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Have you ever gone nuts trying to buy a pair of limited-edition sneakers only to realize they’re sold out?
If you have, you’ve experienced the magic of scarcity marketing tactics.
The idea is based on the scarcity principle – which states that we place more value on items we believe are scarce than ones we believe are abundant.
Once you realize this, you can see the principle at work all around you.
For instance, have you ever known anyone that had an extremely rare action figure that was worth thousands of dollars?
By itself, the plastic toy holds no practical value, so it shouldn’t be worth anything. The value comes entirely from the fact that it’s scarce. The figure is OOP (out of production), so there are only a limited number of figures left in the world, which is why a useless plastic toy is so ridiculously expensive.
While this may seem odd, scarcity tactics are extremely powerful, and you can and should use them in your digital marketing campaigns.
If you take a quick look around the internet, it won’t take long for you to see limited edition products, limited supplies, and other examples of the scarcity principle at work.
While you shouldn’t make every product you sell scarce, a touch of scarcity here and there can boost sales dramatically, so read on to learn how you can take advantage of scarcity marketing for your business.
Why Scarcity Marketing Works So Well
If you’re a millennial, you’ve undoubtedly heard the term FOMO or fear of missing out. In fact, 69% of millennials report feeling FOMO on a regular basis, but it’s certainly not a phenomenon exclusive to younger generations.
Nobody wants to feel like they’re missing out on something exclusive, fun, useful, or exciting.
As it turns out, FOMO is the psychological effect that makes scarcity marketing such an effective tactic.
By offering products with limited availability, you’ll trigger the FOMO inside your audience. It’ll also spark some intrigue and discussion concerning your products, which can make them seem even more impressive.
What if you have plenty of products to sell and don’t have any genuine scarcity?
That won’t matter, as according to the scarcity principle, people assign increased value to items that only have perceived scarcity.
That means you can choose to sell limited quantities of a product that you normally would be able to keep in stock – all just to take advantage of the scarcity principle.
A study confirming the power of scarcity
The scarcity effect is definitely real, as there have been many studies proving its existence.
A recent study published in the Journal of the Academy of Marketing Science used scarcity marketing to promote limited-time beer products.
By making beer products scarce by only being available for a limited time, they saw a rapid increase in demand pre-launch.
The study also made use of umbrella marketing, where they included several beers in the limited-time promotion, which led to a spike in sales for all products.
As you can see, the perceived value of a product increases as its perceived demand increases. That leads people to believe that the item is high-quality and valuable; otherwise, why would they sell so fast?
The good news is you can use this way of thinking to your advantage. Whenever you’re developing limited-time offers for your scarce products, you should always give the impression that you’re low on supply due to huge levels of demand & hype, never supply chain issues.
Scarcity makes prices less of a concern for potential customers
Another study on scarcity marketing by Indiana University declared that perceived product scarcity makes prices matter less to customers.
The study involved two phases. The first experiment is highly similar to the beer experiment, where a group of students was shown one scarce good and one abundant good. Once again, the students preferred the scarce goods by a large margin.
The second experiment went a step further. In this phase, 171 students evaluated the WTA (willingness-to-accept) price of two goods – one scarce and the other not.
Unsurprisingly, the scarce product received a higher WTA price than the abundant product by a significant margin.
That means whenever a product is scarce, consumers are willing to spend more than they would have otherwise.
Once again, this is definitely something you can adopt in your marketing techniques.
For example, if you have a top-tier product with an expensive price tag that isn’t selling too well, try advertising that you’re running low on your supply. You can do this in a number of ways, including listing how many copies you have left on the product page (more on ways to implement scarcity marketing in a bit).
By making it scarce, you’ll increase its perceived value, and your prospects will suddenly be willing to pay more for it.
This tactic can also increase your average ticket size by strategically using it for high-end products.
The power of an exclusive product
FOMO is the only reason why scarcity marketing works so well. The other reason why consumers love scarcity so much is the lure of an exclusive product.
Why is that?
