Selling Through Scarcity: Screwing It Up

istock_diamonds5This is the fourth post in our sales and marketing tactics series. Prior posts include Afraid of Marketing or Just Turned Off, How Urgency Gets You To Buy, and Is Scarcity a Scam. And now for today’s post… how scarcity backfires.

We’ve learned that scarcity and urgency do work to persuade many a person to buy, sign up or download. People typically want what they don’t have, and they want what they can’t have even more. Limiting numbers influences people into placing more value on objects, services or memberships, boosting sales and creating social demand.

Scarcity is a powerful tool in the marketer’s arsenal. Because of that, its use is widespread and common. All sorts of variations exist, helping businesses and manufacturers gain new customers and clients all the time.

There’s nothing wrong with that. It’s perfectly fine to use this strategy to help earn income and deliver a good product to people. Nothing wrong with that at all.

You have to use the tactic well, though. Scarcity can fall flat or even backfire, damaging your reputation, your sales or even both. Take a look at what to do, what to avoid, and what to strive for:

Don’t Market to Deprived People

We don’t like to lose what we have. In fact, we hate it, and sometimes we’ll act outrageously to protect our freedoms or fight to keep what we had.

Take political unrest, for example. Swoop down on a nation and tell them they can no longer own cats. You’ll find yourself with a mass of people clamoring for the animals, defending their right to own cats and avidly snatching up all available cats like there’s no tomorrow. It makes no difference whether these people were cat lovers or not. They’ll defend their right to choose to own aggressively.

But what if the right to own cats never existed in the first place? What if no one had ever been allowed to own cats and it had been that way since as far back as they could remember?

Well, there’d be grumbles and mutters about the lack of rights, but for the large part, there wouldn’t be any riots or uprisings. Cats would always have been hard to obtain, and the deprivation becomes the natural order of things.

Here’s another example: diamonds. They’re scarce enough, and they’re expensive to buy. Top-quality diamonds are difficult to access and possess. But you don’t see much people rushing out and demanding diamond, do you?

Of course not. Difficulty of diamond possession has always been the way of things, and it’s nothing new. We’re not motivated to do much about it. Constant scarcity doesn’t work well to create hard, fast sales.

Using scarcity to target an already-deprived consumer market won’t work. That course is out of reach. It always has been. It always will be. It’s the natural order of things, and so why try to buy?

Also, most people are more motivated about what they’re losing over what they gain. Those who have never had the right or the freedom in the first place and have always felt deprived won’t see much point in getting excited about a potential loss. The loss isn’t there to experience.

Now imagine everyone is given a diamond at birth and suddenly, the government decides to change its mind…

That’s right. Watch out.

Same Old, Same Old

Imagine you build a great course. Imagine you offer access to people for six months at an affordable rate. Then imagine you decide to close down sign-up. You announce the impending lock-down, and people had better get in quick.

Then a month later, you offer a new course. It’s affordable. People sign up for that one. Then you announce an upcoming lock-down…And then you open a new course. Same thing. Six months, lock-down.

Do you think people will rush to sign up?

People aren’t stupid. The scarcity tactic becomes visible and obvious, even expected. You do it all the time. The threat of loss becomes constant, and it starts to lose its effect. You’ve diminished your influential power.

You can’t be taken seriously. It’s just another scam to get people to sign up. Besides, there’ll be another course coming in just a few months…

Just like Pavlov’s dogs, people can be desensitized. The first time you watch an X-rated movie, for example, your eyes may pop out of your head. After you’ve watched 100 flicks, though, you’re blasé about the whole affair.

That’s why overuse of the scarcity principle doesn’t do you any favors. Use it sparingly and not as a constant strategy to gain sales. Otherwise, you end up desensitizing your target market, creating expectancy and perhaps even more importantly, hurting your reputation as a credible resource.

Walk the Talk

Credibility is key. If you have no credibility, you have nothing. You’ll get a few sales, disappoint people and they’ll go elsewhere. They’ll talk to their friends, badmouth you and take you down. As time goes on and your reputation sullies, you’ll end up with nothing.

Trust is a huge factor in sales. People need to believe they’re spending their money well, and they also need to believe you’ll deliver on your promise of value. You need to gain their trust before they’ll buy, and then you need to maintain and build on the trust you’ve earned.

That is, if you want to be successful.

So you need to be credible, which means believable. If you aren’t believable, you aren’t trustworthy. If you aren’t trustworthy, you’re going to be poor.

• If you’re going to use scarcity, make sure that what you sell lives up to its promises. Think about it:

• If your product is of poor quality, then first sales create unhappy customers who tell others about being gypped. Social demand for your product drops, and no one wants it.

• If your product is common, then scarcity just isn’t going to work in your favor. Why buy from you if what you sell can be had easily elsewhere?

