only once ever), events (o two events can truly be identical) and pre-orders.
Events, and therefore tickets for events, are by their very nature making use of the scarcity tactic but (the majority of the time) this happens inherently rather than tactically. Take, for example, Glastonbury Festival. Each year Glastonbury Festival puts out around 200,000 tickets to the general public. Without fail, these tickets sell out within the first hour that they are on sale. It’s a combination of limited supply, limited time and a one of the kind even - the perfect storm of scarcity marketing.
Snap Inc, the parent company of Snapchat wanted to promote their Snap Spectacles in an innovative way. So they decided to use an unconventional guerilla marketing tactic, they placed vending machines randomly in urban places where people were able to purchase a pair of the video camera sunglasses for $130. Snap shared the location of the machines 24 hours before and after that, they were gone forever.
A slightly unusual method of one time only events and scarcity was leveraged by The New Yorker. Back when they revamped their website they opted to make all of their archives from 2007 to present available to the public (no subscription required), whilst this didn’t necessarily drive massive sales, the scarcity in terms of availability and the one time nature of this event meant that thousands of people who didn’t have subscriptions or access normally flocked to the site to read as much as they could. The New Yorker analysed these readers as a way of informing their future content and marketing strategies.
Companies looking to garner some initial investment before they launch their product will often give customers the example to pre-order products. These pre-orders are often limited in number, over a certain time and usually give the customer a pre-order bonus. In video games, this usually translates into a unique in-game item or early access to a feature which shows off your early adopter status.
World of Warcraft’s Pre-Order Bonus. Source: All That’s Epic
The competitive spirit in humans is ever enduring and leveraging this within competitions creates a great opportunity for marketing. Competitions, by their very design, create scarcity. There can only be one winner, and people want to be that person. We have stronger desires for things when we think that other people want them too.
eBay has built its entire business on a scarcity model. At the start of eBay, before there were shops with stock, you were bidding on the one item in the listing. It was you against the horde of invisible competitors going for that same item, and that made you want it more. The competitive element drives people to act on their impulses and go after purchases. Furthermore, they openly display how many other people have bid on the items (showing that you’re on the precipice of missing out) and also the ticking clock showing when the auction ends. It’s no coincidence that there are flurries of bids at the end of auctions, or that eBay prominently displays auctions that are ending soon on their homepage.
Making use of the natural competitiveness of humans was a core part of FitBit’s marketing strategy. They will regularly pit users into games or challenges against each other with the aim of users showing off their results. When they do so they also show off that they’re using a Fitbit and it encourages more users to interact with them and take on the challenge. It could be as simple as a Daily Showdown where step count comes into play over a 24 hour period or it could be more intense with users racing against each other for the fastest 5 or 10k times. People like the feeling of winning, it’s an endorphin rush that encourages them to come back time and time again.
Scarcity works because people don’t like to miss out. In marketing the tactic should be used to encourage those wavering but shouldn’t be used to take advantage of those in vulnerable situations. Whether you’re looking to limit the number of available items, limit the time that they’re available for, create one of a kind specials or incite people’s competitive spirit, scarcity is a powerful tactic.
- Massage the fear of missing out (FOMO) to encourage people to act sooner rather than later
- Create limited supplies, especially in physical settings where consumers can see numbers dwindle
- Create limited time offers to leverage the ticking clock aspect of the sale
- Put on one of a kind events, make people want to be there because it won’t be happening like this ever again
- Build on human’s natural competitiveness to encourage that winning feeling
Read more about the 7 Principles of Persuasion:
- Reciprocity Principle Examples
- Commitment & Consistency Principle Examples
- Social Proof - How to Use it to Drive Conversions
- Liking Principle Examples - Building Rapport with Your Audience
- Authority Principle - How to Build Authority and Use It in Marketing
- Scarcity Marketing - Limited Time, Stock & One-Time Offers (You are here!)
- The Unity Principle - Community Marketing 101
Request a demo of GrowSurf
Set up your referral marketing program with software that lowers your customer acquisition cost and saves you gobs of time.