Scarcity makes your products sexier.
Bold claim, I know.
But it’s true: Items in limited supply are strangely appealing.
You’ve probably experienced this in your own life: You always want what you can’t have. That last remaining bagel that the lady in front of you just bought. Your best friend’s super handsome boyfriend. The list goes on and on.
Clothing companies know this works, too. One online retailer tested a limited next-day shipping offer against another version in which the limited offer wasn’t shown.
And guess what? The limited time shipping offer boosted sales by 226%.
All it took was one line of text with a countdown and somewhere around 45 seconds to install it.
I recently faced this reality when I was on the hunt for a jacket sold two seasons ago at one of my favorite online retailers.
The item was (of course) sold out in-store, so I turned to various resale markets. I poured over eBay listings. I scoured used clothing sites.
When I finally found someone re-selling the jacket for 2x the original price (and that was used!) I didn’t even think twice about the higher price tag. I knew how unlikely it was that I’d find this item anywhere else--and because it was so scarce--I had to have it.
Researchers have found that this isn't unique. Scarcity compels people to perceive limited quantities as more precious and valuable (and this extends far beyond the realm of kickass jackets).
Don’t believe me? The proof is in the...cookies.
Researchers Worchel, Lee, and Adewole asked participants to rate two jars of cookies. At first, both jars contained 10 of the exact same cookie. Then from one jar, eight cookies were removed (making them more scarce). Now participants had to choose between the jar with 10 cookies or the jar with only two left.
Guess which one people chose from more often?
The jar with only two cookies.
Advertisers and marketers have been using scarcity to make products fly off the shelves for more than 65 years. And within this guide, I’ll show you exactly how to use scarcity to boost your sales, too.
Scarcity is a tactic marketing and sales teams love--because it works. Take a look at this Safeway ad from 1952:
Notice that the storewide sale isn’t open-ended: It’s seven days long.
The ad gives shoppers formal notice that they only have one week to take advantage of the sale.
Is it because the food that’s on sale is perishable? Nope. They’re having a sale on canned food.
Scarcity is not a new idea, but today, people are leveraging it in new, exciting ways.
Why? Because scarcity doesn’t just make shoppers feel a sense of urgency to convert and take action--it has a slew of other handy side-effects, too.
However, to take full advantage of scarcity to increase your sales, you first need to fully understand it’s power.
The power of scarcity can be understood through a simple lesson on commodity theory.
This theory proposes that scarcity increases the value (or at least the desirability) of an item or experience that meet three basic criteria:
In case you’re wondering, this means any marketable good and service fits the bill--and even marketing activities fall into this category.
Commodity theory suggests that scarcity increases perceived value because possession of items in scarce supply make people feel distinctive, unique, and special.
And no value means more for your business than the perceived value of your products.
Because who doesn’t want to own something that few others do? We love to feel like the special snowflakes our parents always told us we were.
However, other researchers have found that scarcity increases desirability as a result of even more psychological factors.
Dr. Michael Lynn, a professor at Cornell, compiled a list of explanations psychologists and researchers have found over the years that examine why scarcity increases desirability:
Let’s break these down three main categories:
1. Scarce items feel exclusive: Those who have scarce items have exclusive access, which is not openly available to others. This, in itself, makes a scarce item more desirable. This is why clubs have VIP areas, airlines have special membership lounges, etc. Even Birchbox has a VIP club called ‘Aces’ with perks for special members.
2. Scarce items appear more valuable: According to the law of supply and demand, items low in supply often cost more, and therefore scare items are expensive items that act as status symbols. Example: To get one of the few Birkin bags produced by luxury brand Hermes, one can be waitlisted for years...just to pay the $10K+ price tag.
3. Scarce items make people feel powerful: Snagging a scarce item means you have access to something other people want but can’t have--which gives the owner power.
Think back in history when royalty and leaders were the few lucky enough to have access to clean water, abundant food, and comfortable living quarters. Access to these scarce essentials made them even more powerful.
But wait, there’s more! Scarcity as a driver of desirability is further proven in research conducted in a virtual context. It’s not an effect that only works in a real-life context.
A study by Wageningen and Tilburg Universities on product scarcity confirmed that limited supply in a virtual shopping environment lead participants to believe scarce items were more popular. They believed supply was limited because demand for these items was higher than other items. Because of this belief, more shoppers chose the scarce item over the non-scarce item when told to select an item of their own.
In this setting, the cause of scarcity didn’t matter, either. Items that were scarce as a result of increased demand or limited supply both had higher consumer preference over non-scarce items.
The bottom line: The more scarce an item, the more people want it.
Just like the cookies.
And guess what? There are nine ways you can leverage scarcity to boost your marketing and sales, too.
Let’s look at some specific ways you can start implementing scarcity tactics right away.