• If you can’t justify why your product is scarce, then people won’t believe you and they’re going to smell a scam. Why buy if the limitation doesn’t make sense?

For scarcity to work, create trust and desire, and deliver on the promises you make. Get social demand backing you up. Have a credible reason to limit your numbers. Provide quality and value.

You need to demonstrate that social demand exists, as well. We’re competitive creatures, and we’ll try to beat others out. But lacking competition, we don’t race so hard – if at all. Here’s an example of how a lack of social demand or a shaky demonstration of it could hurt your sales:

Let’s say an internet marketer sends out a notice that said there were 500 copies for sale. Two days later, he sends out a second notice that says there are 346 copies left – better hurry! There’s only one day left!

Consumers who receive that notice don’t think, “Wow! 154 gone already? I’d better buy fast!” They think, “Wow. He has that many left? That’s 346 people who didn’t buy… Hm. I’d better not buy either.”

Create some urgency if you’re going to use scarcity. Get people worried they may lose their chance, and they’ll be more inclined to buy. Without urgency, such as with a month-long promotion, you may find that scarcity doesn’t work very well at all. Consumers have time to consider their choices and opt not to buy.

(Hint: Remember that when you need to decide quickly under pressure, you’re probably not going to make the best decision. Walk away, take some time to think and calm down – even if that means losing a chance. You’ll probably realize that cool heads make smart decisions.)

Lastly, you need to walk the talk, too. If you’re going to use scarcity, stick to your guns and be believable..

Only 100 copies? Don’t decide two weeks later to offer 50 new people a second chance to buy. 3 days only? Don’t keep the sale going for 365 days if you didn’t hit the sales figures you wanted. Taking it off the market for good? Don’t put it back up for grabs three months later because you’re strapped for cash or want another whirlwind of income.

Your customers need to know that when you say this is their last chance to buy, you really mean it.

Can you think of any other situations where scarcity backfires? Would you use the scarcity principle to see? Why? Why not?

Post by James Chartrand

James Chartrand is an expert copywriter and the owner of Men with Pens and Damn Fine Words, the game-changing writing course for business owners. She loves the color blue, her kids, Nike sneakers and ice skating.

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  1. I semi disagree with the reptitive side of scarcity. The first thing that popped into my head was QVC and other associated shopping channels. On the rare occasion I’ve been watching one of their sales they will always have a timer, the number of items left and usually a very attractive woman flouting herself more than the actual goods.

    I can only assume, due to them still airing new content / shows that they do actually sell the products. Despite never having bought anything I still find myself drawn in by the “Only 50 left” and “for the next three minutes HALF PRICE” messages they fire out… I know I don’t need what they’re offering, and I know they are using scarcity tactics but I can’t help but react to the messages they fire out, “hmm maybe I could use it… and I’ll be getting a good deal…”. I don’t think they have changed or will change their tactics, it works for them, and well it seems. One thing they don’t do though is ever extend the sale of an item past the point they say they’re all sold out, even if they may not be.

    On the other hand, a high street store that has a permanent 70% sale on may draw me in once, but when I see the sale continue for the next 5 months I won’t buy anything from them. I’d feel like I was being deliberately ripped off being sold goods that are obviously not quite the standard they should be for the RRP price in the first place.

    Would I use the scarcity tactic? Probably, in fact I used it recently renting out two rooms in my house. I needed a decision quickly, but I did have the benefit of 4 people interested in just one room. The service was scarce, I therefore made sure they all knew it.

    I guess it boils down to the comments you made about credibility, maybe using this tactic would only ever be credible if the product / service you’re selling actually IS scarce?

  2. Scarcity backfires when you can view the source code and see that the marketer is lying.

    It also backfires when you read about products on forums that show how to access the One Time Offer again and again.

    Great post, Barbara

    Barbara Ling, Virtual Coach´s last blog post…What’s a white list?

  3. James,

    My time is scarce. My ability to personally service clients is scarce. If the product I’m offering includes demands on me, as an e-course might, I’d use scarcity to sell, for sure. Or if intimacy was a factor, like with a speech or a membership where folks should be able to interact on a human scale. Other than that I’m not too likely to run into it… though come to think of it, as service professional, hiring me is *always* a scarce commodity!

    So how can I work this into my everyday copy… Buy Now! Kelly only has 24 hours in her day and you aren’t getting all of them!

    :)

    Regards,

    Kelly

  4. Interesting post James!

    Your illustration reminded me of a local TV commercial where I live. The salesperson urges buyers to rush in because “they are about to go out of business.”

    This particular business has been “going out of business” for over ten years now and no one pays any attention any more. The claim is so obviously fake.

