GROWTH MARKETING

Have you ever noticed things in limited quantities are strangely appealing?

You’ve probably experienced this in your own life: You always want what you can’t have.

Turns out, scarcity makes people perceive limited quantities as more precious and valuable. And, with the help of today’s guide, you can use this exact tactic to boost your sales too by learning how to create scarcity.

Here is what we are going to cover:

• The Science Behind Scarcity & Why It Works So Well
• Why Marketers Love Using Scarcity Marketing to Boost Sales (And Always Have)
• How to Harness the Real Power of Scarcity
• 9 Ways to Use Scarcity Marketing to Your Advantage
• Using Limited Availability To Increase Conversions
• Using Demand and Popularity To Jumpstart Your Sales
• The Limits of Scarcity Marketing
• Using Limited Time Offers To Boost a Low Sales Month

Before we jump in though, let’s talk more about how scarcity marketing works, why it works so well, and how to effectively use scarcity marketing.

Understanding the Scarcity Principle

The scarcity principle is a fundamental concept in marketing that leverages the psychological effect of limited availability to increase the perceived value of a product or service. By creating a sense of scarcity, businesses can drive demand, boost sales, and ultimately, increase revenue. This principle taps into the human fear of missing out (FOMO) and the innate desire to possess something that is not easily accessible. When potential customers perceive that a product is scarce, they are more likely to act quickly to secure it, fearing that they might lose the opportunity if they delay.

Definition and Explanation of Scarcity

Scarcity refers to the limited availability of a product or service, which can be created through various means, such as limited quantities, time-sensitive offers, or exclusive access. The scarcity principle is based on the idea that people place a higher value on things that are scarce and are more likely to take action when they feel like they’re losing their freedom of choice. For instance, a product available in limited quantities or for a limited time can create a sense of urgency, prompting customers to make a purchase decision faster than they normally would.

The Research Behind Scarcity

Researchers Worchel, Lee, and Adewole asked participants to rate two jars of cookies. Initially, both jars contained 10 of the exact same cookie.[*] Limited resources play a crucial role in this scenario, as the perception of scarcity influences consumer behavior.

Then from one jar, eight cookies were removed (making them more scarce).

Now participants had to choose between the jar with 10 cookies or the jar with only two left.

Which one do you think people chose from more often?

The jar with only two cookies.

Here’s how scarcity works in the marketing realm.

Why Marketers Love Using Scarcity Marketing to Boost Sales (And Always Have)

Scarcity is a tactic marketing and sales teams love–because it works. Take a look at this Safeway ad from 1952:

Notice that the storewide sale isn’t open-ended: It’s seven (sensational) days long.

The ad gives shoppers formal notice that they only have one week to take advantage of the sale.

But scarcity doesn’t just make shoppers feel a sense of urgency to convert and take action–it has a slew of other handy side-effects, too.

One clothing company has this all figured out. This online retailer tested a limited next-day shipping offer against another version in which the limited offer wasn’t shown.

The limited time shipping offer boosted sales by 226%.

All it took was one line of text with a countdown and somewhere around 45 seconds to install it.

But to take full advantage of scarcity to increase your sales, you need to fully understand its power. Additionally, avoid creating false scarcity, as it can damage your brand’s reputation and alienate customers.

How to Harness the Real Power of Scarcity

The commodity theory proposes that scarcity increases the value (or at least the desirability) of an item or experience that meet three basic criteria:

• It’s useful
• It’s transferable between people
• It has the potential to be possessed

Any marketable good and service fits the bill– even marketing activities fall into this category.

On top of that, Dr. Michael Lynn, a professor at Cornell, compiled a list of explanations psychologists and researchers have found over the years that examine why scarcity increases desirability:

Let’s break down these three main categories:

1. Scarce items feel exclusive: Those who have scarce items have exclusive access, which is not openly available to others. This, in itself, makes a scarce item more desirable. This is why clubs have VIP areas, airlines have special membership lounges, etc. 
2. Scarce items appear more valuable: According to the law of supply and demand, items in low supply often cost more, and therefore scarce items are expensive items that act as status symbols. Example: To get one of the few Birkin bags produced by luxury brand Hermes, you’ll probably be waitlisted for years…just to pay the $10K+ price tag.
3. Scarce items make people feel powerful: Snagging a scarce item means you have access to something other people want but can’t have–which gives the owner a sense of power.

At one point, only the royals and leaders had access to clean water, abundant food, and comfortable living quarters. Because of this, these scarce essentials became even more powerful.

But that’s not all. Scarcity, as a driver of desirability, is further proven in research conducted in a virtual context. It’s not an effect that only works in a real-life context.