It’s because we love being only one of a few to own something, which can boost our sense of uniqueness. As a result, owning something rare can increase its product utility drastically.
Consider the collectible action figures we brought up at the beginning of this article, as they perfectly exemplify the power of exclusivity.
A plastic sculpture of a figure from popular culture doesn’t have any utility or function. You can’t mow your yard with it, nor will it help you lose weight. Yet, people are willing to shell out thousands of dollars for one, primarily because it’s rare.
The rarity is what drives the value of the figure, or any other type of collectible, for that matter.
When you own something rare, it becomes more than a product. It becomes a sign of your status and can make you feel special.
Exclusivity’s superpowers aren’t limited to products, either.
There’s tremendous value in becoming an exclusive brand, too.
For instance, do you have a friend that brags about the lavish invite-only clubs they attend or a family member that revels in the trendy bar they frequent that not many people know about?
Both are examples of how being an exclusive brand attracts loyal customers. The fact that your brand or location is ‘their little secret’ is a major part of the appeal, as it makes your customers feel special for finding you.
Scarcity & Urgency: How are They Different?
Marketers often view scarcity marketing and eliciting a sense of urgency in customers as the same thing, but they’re actually two different concepts.
Urgency is another psychological factor that convinces customers to buy, but it’s different from scarcity in that it deals with limited-time offers instead of limited quantities.
In other words, customers will have a limited amount of time to take advantage of discounted prices or some other type of perk. The products available during these limited-time offers are abundant instead of scarce, which is why eliciting a sense of urgency is different from scarcity marketing.
Urgency is another FOMO tactic that can be equally as powerful as scarcity, so you should definitely use it in your marketing strategy.
Here are some examples of urgency marketing:
- Countdown timers for special promotions that end once the timer reaches 0.
- Flash sales are discounts that appear out of nowhere and only last for a short period of time, creating a sense of urgency that encourages customers to act now (and buy now).
- Limited offers, such as heavy discounts on Black Friday or other special times/holiday seasons.
The goal of urgency marketing is to make your customers feel as if the clock is ticking on special discounts and offers, and if they don’t act now, they’ll miss out (which is why urgency is another FOMO tactic).
Scarcity vs. urgency: either use one or the other
Pro tip: When using these techniques in your content, you should only use one FOMO tactic at a time. That’s because if you try to use scarcity & urgency on the same product, it’ll come off as overkill and can backfire.
Using a countdown timer on a product that already has a low supply will raise eyebrows from your potential customers. It may also cause them to ignore the sale due to the fear that they may not receive their product due to the low stock.
That’s why it’s best to choose one FOMO tactic and stick with it. If you’re going for a limited edition product, the scarcity will be more than enough to motivate buyers, so you don’t need to add a sense of urgency on top of it.
Scarcity Marketing is Best in Moderation
Scarcity marketing tactics are like drinking alcohol in that moderation is king.
If every product you sell is a limited release with low stock, your customers will quickly notice what you’re doing. It’s not hard to tell when a company overdoes it with scarcity & urgency tactics, and they usually backfire when they do.
It’s akin to the boy who cried wolf. The more scarcity campaigns you start, the less impact they’ll have on your customers – as your scarcity claims will become more and more inauthentic.
For scarcity tactics to work, they have to seem 100% genuine to your customers. They’ll take their business elsewhere if they suspect you’re trying to pull the wool over their eyes.
Yet, when scarcity & urgency tactics are used tastefully and appropriately, they provide outstanding results.
Using Scarcity Marketing & Urgency to Your Advantage
Now that you know the correct way to approach scarcity & urgency marketing, it’s time to learn how to put it into practice.
It’s crucial to distinguish which tactics involve scarcity and which involve urgency to ensure that you don’t mix and match them.
Here are some of the most effective scarcity & urgency marketing tactics that you can start using today.
Urgency: flash sales
A flash sale should involve attractive discounts that pop up seemingly out of nowhere and only last for a brief period.