  5. Scarcity almost always makes me run the other way and not trust the seller. Unless it’s clearing out an old version of a physical product, or potentially for spots in a coaching program or a class, it’s usually deceptive sales tactic used by liars.

    John Soares´s last blog post…Higher Education Opportunity Act Affects Textbook Publishers/Supplement Bundling with Textbooks

  6. Hi John, I think along the same lines but I ask myself: can I prove they’re liars? Or is that just the perception due to experience in a few cases? I don’t like tarring everyone with the same brush and feel that this is doing just that.

    On the other hand, if everyone was skeptical and didn’t fall for it, no one would do it…

    David B´s last blog post…Are you ready for Virtualisation?

  7. @ David and John – Well, here’s an example: Limited Flavors. McDonalds with their limited fajitas, or an ice cream company with a flavor of the month. That’s all scarcity tactics at play, but none of these companies are considered liars, and no one runs away from them. See the difference?

    @ Laura – Oh, that’s just too funny. I’m sure you good people have been keeping this poor company hovering on the brink of bankruptcy able to stay in business! ;)

    @ Kelly – A waiting list is a scarcity tactic, wouldn’t you say? And so, your time is limited and people have to get on the list before it’s too long!

    @ Barbara – Oy, I hear you on that. The Internet is full of people who just fail miserably at using this marketing strategy properly.

    @ David – Good point on the infomercial shows. They do use scarcity repeatedly, and they do sell. But as you say, they walk the talk. You *know* (through expectancy that these people created) that when it’s over, it’s over. You missed your chance. This makes them credible, which inspires trust, which inspires sales… So yes. They pull it off right.

    As for your example of room renting, the real estate industry is well known for selling houses using this scarcity/competition tactic. “Well, we just had someone visit yesterday who seemed very interested, but they haven’t made an offer yet – they’re seriously thinking about it though…”

  8. Yes, I hate being told that, certainly by estate agents… I never actually know whether to believe them or not, which harks back to John’s point! Hmmm… I’m starting to think that scarcity is in fact a cheap tactic despite the fact they may possibly be telling the truth. It’s the unknown, unless we know they’re lieing there’ll always be that element of doubt that could force your hand.

    David B´s last blog post…Are you ready for Virtualisation?

  9. Points well-taken about presuming false scarcity. I’m on the receiving end of a lot of Internet marketing offers, and many of these do use false scarcity and false one-time-offer tactics.

    John Soares´s last blog post…Higher Education Opportunity Act Affects Textbook Publishers/Supplement Bundling with Textbooks

  10. @Laura – HA! There was a furniture store exactly like that in a little town about 30 minutes away from my hometown. One summer I was home from college, I helped out at a couple of remotes for our local radio station. One of those was at this furniture store that was having a going out of business sale.

    Four years later, when I graduated college and went back to work for that radio station, that store was STILL in business and STILL advertising its going out of business sale!

    It did finally backfire on them, though. They went out of business about 2 years ago, right before I moved away.

    If you keep yelling the same thing when it’s not true, eventually people are going to start ignoring you.

  11. James,

    ‘Zactly. ;)

  12. I think it works when you already were thinking of getting something, so you are already ‘primed’ so to speak. Case in point, my daughter and her boyfriend have been saving for a large screen TV. Today the went out to ‘look’ for which TV they ‘might’ want. Lo and behold, one of the stores was having a One Day Only Manager’s Special. And only THREE tv’s left. Did they buy the TV? Damn straight they did.

    Urban Panther´s last blog post…Hitting the wall

  13. Thanks for pointing out the traps of this – and yes, I’ve seen all of these all over the Internet (and in Real Life)!

    I’m with Kelly on the scarcity thing – it’s about my valuable time and building up a waiting list.

    Alex Fayle | Someday Syndrome´s last blog post…The World Owes Me Nothing: Glen Allsopp Interview

  14. This post reminds me of raising children. Say you have a bedtime of 9:00. The kids go to bed at 9:00 and that’s that. No problems. But what if you let them stay up till 10:00 one night? You will hear about that for the rest of their childhood lives. You have now taken away something they already had.
    It also reminds me of telling my daughter she couldn’t go out with a particular boy. Was that dumb on my part.

    Andy with network marketing´s last blog post…MLM Network Marketing Success with Network Leads

  15. A very insightful post on the use of scarcity as a selling strategy. Many companies have fallen into the trap of using this strategy consistently which in turn only paves the way for their own downfalls. This can be a very effective method but it takes timing, credibility, and planning to pull off. Without the necessary trust in your company and product, then this isn’t worth trying at all. Thanks!

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  4. […] in five seconds.” That same scarcity discouraged me from making a purchase at all. That or customers don’t always take the artificial scarcity seriously as it’s such a widely used sales gimmick. A seemingly nonstop barrage of “buy […]

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