A study by Wageningen and Tilburg Universities on product scarcity confirmed:

• Limited supply in a virtual shopping environment lead participants to believe scarce items were more popular.
• They believed supply was limited because demand for these items was higher than other items. 
• With this belief in mind, more shoppers chose the scarce item over the non-scarce one when told to select an item of their own.

In this setting, the cause of scarcity didn’t matter, either. Items that were scarce as a result of increased consumer demand or limited supply both had higher consumer preference over non-scarce items.

The bottom line: The more scarce an item, the more people want it.

Just like the cookies.

So how does all of this translate into more sales? 

Here are nine ways you can leverage scarcity to create urgency to do just that.

Creating Perceived Scarcity

Creating perceived scarcity is a crucial aspect of implementing scarcity marketing strategies. Businesses can create perceived scarcity by:

• Limiting quantities: By limiting the quantity of a product or service, businesses can create a sense of urgency and exclusivity. For example, a limited edition sneaker release can generate buzz and prompt quick purchases.
• Creating time-sensitive offers: Time-sensitive offers, such as flash sales or limited-time discounts, can create a sense of urgency and encourage customers to take action quickly. A flash sale with a countdown timer can significantly boost sales within a short period.
• Offering exclusive access: Exclusive access to a product or service can create a sense of scarcity and exclusivity, making customers feel like they’re part of a select group. Membership-only deals or early access to new products can enhance perceived value and drive demand.

9 Ways to Use Scarcity Marketing to Your Advantage

Let’s look at some specific ways you can start implementing scarcity marketing tactics right away.

You can find numerous scarcity examples from brands like Asos and Best Buy, showcasing how these strategies effectively drive conversions and engage customers.

USING LIMITED TIME OFFERS TO BOOST A LOW SALES MONTH

One of the best ways to leverage scarcity is through limited time offers.

Just like in the Safeway ad you saw earlier, when time is scarce, it makes people act fast. They have less time to second-guess and the pressure is on which means they will act sooner rather than later.

There’s nothing more anxiety-inducing than seeing the minutes on a clock tick down…

If you are using BDOW! pop-ups and forms to promote your limited time offers, did you know you could set them to display based on the date? (Watch this two minute tutorial and learn how to implement advanced date-based rules.)

SCARCITY MARKETING TACTIC #1: PURCHASE COUNTDOWNS

Putting a timer or countdown within a sales context means you’re defining the scarcity parameters.

When the customer has a firm grasp on how much time he or she has left to make a decision, it adds urgency.

eBay is known for their purchase countdowns that ignite last-minute bidding wars amongst prospective buyers.

Why is a countdown so effective as a scarcity tactic? Because we hate losing and this next theory explains this further.

Psychologist Daniel Kahneman’s Loss Aversion Theory is based on findings that state the pain of losing is psychologically almost two times as powerful as the pleasure of gaining[*].

You can see this in the graph below.[*]

You read that right: Losses can be 2x more painful than gains are pleasurable.

Tie this in with Freud’s Pleasure Principle (a human’s innate tendency to seek pleasure and avoid pain), and it’s not hard to see why online shoppers keep on bidding while the countdown draws to a close. Bidders drive up the price tag of a scarce item just to avoid the pain of not winning.

Put this into place with your own offers by using a countdown timer on your BDOW! pop-ups.

SCARCITY MARKETING TACTIC #2: SALE PRICE COUNTDOWNS

Countdowns can also be used in the context of a limited time sale price. 

Using this example from the Social Media Marketing World conference, you can see that adding a countdown shows interested attendees how much time is left before the sale price ends.

The limited time sale on Virtual Tickets not only encourages a “buy now” mindset, but it again taps into the loss aversion tactic that reminds potential attendees why they need to act now rather than later.

They drive this home by not only limiting the time on the offer, but by limiting the quantity of the sale price Virtual Tickets, too.

In another example, Huckberry[*] reminds shoppers that limited time sale prices have a hard stop time with an on-site countdown for discounts.

Limited time offers like these put another psychological tactic to work as a powerful motivator: Fear of Missing Out, or FOMO.

The FOMO phenomenon was named by Dr. Dan Herman in 1996, and is defined as a “clearly fearful attitude towards the possibility of failing to exhaust available opportunities and missing the expected joy associated with succeeding in doing so.”

Put simply, people hate missing out on a good deal which is why using FOMO can be so effective.

SCARCITY MARKETING TACTIC #3: NEXT-DAY SHIPPING COUNTDOWNS

Another place you can leverage a countdown to take advantage of FOMO is within a next-day shipping context.

By letting shoppers see how much time is left before they’ll miss out on next-day shipping, you can increase the urgency and encourage customers to purchase now.

Amazon uses this exact tactic to let shoppers know how much time is left before they can no longer guarantee next-day shipping.

If you had the opportunity to get next-day shipping, wouldn’t you hurry up and check-out to take advantage of that offer?

