When infomercials changed from from saying “Call now, operators are standing by” to instead saying “If the line is busy, call again”, their sales immediately increased.
Two reasons: one is Social Proof, which we've talked about before.
The other reason is Scarcity.
When something appears to be limited in quantity, humans are subconsciously driven to value it more.
Though it seems irrational, it’s simple economics: supply and demand. The less supply, the higher the value (as long as there is enough demand).
It’s also FOMO. Fear of missing out.
Studies show that, for example, the pain of losing $5 is much stronger than the pleasure of gaining $5.
So if it’s our last chance to buy something, FOMO kicks in and we want it more.
And it appears to work whether the scarcity is real, or merely looks that way. In one experiment, vegetables that were placed in mostly-empty 32-ounce containers were chosen over the same number of vegetables placed in very full 8-ounce containers.
Because it works so well, scarcity is one of the most commonly used psychological principles in marketing. And it works for businesses of all sizes, from startups to massive multinationals.
Businesses use scarcity in their products and marketing in a lot of ways:
Invitation-only launches, or those available to limited users (e.g. the early days of both Facebook & Gmail, or any closed beta)
Calling out the # of items left in stock -- for example, Amazon and Booking.com’s “only 3 left!” warnings for products and hotel rooms.
High-visibility product launches that cause people to stand in line or pre-order in droves. This actually creates the scarcity, which thereby increases demand further (e.g. every new iPhone, or the Tesla Model 3)
Using a deadline, rather than limited quantity (“30% off until June 15th”)
Live webinars with limited space ("the first 100 people who sign up...")
Opportunity to invest in an early round of funding before it becomes oversubscribed
But as you might expect, when someone knows the scarcity is simply a sales tactic, they are less likely to buy.
So if you employ scarcity with a digital product that is obviously not naturally scarce, like an online course or a live webinar, it’s a good idea to tell people why you're only offering a limited number. For example, maybe space is limited so that you can answer everyone’s questions or provide 1-on-1 support.
If I wanted to use Scarcity as a psychological persuasive technique to encourage you to subscribe our email newsletter, I might say:
Now it's your turn.
How can you use scarcity to improve your marketing? Leave a comment below!