One of the main ways to leverage scarcity is through limited time offers.
Just like in the Safeway ad we talked about earlier, when time is scarce, it makes people act more quickly. After all…
They have less time to second-guess conversion and the pressure is on: they will act sooner rather than later.
There’s nothing more anxiety-inducing than seeing the minutes on a clock tick down...
Putting a timer or countdown within a sales context means defining some scarcity parameters.
When the customer has a firm grasp on how much time he or she has left to make a decision, it adds a sense of urgency to the process.
You’ve likely seen this in action: eBay is known for their sometimes anxiety-producing purchase countdowns that can ignite last-minute bidding wars amongst prospective buyers.
Why is a countdown so effective as a scarcity tactic? Probably because of a psychological process explained via Loss Aversion Theory.
Psychologist Daniel Kahneman’s Loss Aversion Theory is based on findings which indicate the pain of losing is psychologically almost two times as powerful as the pleasure of gaining, as seen in the graph below.
You read that right: Losses can be 2x more painful than gains are pleasurable.
I’ll bet you’ve experienced it, too.
Have you ever been offered a raise? Say your boss said she’d give you an extra $200 a month. You’d be excited, right? But if your boss said she was going to take away $200 a month from your salary, you’d be livid. We’re talking red hot with rage. REALLY. EFFING. PISSED.
That’s loss aversion theory at work.
Tie this in with Freud’s Pleasure Principle (a human’s innate tendency to seek pleasure and avoid pain), and it’s not hard to see why online shoppers keep on bidding while the countdown draws to a close. Bidders will drive up the price tag of a scarce item just to avoid the pain of not winning.
You can put this into place with your own business. Tools like Countdown Monkey and Scarcity Builder allow you to add a purchase countdown to your site so you can take advantage of this scarcity tactic with ease.
Countdowns can also be used in the context of a limited time sale price to remind viewers how much time is left to act before the discounted offer goes away.
As you can see in this example from the Social Media Marketing World 2016 conference, they’re using a countdown to show interested attendees how much time is left before the sale price ends on Virtual Tickets.
The limited time sale on Virtual Tickets not only encourages a “buy now” mindset, but it again taps into the loss aversion tactic that reminds potential attendees why they need to act now rather than later.
They drive this home by not only limiting the time on the offer, but by limiting the quantity of the sale price Virtual Tickets, too.
In another example, Huckberry reminds shoppers that limited time sale prices have a hard stop time with an on-site countdown for discounts.
Limited time offers like these put another psychological tactic to work as a powerful motivator: Fear of Missing Out, or FOMO.
The FOMO phenomenon was named by Dr. Dan Herman in 1996, and is defined as a “clearly fearful attitude towards the possibility of failing to exhaust available opportunities and missing the expected joy associated with succeeding in doing so.”
Put simply, people hate missing out on a good deal.
Another place you can leverage a countdown to take advantage of FOMO is within a next-day shipping context.
By letting shoppers see how much time is left before they’ll miss out on next-day shipping, you can increase the urgency to purchase now.
Amazon uses this type of notice to let shoppers know how much time is left before they can no longer guarantee next-day shipping.
If you had the opportunity to get next-day shipping, wouldn’t you hurry up and check out to take advantage of that offer?
I would (and have).
Seasonal limited time offers also help buyers see scarcity and drive sales.
This is one of the reasons stores like Starbucks only sell pumpkin spice flavored drinks in the fall.
Research has proven that seasonal offers pay off. A NPD Group purchase tracking study on seasonal beverages (like pumpkin spice lattes) showed that seasonal offers not only spur purchases, but they also produce higher average order size.
During non-seasonal offer periods, the average check for pumpkin spice latte buyers was $7.81, compared to only $6.67 for those who bought a non-seasonal drink.
Why did that happen? Because purchase cycle analysis from the same study showed that these seasonal beverages were viewed as indulgent purchases, in which consumers not only bought the seasonal beverage, but an additional food item, too.
It’s the “treat yo self” mentality that says, “I’m already buying this special item, why not go all in?”
So how can you add seasonal offers to your business?
Next, let’s look at how limited availability works to drive sales.
Scarcity connotates short supply, and sometimes that means the product itself is in limited quantity. Let’s explore how you can use short supply to your advantage.
We talked about how scarcity makes shoppers infer about the popularity of an item (especially for online shoppers), which is why it’s not surprising more and more online retailers are leveraging low-stock notices.
Zappos uses a low stock notice to alert shoppers of scarce items, which is particularly important information for shoppers looking for a particular size and color.
When a buyer can see that the item he or she wants is near selling out, it’s just one more reason to make a purchase immediately.