I would (and have) and I bet you would too.

SCARCITY MARKETING TACTIC #4: SEASONAL OFFERS

Seasonal offers also help buyers see scarcity and drive sales. After all, the holidays and seasons don’t last forever.

This is one of the reasons stores like Starbucks only sell pumpkin spice flavored drinks in the fall.

Research has proven that seasonal offers pay off. A NPD Group purchase tracking study on seasonal beverages (like pumpkin spice lattes) showed that seasonal offers not only spur purchases, but they also produce higher average order size.

During seasonal offer periods, the average check for pumpkin spice latte buyers was $7.81, compared to only $6.67 for those who bought a non-seasonal drink.

Why did that happen? Because purchase cycle analysis from the same study showed that these seasonal beverages were viewed as indulgent purchases, in which consumers not only bought the seasonal beverage, but an additional food item, too.

It’s the “treat yo self” mentality that says, “I’m already buying this special item, why not go all in?”

Limited time offers are powerful for creating a sense of urgency, but scarcity extends far beyond the realm of limited time flash sales.

So how can you add seasonal offers to your business?

• If you have a digital product, offer seasonal bonuses.
• If you have an eCommerce store, pull season-appropriate items off of the digital shelf after a period of time (and make sure your customers are aware you’re doing it!)
• If you have a service business, offer a special, discounted rate to your most loyal customers during a specific season (like Christmas.)

Next, let’s look at how limited availability works to drive sales.

Using Limited Availability to Increase Conversions

Scarcity already hints at a short supply, and sometimes that means the product itself is in limited quantity. Let’s explore how you can use short supply to your advantage. Scarcity marketing examples, such as limited-edition product releases, can effectively demonstrate how creating a sense of urgency compels consumers to act quickly and increases demand.

SCARCITY MARKETING TACTIC #5: LOW STOCK NOTICES

As I mentioned earlier, scarcity makes items seem more popular (especially for online shoppers), which is why it’s not surprising more and more online retailers are leveraging low-stock notices to generate hype.

Zappos uses a low stock notice to alert shoppers of scarce items, which is important information for anyone looking for a particular size and color.

When a buyer sees that the item he or she wants is near selling out, it’s just one more reason to make a purchase immediately.

SCARCITY MARKETING TACTIC #6: LIMITED PRODUCTION (EXCLUSIVITY)

Other times, limited stock isn’t a product of high-volume demand–it’s a deliberate sales strategy.

Small-batch, limited edition products are just that. Think back to the Adidas release of Kanye West’s Yeezy Boost 350. Within minutes of going for sale online, the sneakers were completely sold out.

Now, not everyone has the celebrity status and reach of Kanye West–but that doesn’t mean limited production loses its effectiveness as a scarcity sales tactic when used in a non-celebrity context.

Brothers Leather Supply lets online shoppers know when their limited edition products are low in stock to drive sales. The red copy notating scarcity stands out from other elements on the page, making it easy for customers to spot.

Limited production products tap into those desirability drivers I talked about earlier. They can be seen as status symbols, have an air of exclusivity, and make owners feel unique and special.

So far I’ve covered limited time offers and limited quantity offers as examples of scarcity marketing tactics, but there’s one more strategy that also works well…

Using Demand and Popularity To Jumpstart Your Sales

Have a product/service in high demand? Showcase it.

Leveraging your demand not only adds ethos to your offering, but it communicates the risk of scarcity as well.

Measuring the Effectiveness of Scarcity Marketing

Measuring the effectiveness of scarcity marketing is crucial to understanding its impact on sales and revenue. By tracking key metrics, businesses can optimize their scarcity marketing strategies and improve their results. Effective measurement allows businesses to see what works, what doesn’t, and how they can refine their approach to maximize the benefits of scarcity marketing.

Key Metrics to Track

When measuring the effectiveness of scarcity marketing, businesses should track the following key metrics:

• Conversion rates: Conversion rates measure the percentage of customers who complete a desired action, such as making a purchase. A higher conversion rate indicates that the scarcity marketing strategy is effectively driving customers to take action.
• Sales volume: Sales volume measures the total number of sales generated by a scarcity marketing campaign. Tracking sales volume helps businesses understand the direct impact of their scarcity tactics on overall sales.
• Customer engagement: Customer engagement measures the level of interaction between customers and a business, such as social media engagement or email open rates. High engagement levels can indicate that the scarcity marketing campaign is resonating with the audience.
• Brand loyalty: Brand loyalty measures the level of loyalty and retention among customers, which can be influenced by scarcity marketing strategies. Loyal customers are more likely to respond positively to scarcity tactics and make repeat purchases.

By tracking these key metrics, businesses can gain a deeper understanding of the effectiveness of their scarcity marketing strategies and make data-driven decisions to optimize their campaigns. This approach ensures that scarcity marketing efforts are not only driving immediate sales but also contributing to long-term customer loyalty and brand growth.