Since they’re rare and show up with no warning, they elicit a strong sense of FOMO in customers. They’ll feel as if they missed out if they aren’t able to take advantage of your incredible deals, which is a fantastic motivator to get them to place orders now.
The discounts you offer must be very appealing for a flash sale to be especially effective. $50 off a top-tier product is a great way to turn heads, especially if you create advertisements for the sale.
To reward your existing customers, you can tell them about the sale first (don’t forget to mention that fact in the email you send out to them), which will make them feel valued.
If you desperately need a surge in your cash flow, starting a flash sale can boost your sales. You can also promote your flash sales through various channels, such as social media, email marketing, and SMS, to ensure as many people know about it as possible.
After all, just because the sale springs up out of nowhere doesn’t mean that you don’t want people to know about it. As such, don’t hesitate to take your promotional efforts to an 11 once you announce the sale.
Scarcity: limited stock
A classic scarcity marketing technique is to advertise a limited stock for a particular product (whether it’s actually true or not is up to you, just remember not to overdo it).
The most popular way to draw attention to a limited supply is to include the number of items you have left on the product page, such as:
“There are only 3 left in stock, so don’t wait to place an order now!”
If that’s too on the nose for you, there are other, subtler ways to let customers know that you’re almost out of stock of a particular item.
Popular options include brief messages that say something like ‘almost out’ or ‘nearly sold out’ to get the message across. While they’re shorter in length, these simple phrases will still trigger the FOMO response in your customers, so they still achieve the desired effect.
Besides that, limited stock messages are very easy to automate.
All you have to do is set up a trigger to fire once you hit a specific stock level that automatically displays the limited stock message of your choosing.
This highly effective technique will put the scarcity principle to work without you having to move a finger.
The best part?
Automated limited stock messages are a 100% genuine form of scarcity marketing, so they shouldn’t raise any eyebrows from customers.
Urgency: countdown timers
Eliciting a sense of urgency is about establishing a ticking clock, which is why countdown timers are the ultimate urgency marketing tool.
A countdown timer displays how long customers have to take advantage of a sale in real-time. It displays next to all products that apply to the sale, and it constantly ticks down, making the customers’ desire to act more urgent with each tick.
It’s crucial that you implement an actual timer that counts down to the end of the sale in real-time instead of just listing the end date of the sale.
Why is that?
It’s because a static end date can’t compete with the anxiety-inducing visual of a literal ticking clock.
Your customers are watching a golden opportunity slowly disappear before their eyes, which will light a fire underneath them to act now and capitalize on your sale.
You should also be strategic with the placement of your countdown timers, as you want to place them in spots where customers can’t miss them.
For instance, it wouldn’t be a good idea to place your countdown timer at the bottom of your page or next to the similar products you recommend. The two best spots for countdown timers are either at the top of the page or directly above the Add to Cart button.
Scarcity: limited edition product drops
Besides letting customers know whenever one of your products has a low supply, you can also release ‘limited edition’ products – where you only produce a set amount of them to sell.
This makes the item scarce from the very beginning, which will drive up its value.
This practice runs rampant in the fashion world, especially for sneakers. Brands like Adidas often feature drop models that have limited quantities, which typically causes their sites to crash due to the massive spike in demand.
Limited edition products are effective not only because of the scarcity principle but also the exclusivity.
People love owning something rare or one-of-a-kind for the elevated status it brings them, which is why product drops are so effective.
Even if you don’t sell sneakers or fashion items, you can take advantage of the power of product drops at your business. To do so, try releasing special versions of your flagship products and only produce a set number of them.
Don’t just shoot in the dark here, though. Ensure that your limited edition products are relevant to your audience.
For instance, if you sell pocket knives and your primary audience consists of hunters, fishers, and veterans, release a limited ‘patriotic’ edition featuring an American flag & eagle decor and only manufacture 1,000 or so.
From there, get the word out about your limited product release through every marketing channel that you have (social media, blogs, emails, texts, etc.). In your promotional content, make sure to feature the limited supply front and center.
Do it right, and your customer base will be tripping over themselves to order one of your amazing limited-edition pocket knives.
