In this post, you'll learn everything there is to know about scarcity marketing and how to create a scarcity marketing plan that will help you boost conversions for your business. Let's go!
First, you may be thinking:
“What is scarcity marketing?
Is it appropriate for my type of business?
How do I use this principle?
Who do I target?”
Well, don’t worry. We're going to outline just how to successfully write a powerful scarcity marketing plan that will help you sell your product or service like a pro.
Ready? Let's roll...
Scarcity is defined as insufficiency or shortness of supply. (Source).
Applying scarcity to marketing is simple: you use the fear of insufficiency to sell more.
For example, a company will notify consumers that there is only X amount of their product left in stock. They urge the consumer to buy now because if they do not purchase at this moment, the product will likely sell out before they have a chance to buy later on.
There are two broad methods of scarcity marketing to keep in mind:
The first is limited number scarcity marketing. This means that the product or service is in short supply and won’t be available once it runs out.
The second method is limited time, or deadline, scarcity marketing. This means that the product or service is only available during a specific time period and will not be available after a set date.
According to SitePoint, the overall goal of scarcity marketing is to create a sense of urgency through an aggressive call-to-action that makes people scared that they will not be able to acquire a product/service that they want if they do not act fast and buy now. (Source).
Dr. Robert Cialdini, the Regents' Professor Emeritus of Psychology and Marketing at Arizona State University, is best known for his book on marketing and persuasion, Influence: The Psychology of Persuasion. It sold over three million copies and has been translated into thirty languages.
The book was based on six key principles of influence and the last principle being scarcity. He says that perceived scarcity will generate demand. Scarcity is believed to make a product appear more valuable to a consumer.
A study was conducted in 1975 where researchers wanted to know how people would value cookies in two identical glass jars.
One jar had 10 cookies, while the other contained only two. The cookies and the jars were absolutely identical, yet the two cookies were valued more highly than the jar with 10 cookies. (source).
Some may think that this method of marketing is manipulative, but outlining your plan with a transparent offer will help keep you honest.
The history of this marketing principle goes as far back as 1867, when Karl Marx wrote the Commodity Theory that deals with economics, supply and demand. This theory demonstrated the effects of limited availability on the valuation of commodities.
One of the first notable uses of the scarcity principle was by Walt Disney Studios. The company would re-release old films and urge consumers to buy before they went back into the “Disney Vault.” This one was one of the earlier examples of Limited-time scarcity marketing!
If you haven’t already, describe the customer, you would like to target with your scarcity marketing plan. What demographic is your primary audience (age, gender, etc.)? What are their interests and behaviors?
Knowing your target customer and their wants and needs concerning your product is key to delivering a successful marketing plan.
When writing your marketing plan, it is important to keep in mind what is in your means, as you want your plan to be realistic and tangible.
If you are a small business or blogger, selling your product at a discounted rate may make it more difficult to generate profit.
Create a list of overall goals and include what you can contribute financially to the marketing activities without burdening yourself.
Determine which scarcity method is right for your product or service. You can do this by analyzing your overall goals, budget, means, etc.
If you are a small business or blogger with a limited inventory of products, a limited number scarcity plan may be the best route for you.
If you have a warehouse full of products that need to be moved as soon as possible, the limited-time principle may work for you.
If you are selling a service via your website or wherever a limited-time plan could help you attract potential new clients. For example, the potential client has a certain amount of time to sign up for your service at a discounted rate before the rate goes back up.
Determining the right method of scarcity marketing is crucial before moving on with your marketing plan.
How do you plan to get the word out about your promotion?
Your marketing materials are going to be what pushes your scarcity plan. Your materials can include your website, company blog, social media pages, digital ads and email, print brochures, TV commercials, etc.
You want your marketing materials to convey your promotion in a transparent, consistent, and fluid way. Consider all of your options and decide which will reach your target customer most effectively.
I have included a few examples of notable companies using scarcity to sell their products and services.
Amazon – This online retailer utilizes both methods of scarcity marketing to its advantage. In the first photo, you will notice that they have a “Deal of the Day” section with a countdown timer when customers can purchase certain goods at a discounted price.
The second photo shows their use of limited number scarcity marketing by letting customers know how many products are left in stock and encouraging customers to order soon.
Arby’s – Many foods and beverage businesses utilize seasonal or limited-time-only offerings to lure guests to their establishment. Here is an example of how Arby’s incorporates limited-time menu items on their website.
Groupon – This is an interesting example because Groupon has taken the scarcity marketing principle and turned it into their core business model. If you aren’t familiar with Groupon, it is a website that allows you to buy products or services within a time constraint.
You can purchase boating lessons, a new alarm clock, or even an all-inclusive vacation to Italy. The limited-time principle is applied, and customers are forced to make a purchasing decision rather quickly. Talk about a spontaneous vacation!
Scarcity marketing works because it forces the customer to take action. It is a fact of life that people put off buying things until they have to. They will wait until their next pay-check, or until they pay off their credit card, or after rent is due.
They make a decision to wait, and when the time has come, it is sometimes forgotten. Encouraging a customer to purchase now rather than later can help you meet your sales goals.
When evaluating your marketing plan, it is important to take a few things into consideration. First, did you see a return-on-investment (ROI)? After subtracting what you put into this plan, were you able to make a significant profit?
Determining your ROI can help breakdown exactly why this campaign worked or why it didn’t.
Another important factor to consider is customer feedback. You can ask your customers questions such as,
“How did you find out about this sale?”
or,
“Would you refer us to a friend in the future?”
Customer feedback is a useful tool because it can help you tailor your next campaign to be even more successful than your first.
Look for patterns. In my scarcity marketing experience, I had a product that had a limited time offer, and the promotion lasted for one week.
During the first six days, there were less than 100 sales. During the last twenty-four hours, our sales almost doubled.
Depending on your frequency rate, a consumer may see your offer once, twice, or even three times. That purchase funnel has already started, and your product is in the consumer’s mind. It may take until the last day of the offer or sale for the consumer to finally complete the purchase. Notice these patterns and keep track of them for future campaigns.
So do you have a special product that is limited in quantity or featured for a limited time? If so, scarcity may just be what you are looking for.
Just remember, if you are wishing to use scarcity as a model: use it responsibly. There’s a fine line between creating the perception of value through scarcity and just annoying shoppers.
To help you create an effective scarcity marketing plan, check out the awesome Thrive Ultimatum plugin for WordPress.
Thrive Ultimatum is an all-in-one scarcity marketing tool that will help you create and track multiple types of campaigns, including fixed date, recurring, and evergreen campaigns.
In a nutshell, Thrive Ultimatum will help your business:
You can learn more here in my review, or grab this awesome tool below.