SCARCITY MARKETING TACTIC #7: SPOTLIGHT CUSTOMER BEHAVIOR

Social proof is an indicator of popularity, and often demand.

Popularized by Psychologist Robert Cialdini, social proof theory explains why people look to others when making a decision: They’re looking for guidance from a larger, possibly better informed, consensus.

Sales and marketing teams that leverage social proof are not only showcasing their most popular products and services, but they’re also creating a sense of increased demand at the same time.

Take a look at how Airbnb showcases wish-listed locations as a form of social proof:

When travelers see how popular a particular place is with other users, they’re not only seeing social proof in action, but they’ll also feel greater urgency to book before it’s snatched up by someone else. You need to act fast when a commodity is in high demand. Knowing that other people want to travel there also increases its perceived value.

SCARCITY MARKETING TACTIC #8: USE NUMBERS TO INDICATE POPULARITY & DEMAND

Sharing hard numbers and statistics about your product or service is another indicator of social proof and popularity that takes advantage of FOMO.

Bonus: It adds transparency as well.

Check out how we do this here at BDOW!: “Over 30k Sites Can’t Be Wrong”

By showing how many people (over 30k) use BDOW!, we’re building social proof that our tools are trustworthy.

SCARCITY MARKETING TACTIC #9: LEVERAGE REAL-TIME ACTIVITY

You can communicate encroaching scarcity by showing customers what others are doing in real-time.

Again, this helps create a sense of urgency, as buyers are able to see what other people are doing, and gives them an idea of how quickly they need to act if they want to claim the scarce item.

Expedia does this well with hotel bookings–they use yellow pop up notifications that tell browsing visitors how many other shoppers are looking at the same hotel at the moment as well as how many booked this location recently.

All of the tactics outlined here can be valuable, but as with anything, they should be used in moderation, and only when appropriate.

SCARCITY MARKETING BONUS TACTIC: LIMITED-EDITION PRODUCTS

Limited-edition products are a powerful scarcity marketing tactic that can create a sense of urgency and exclusivity. By creating a limited-edition product, businesses can:

• Create a sense of scarcity: Limited-edition products are, by definition, scarce, which can create a sense of urgency and exclusivity. Customers are more likely to act quickly to secure a product that they know won’t be available for long.
• Increase perceived value: Limited-edition products are often perceived as more valuable than regular products, which can increase their perceived value. For example, a limited-edition watch or handbag can be seen as a status symbol, driving higher demand.
• Drive demand: Limited-edition products can drive demand and encourage customers to take action quickly, before the product sells out. The fear of missing out on a unique item can be a strong motivator for potential customers.

The Limits of Scarcity Marketing

Can scarcity marketing tactics boost your sales? Absolutely.

But only when used in the right ways, at the right times.

Scarcity marketing tactics aren’t a quick fix for lagging sales. 

Instead, they increase the intensity of desirability for an item that’s already in demand. Think about it: If people aren’t already lining up to wait for your scarce offering, is slapping a timer on it going to magically increase demand? Probably not. Strive to build a loyal customer base who can’t wait for your new releases before tying in scarcity marketing.

Too much pressure is a bad thing. Many of the scarcity-focused strategies I’ve talked about today create some anxiety-producing urgency–and when you put too much pressure on your customers to act quickly, they may feel like you’re forcing them into action–not letting them make their own decisions. It’s an easy way to break ties with loyal customers.

Everything in moderation.

Limited edition items are special because they’re different from all of your other offerings. That means you can’t make every single item limited, seasonal, low in stock, and only available for a short period. If nothing else, customers will get annoyed that you can’t regulate your inventory. Scarcity should be used in moderation…or scarcely, if you will.

Test to know what works.

I’m a huge fan of testing, so of course I’m going to urge you to test out different scarcity marketing tactics to find the right ones that drive conversions with your specific audience. An easy way to do that: use BDOW!’s A/B testing to find out which offers resonate with your audience.

Boost Your Sales with Scarcity Marketing

Ready to start using the scarcity principle to improve your marketing and sales?

Let’s do a quick recap of why it works and how you can use it.

Why it works: Scarce items make people feel unique, powerful, and like they have access to something valuable and exclusive.

How to use it:

• Purchase countdowns
• Sale price countdowns
• Next-day shipping countdowns
• Seasonal offers
• Low stock notices
• Limited edition items
• Spotlighting customer behavior
• Using numbers that indicate popularity/demand
• Showing real-time activity

Scarcity is why people perceive limited quantities as more precious and valuable but it’s not a quick fix for lagging sales. 

Don’t Overdo It

If you use it too much or pressure your existing customers too excessively, you’ll end up scaring them away instead.

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