Scarcity: social proof
Another way to utilize the scarcity principle is to provide social proof for your scarce products.
What’s social proof?
A perfect example is a perfect five-star rating for a product with thousands of positive reviews online. The message this sends is clear – that the item in question must be high-quality because tons of people in society are enjoying it.
So if you can use social proof to convince your customers that your products are low in stock because they’re extremely popular, you’ll make your products appear far more attractive.
In fact, according to a local consumer review survey, 49% of shoppers said they trust positive customer reviews just as much as they make personal recommendations from friends and family.
Ways to add social proof to your product pages include:
- Displaying the average customer rating out of five stars
- Including detailed customer reviews with high-resolution images
- Showing positive quotes from user testimonials
- Linking to in-depth customer case studies and testimonials
Using social proof in combination with urgency & scarcity marketing tactics will help each product page earn more revenue.
Urgency: Reserving shopping carts for a limited time
Cart abandonment is a problem that plagues every eCommerce store, regardless of the products they sell.
Customers abandon carts for a variety of reasons, including a lack of funds, forgetfulness, and finding equivalent products elsewhere. As a store owner, this frustrating issue actually poses a great opportunity for creating a sense of urgency in your customers.
How do you do that?
You do so by reserving the customer’s cart for a limited period of time and then sending them an email or SMS message notifying them how much time they have left to recover it.
Also, be sure to include how long the customer has left to claim the order before it expires, which will create the sense of urgency you want. A message like this may be the motivation they need to revisit your store and complete their order – which can boost your conversion rates.
These types of messages are also something you can automate with certain types of software to save you from having to send them all manually.
Real-World Examples of Scarcity Marketing to Inspire You
Since you know some effective scarcity marketing techniques, let’s look at some well-known examples to see the principle in practice.
Companies are always using scarcity & urgency tactics to encourage their customers to act now and spend more, and you can copy their techniques in your campaigns.
Example #1: Starbucks
Even if you’ve never set foot inside a Starbucks, you’ve likely heard of their infamous pumpkin spice latte.
Every year, thousands of excited customers line up to sip on the fall-themed beverage, as it’s not available for most of the year.
It’s an example of the scarcity principle at work, as the return of the pumpkin spice latte generates massive hype during the fall season. If they made the available beverage year-round, it wouldn’t receive nearly as much buzz or have the same mystique, which is why it needs to retain its scarcity.
Example #2: Amazon
Amazon puts the scarcity principle to work with its ‘only x left in stock’ message that appears for products that are low in stock.
The online behemoth has mastered the technique, with the message being near impossible to miss.
It appears directly above the ‘Add to Cart’ button in red (or green) bolded text. It draws attention to itself, and customers will undoubtedly see it whenever they check out a product, which will trigger the FOMO response.
Amazon’s limited stock messaging is something all eCommerce stores should implement, albeit in their own style.
Example #3: Aldi
Like Starbucks, Aldi supermarkets have a limited edition product that only rears its head several times a year.
What is it?
An outdoor chair in the shape of an egg.
While the egg chair is certainly novel in appearance, the fact that it’s able to generate so much hype whenever Aldi restocks it is proof of the magic of scarcity marketing.
People go nuts whenever they hear that there are new egg chairs at Aldi, with 74,000 users searching for them each month.
Once again, if Aldi made their egg chairs readily available at all locations, the magic would wear off. The rarity of the egg chair is equally as important as its eccentric design, if not more so.
Final Thoughts: Scarcity Marketing
Putting the scarcity principle to work in your business can help you boost your revenue and generate lots of hype for your new products.
Eliciting a sense of urgency in your customers will also encourage them to take action sooner rather than later.
Both tactics take advantage of the FOMO response, but they’re both best used in moderation – and never at the same time.
Do you need professional help putting together a digital marketing strategy for your company?
Then don’t wait to check out our outstanding white-label marketing services at The HOTH. Our team of digital marketing experts and SEO gurus is also available for consulting, so feel free to schedule a call today.
