Increasing Sales Through Scarcity – Is It a Scam?

wii-mario-kart-toad1This is the third post in a series on sales and marketing tactics. Read our first post, Afraid of Marketing or Just Turned Off, and then our second, How Urgency Gets You To Buy. And now for today’s post…

The law of supply and demand says that when something is hard to get, it’s worth more. That’s great if you have a small stash of Canadian diamonds tucked in your pocket. But how does it all work? What makes us want those Canadian diamonds so badly? They’re just hunks of compressed coal, after all.

What creates desire and demand in the first place?

Scarcity. We want what we can’t have. We desire what is difficult to possess. The more out of our financial reach or our ability to seize, and boy, do we ever want that one thing.

Limited Numbers Create Desire

Take Mario Kart, for example. It’s just a Wii game, right? Well, when Christmas 2008 rolled around and I couldn’t find Mario Kart in the stores anywhere, that game took on more importance. I wanted it, dammit, and I couldn’t have it.

So I wanted it more.

I began to ask for the game at other stores. “Sold out,” I was told, and I suppressed a sigh and a pang of envy for those lucky gamers whizzing around in their carts. I started to travel to stores I don’t usually shop at in hopes of finding wee Mario and his vehicles.

No luck.

I perused the leaflets that came with my newspapers. I was getting desperate. I would ask clerks when they expected to have copies of the game. “Oh, we only get a few in at a time, and they sell out fast.” Well. I’d just have to watch more closely and be faster, wouldn’t I?

And then one day…

The local Wal-Mart proclaimed they had Mario Kart, and even better, it was on sale! Without even thinking, I dropped everything and hopped in my car. There it was – four months after Christmas, and mine, all mine!

Price be damned, I was going to have that Wii game in my hot little hands. And when I’d finally paid and brought the game home, I felt victorious. I, too, was now one of the cool kids – nay, the elite!

Truth be told, I’ve played the game exactly twice since I’ve bought it.

We Want What We Can’t Have

Scarcity and social demand got me wanting that Wii game badly. It wasn’t just a game anymore – it was a coveted object in my possession, one that would make non-owners envious. Once I owned it… Meh.

You’re not above this psychological consumerist quirk, either. We all make decisions on what to buy and what’s valuable based on scarcity and social demand. These two elements help us determine what’s good to have and what keeps us in favorable position with other human beings.

That’s important. If you’re out of favor, you’re an outcast. And caveman logic (it’s hardwired in your brain) says that outcasts, loners, weirdos and whatnot just don’t survive. Being an accepted member of society is crucial to safety and our well-being.

Back to scarcity, shall we? The scarcity principle claims that opportunities are more valuable to us when availability is limited.

Take wedding bands and diamond rings, for example. They’re just metal and stones, but boy, they carry a nifty price tag, and they’re always in demand. Silver and aquamarines are just as pretty, though, but neither metal nor stone are as scarce as gold and diamonds. Thus, we perceive them as of lower value.

Are they? Not really. A stone is a stone is a stone. Our perception of value, therefore, comes from the difficulty in possessing that particular stone. Diamonds are hard to find, they’re expensive to extract and cut, and there’s a limited supply available.

Out Of Your League and Into Your Emotions

Here’s another great example: Let’s use Frank Kern’s Mass Control. (Love him or hate him, the guy offers the best example going for the purposes of this post.)

  • Frank’s course is hard to find – you can’t easily obtain it and those who do own it aren’t sharing what they’ve learned very much. The information isn’t common and it’s difficultly obtained.
  • Frank’s course is expensive – at about $2,000, it’s out of financial reach for many people.
  • Frank’s course has limited availability – it goes on sale for a short time and then it’s gone for a long time. We could lose an opportunity.

That’s the perfect recipe for success. Frank’s made sure to apply scarcity principles to create desire. He tosses in some urgency tactics, and his courses are real hot sellers.

