If you’ve ever quickly decided to buy a product you weren’t entirely ready to buy, you probably did so because you feared you’d miss out entirely. Chances are, whether you were buying online, from a small business, or at a large retailer, that feeling wasn’t entirely a coincidence.
Both small businesses and larger ones routinely use scarcity tactics to entice customers to buy and to get those customers to come back over and over again.
In numerous studies, behavioral economists and psychologists have found that when something is scarce, people think it’s of higher quality. After all, it’s almost sold out, isn’t it?
When people begin to fear that they’ll miss their chance, it feels like a potential loss of freedom. We all want to be free, so we often react quickly — and buy. Which may make us not as free as we think.
I found myself reacting this way just last week, in a chocolate shop of all places. Looking through the glass at the 20 or so chocolates beneath, I chose a few flavors I knew I’d like and then, for the rest of my selections, I picked from the trays that were nearly empty. I thought maybe some regulars knew the best flavors, and I didn’t want to miss out.
It’s a subtle, but effective technique. Experts agree that items that are exclusive, scarce, uncertain, or in high demand routinely overcome the friction and doubt that often slows the buying cycle. Almost all businesses’ scarcity offers are based on limits.
The most commonly limited factors are time, access, or quantity. And, often, retailers will limit several aspects at once. Let’s look at some ways this can work for your small business.
This category includes things like holiday sales and seasonal offers. Most famously, there’s Starbucks’ Pumpkin Spice Latte and holiday Frappuccino drinks. Customers willingly pay more for these drinks and they make sure to stop into a Starbucks to pick one up because they know they can’t just get the drink whenever they want.
These seasonal bonuses are a wonderful retention tool, especially for customers who haven’t made a purchase recently or who may be cooling to your brand — a seasonal special can be just the thing to get them in the door again and renew their loyalty.
It may be counter-intuitive to limit access to your product when you’re trying to sell it, but it’s a tried and true tactic. In fact, Starbucks added another layer to their Pumpkin Spice Latte scarcity story by granting early access to die-hard fans who were willing to give up their phone numbers in exchange for a promo code.
That’s next-level marketing.
However, limiting access can be as simple as gating the download of an eBook or white paper, or selectively offering free trials. The most common way to limit access and convey the appearance of luxury is to raise prices.
Limited access offers are a great way to get people to act immediately, but be sure to use them only on your most popular products, lest they backfire.
The final category of scarcity-creating techniques is limiting the quantity of the product. Businesses as diverse as online flight aggregators and retail shops do this exceptionally well. Gilt.com, the membership-only clothing site, uses a bevy of scarcity tactics, including their limited-time sales — even showing you that there’s a limited number of items left; in fact, they keep sold-out items on screen to show you it’s real: You can miss out, so you better act now.
Learn How to Implement the Right Scarcity Techniques
If you’re looking to increase customer retention, you’ve got to deploy these scarcity tactics with care — and in combination with other tried and true marketing tactics.
If you’re interested in learning specific, highly specialized strategies for retaining your best customers, download our eBook, Keep Customers Coming Back for More. It’s free, comprehensive, and will leave you with specific action steps you can take to ensure you’re serving your customers well, so they’ll keep coming back for more. You’ll learn how to:
- Understand what matters to your customers, through market research
- Capitalize on FOMO, but avoid the sleazy sale
- How to use customer lifetime value, or CLV, to make marketing decisions
- How to get and use social proof to drive interest