In this episode, we look at how to increase sales using the Law of Scarcity.
This episode was inspired by Richard Shotton’s book The Choice Factory – How 25 behavioural biases influence the products we decide to buy, chapter 25, Scarcity.
Goods and services become far more appealing when they’re in short supply. The less there is the more you want it.
There’s a well-known story of when British Airways announced it was closing the London to New York Concorde service. The next day sales massively increased. Nothing had changed about the service or the cost, it had simply become scarce.
There are a few ways you can implement the law of scarcity:
1. Limit the duration of availability: when Starbucks brought out their “Unicorn frappuccino” which was brightly coloured and highly instagrammable. After stating on its website that the specialty drink would only be available for a few days, Starbucks was flooded with unicorn frappuccino orders, which quickly sold out within the first day.
People feel more powerfully about loses than they do gains, so the fear of losing out is a higher driver for consumers to make a purchase.
2. Limit the number customers can buy: if you tell customers or put a sign telling customers that they can only buy a limited number of something, it’ll increase sales. This is because customers believe the product is in high demand and in short supply. Apple has done this on their release of new iPhones.
3. Limit production: make some of your products a limited edition. For example, if you sell t-shirts you can make some ranges limited edition, which you’ll never print again. This drives the desire to own one. If you can’t make a limited-edition product for whatever reason. Then you can make the packaging limited edition. For example, if you’re a coffee brand, you could for a short period make a very attractive and limited-edition coffee tin that people must have before they all sold out.
4. Let customers know you’re in short supply: if you shop on Amazon, you’ll notice that sometimes a product will say “only 3 left”. If you’re after a certain product and you see this message it makes that option highly attractive. It also creates a sense of urgency and reduces the time the customer might have to change their mind or shop elsewhere. The customer will think – “If there’s only a few left surely they must be good.”
These are a few ways you can use scarcity to increase sales. But be honest. Don’t say something is limited edition then bring the same product out again. That’ll just destroy your reputation. However, we do encourage you to use your circumstances to your advantage. If you have a very popular product, let your customers know.