Desire is a huge key in marketing and sales strategies. If what you sell is easy to obtain, then no one really cares. Potential customers take for granted that they could buy from you any time they wanted. Limit that option, and you’ll sell more.

Not only that, but desire and scarcity tap right into our fear of loss. We’re hugely motivated to protect what we have, and we’re terrified to lose anything. Since we can have or lose an opportunity… Yeah. Loss is powerful stuff, especially when it comes to our rights and freedoms. It’s cause for revolution, they say.

Blockbuster Lineups – Ka-Ching!

Then there’s social demand, another psychological hot-button. Social demand influences you in that when many people want something, you start to want it too.

If a friend likes a certain shampoo, you might try it out. But if the bottles are selling like hotcakes, there are lineups on the street and everyone’s clamoring for theirs, then you can bet you’ll be lining up for yours too.

Social demand often regulates the decisions we take when it comes to buying. Scarcity can create desire, and urgency can help you buy, but add in that everyone wants one, and you suddenly place far more value on that object than before – and you may do anything to get it.

I’m not kidding. Riots have been started over many an Elmo doll.

Social demand is important, though. It assists our ability to determine quality quickly and thus influences our decisions when to buy and when to pass. We think, “Well, if everyone else wants it, then it must be good.”

Usually, that’s quite true. After all, if the object or service was crap, no one would want it, and the strategies to get us to part with our dollars wouldn’t work very well. It’s fair to say that if it’s both in demand and scarce, it’s probably a good buy.

We Have a Winner!

Need one last example? (Hey, why not?)

Imagine you were eyeing a shirt in the store. It’s nice, you like it, and there’s only one size medium left – just the right size for you.

But you don’t really need a new shirt. Besides, it’s not an emergency. It’s just a nice shirt you might like to own. Hmm… Well, maybe not. So you set the shirt back on the rack and turn to walk away.

Then another shopper approaches excitedly, dragging a friend. “Oh, I saw a shirt I love. I’ll show it to you, right here.” The girl grabs the exact same shirt you were looking at – size medium. “Isn’t it gorgeous?

You probably don’t walk away. In fact, you’re probably listening to the conversation very closely. And if by some chance the girl sets the shirt down on the rack for just a second, you might even snatch it and throw it in your cart before she can pick it up again.

Scarcity. Social demand. Urgency. Sales.

How to Use Scarcity for the Power of Good

Now you know more about creating sales using scarcity and social demand. (You also now know why Frank Kern isn’t going out of business anytime soon). And you know you can use scarcity for your own business as well – without being sleazy or false.

You can limit your consultations. You can restrict your downloads. You can cap your forum membership. You can extend your waiting list. You can raise your rates.

There is nothing wrong doing any of that.

In fact, using the scarcity principle in your business can actually help you live a better life, one that’s more balanced and one that gives you more free time with less work on your plate. The scarcity principle can help you provide better products and services to your customers, and it can help you offer better support to your clients.

And what if you want to fight back against scarcity? You can. There are times when buying isn’t a good idea and you need to keep your hands off your wallet. There are times when something else would serve you just as well, or when you know you’re buying just because everyone else is.

There are times when you start to think you might miss your chance, not get your copy or never be able to get in – and for those times, do this:

Ask yourself whether you want to buy because this product or service is going to give you something more. Do you want it just to own it, or get yours because everyone else is getting one? Are you going to put it to good use? Do you just want to be cool?

Do you really need this item? Or is it just the latest, hottest seller?

Another way to fight the scarcity principle is to remember that while it’s true that what we buy based on scarcity and social demand is usually of good quality, it’s also usually no better quality than what we would buy otherwise.

Keep that in mind. What is scarce or hard to get does not necessarily perform better, look better, or taste better – we just think it does.

See you next Friday, when we discuss how scarcity can backfire on you. (I promise it won’t be as long as this post.) In the meantime, remember, young Sales Skywalker. Shun the Dark side and wield your saber for the Power of Good, not Evil.

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.