SumoMe did this in our recent Sumo-Sized guide:
Though this was rather accidental - there truly is only enough time in the Sumo week to review 50 landing pages before we’ve tapped out.
Other times, limited stock isn’t a product of high-volume demand--it’s a deliberate sales strategy.
Need a lesson in how small-batch, limited edition products use scarcity to drive up demand? Think back to the Adidas release of Kanye West’s Yeezy Boost 350. Within minutes of going for sale online, the sneakers were completely sold out.
Now, not everyone has the celebrity status and reach of Kanye West--but that doesn’t mean limited production loses its effectiveness as a scarcity sales tactic when used in a non-celebrity context.
Brothers Leather Supply lets online shoppers know when their limited edition products are low in stock to drive sales. The red copy notating scarcity stands out from other elements on the page, making it easy for customers to spot.
Limited production products tap into those desirability drivers we talked about before. They can be seen as status symbols, have an air of exclusivity, and make owners feel unique and special.
We’ve covered limited time offers and limited quantity offers as scarcity tactics, but there’s one more strategy that also works well...
Have a product/service in high demand? Showcase it.
Leveraging your demand not only adds ethos to your offering, but it communicates the risk of scarcity as well.
Remember: Economics 101 teaches us that as demand increases and supply remains the same, the price increases. Therefore, if the item/service is finite (as most things are) showcasing its popularity can make customers infer that they need to purchase now before the price jumps.
Social proof is an indicator of popularity, and often demand.
Popularized by Psychologist Robert Cialdini, social proof theory explains why people look to others when making a decision: They’re looking for guidance from a larger, possibly better informed, consensus.
Sales and marketing teams that leverage social proof are not only to showcasing their most popular products and services, but they are also creating a sense of increased demand at the same time.
Take a look at how Airbnb showcases wish listed locations to as a form of social proof:
When travelers can see just how popular a particular place is with other users, they’re not only seeing social proof in action, but they also feel greater urgency to book before it’s snatched up by someone else.
Sharing hard numbers and statistics about your product or service is another indicator of social proof and popularity that takes advantage of FOMO.
Bonus: It adds transparency as well.
We do this at SumoMe by sharing the exact number of sites using our tools--and it’s front and center on our home page.
While this tactic doesn’t leverage a limited offer, it does take a more subtle approach that speaks to the offering’s value (which often goes hand in hand with scarcity), as indicated by the sizable number of users.
This plays into scarcity mainly in your market’s minds. Have you ever used a service or purchased a product that is so popular or good that it feels too good to be true?
You get on the bandwagon right away, because you assume scarcity - you assume that the price will go up, or the company will make the product exclusive. It plays into idea that it’s too good to last.
Basically: Products/services don’t become popular unless they actually work and provide value.
You can communicate encroaching scarcity by showing customers what others are doing in real-time.
Again, this helps create a sense of urgency, as buyers are able to see what other people are doing. This helps them get an idea of how quickly they need to act if they want to claim the scarce item.
Expedia does this with hotel bookings--they use yellow pop up notifications that tell browsing visitors how many other shoppers are looking at the same hotel at the moment as well as how many booked this location in the recent past.
All of the tactics outlined here can be valuable, but as with anything, they should be used in moderation, and only when appropriate.
Can scarcity tactics boost your marketing and sales? Absolutely.
But only when used in the right ways, at the right times.
Scarcity tactics aren’t a quick fix for lagging sales. Instead, they increase the intensity of desirability for an item that’s already in demand. Think about it: If people aren’t already lining up to wait for your scarce offering, is slapping a timer on it going to magically increase demand? Probably not. Strive to build a loyal customer base who can’t wait for your new releases before tying in scarcity.
Too much pressure is a bad thing. Many of the scarcity-focused strategies we’ve talked about create some anxiety-producing urgency--and when you put too much pressure on your customers to act, they may feel like you’re forcing them into action--not letting them make their own decisions. It’s an easy way to break ties with loyal customers, as seen in this example from CoffeeforLess.
Everything in moderation. Limited edition items are special because they’re different from all of your other offerings. That means you can’t make every single item limited, seasonal, low in stock, and only available for a short period. If nothing else, customers will get annoyed that there you can’t seem to keep regulate your inventory. Scarcity should be used in moderation...or scarcely, if you will.
Test to know what works. We’re big fans of testing, so of course we want to urge you to test out different tactics to find the scarcity tactics that drive conversions with your unique audience. An easy way to do that: Monitor and test different strategies by using a heat map tool.
Ready to start using scarcity to improve your marketing and sales?
Let’s do a quick recap of why it works and how you can use it.
Why it works: Scarce items make people feel unique, powerful, and like they have access to something valuable and exclusive.
How to use it:
Have you seen any ways examples of scarcity tactics we haven’t outlined here? Please let us know in the comments!
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