How to use scarcity techniques to increase online sales
Scarcity techniques are a great way to persuade customers to make the leap and buy. By tapping into their in-built fear of missing out, sales that may have been missed can be completed.
When a customer isn’t sure whether they’ll make a purchase, they potentially miss out. By reminding them that the supply of the product is finite, you can persuade them to make the decision to buy.
Why does the threat of scarcity drive sales?
Our needs have changed since our early ancestors. Their main focus was on finding food — feasting when food was plentiful to protect against times when it was scarce. In the 21st Century, our needs have expanded to include consumer goods. We have retained, however, our ancestral fear of missing out. Rather than merely applying to food, this is triggered when the possibility of losing something appears.
This means that we are drawn to sales techniques that show products as popular and becoming scarce. Half-empty sales displays, for example, present the potential for the shopper to miss out. When we are concerned about missing out, we make decisions far more quickly.
Products that are scarce due to popular demand, rather than due to limited production quantity, are often valued more highly. This is due to social proof — other purchasers want the product, so the product must be worth having.
Scarcity techniques in the real and digital world
Scarcity techniques can be used across a wide range of products. They are used by stores such as Starbucks, Amazon and eBay. Starbucks sell seasonal drinks and many customers specifically go in to buy them at certain times of year. Amazon displays how many are left of each product to potential buyers, putting pressure on shoppers to buy as the quantity reduces. eBay pits buyers against one another in bidding wars that often lead to shoppers spending more than they intend to.
Categories of scarcity technique
The different types of scarcity technique are suitable for different types of store. As an online retailer, shoppers will be unable to visualise a half-empty display stand. However, they have access to other elements that in-store shoppers do not.
- Limited time offer: a price or a product available for a set period.
- Seasonal special: a product that is only available for a seasonal period, such as Starbucks’ flavoured lattes.
- Seasonal sales: a temporary reduction in prices for a seasonal period, either for seasonal products or a whole range
- Limited quantity sale: a limited number of items available for sale. This could be from a single product to several thousand of them. This is also apparent around Christmas, when demand causes a scarcity of certain toys.
There are other elements that can be used around these techniques, such as marketing emails. Having an “inform me when it’s back in stock” option, for example, can gauge the size of the demand for a potential re-release, as well as motivating a number of customers who missed out first time round to purchase immediately.
Scarcity technique risks and benefits
Scarcity techniques can offer multiple benefits but can also have risks. They can persuade an unsure shopper to make a purchase, but if there are issues, they can also reduce their trust in you as a retailer.
Different types of technique can have different risks and benefits.
- Limited time offer: can create a boost in sales during quiet periods. If the product has an infinite quantity, such as an eBook, shoppers will often wait until the last minute to buy.
- Seasonal special: can become a yearly event — customers will specifically visit to buy this product at these times of year. Customers will, however, be upset if these products are not available when expected.
- Seasonal sales: can help to clear out old products in time for a new range, as well as a boost at a time when spending is traditionally lower. They can also lead to frustration if there are issues with the software tracking quantities of product.
- Limited quantity sale: creates an impression of desirable rarity, but if the software isn’t working smoothly, can create frustration amongst buyers.
One of the main risks with scarcity techniques is having issues with technology. If your software doesn’t accurately track the quantity of items left, shoppers often feel cheated. If they are able to put the item in their basket and go to the checkout, only to be denied at the last moment, it feels like more of a loss. As many of your consumers will have social media accounts, their frustration will often be aired there.
Another risk is over-use of discounting. If your customers are aware that you frequently hold full-range sales, they will often hold off buying until these sales, reducing your normal-price sales.
Ensure that your strategy matches your products and that your software is up to scratch, and scarcity techniques can have a dramatic positive effect on your sales.
Phillip Adcock is the founder and managing director of the shopper research agency Shopping Behaviour Xplained Ltd, an organisation using research into retail shopper behaviour to explain and predict what your customers do. SBXL operates in seventeen countries for hundreds of clients including Mars, Tesco and B&Q.