Saturday, October 6, 2012

Persuasion & Influence for Modern Marketers - #6 Scarcity

This is a principle that is regularly used in the world of advertising and/or marketing.  "Sale ends Friday",  "Going out of business",  "Columbus Day sales" are examples of applying the principle of scarcity to influence people to make a purchase.  When I was a young bag-toting salesman, I read a book by Tommy Hopkins and one of the chapters was about closing techniques.  One of the techniques he named as the "impending event" close.  "The price goes up on Monday" is how it was usually applied.  This is a highly manipulative closing technique and I don't recommend any of Hopkins' techniques, however, it is a good example of the principle of scarcity.  To avoid ranting against Hopkins and his outdated, manipulative, misguided selling advice, I'll go back to the subject at hand.

It is human nature to want what one cannot have or want more when we can only have less.  There are many studies that prove this as true.  Another example from the retail world can be observed nearly every year during the Christmas shopping season.  It seems nearly every year, one or more companies is able to craftily position a new toy or video game as highly popular with limited quantities sure to run out before Christmas morning.  Oh the lines and the fights that ensue.  This is the principle of scarcity at its best (or maybe at its worst).

A savvy Modern Marketer could apply the principle of scarcity quite easily and effectively, but it must be applied authentically. It must be applied authentically.  Scarcity works very well if your product (or service) is able to offer a unique feature or benefit that your target market wants or needs.  Scarcity persuades even stronger if the information about the scarce supply is exclusive information.  Suppose your boss or co-worker tells you that they heard about an organizational change about to happen to your division not yet public information.  My how badly we want to know what that information might be about.  Compare this to a public notice sent out via email that talks about a new change being considered and follow this link to find out more information.  Not as compelling is it?

Another way to apply 'scarcity' in the world of marketing is to use language that talks about a potential loss as opposed to language talking about a gain.  People will usually react more if they fear they will lose something as compared to reacting because they may gain something.  For example, if I offer a product that will reduce energy costs in a compressed air plant, my message might be "if you buy my product, you'll save 30% on energy costs" or the message could be "if you don't have this product, you're wasting $XX each and every month".  Studies show that a larger proportion of the target audience will respond to the second message.

The problem with the principle of scarcity is that it is easily used to manipulate by offering false information.  As with all of these principles of persuasion and influence, scarcity must be used genuinely.