How to Market Using Scarcity
There are two approaches to scarcity and you muddle them at your own peril! It can be
- a genuine shortage or restriction on availability of your offer, or
- a marketing ploy, used to encourage a quick sale.
The latter is to be deplored. I’ll explore scarcity as a marketing ploy in more detail in my next post because it is a real issue for the entrepreneur. My firm recommendation is you deal solely in genuine scarcity.
Types of Scarcity
- Products may be limited in number. You may have purchased a certain amount, eg a book to go with a particular offer, or as prototypes for something you plan to develop further.
- Time is another scarce commodity. If you are offering consultancy, there will be a limit to the number of clients you can take on. There are ways you can manage this; you can reduce the amount of time available to clients without compromising the quality of your offer but even so there are still limits.
- Numbers can also be restricted by quality. For example, you might offer a group service and know from experience the group is less effective over a certain size.
Less Convincing Scarcity
These are sometimes used by online marketers but should be approached with caution.
- Digital products are never scarce, their effectively infinite numbers are what recommends them in the first place. What would be legitimate would be a price increase. Let’s say you launch a product that requires support services. This would clearly involve a cost to you. Usually there is an annual fee for products that includes support and upgrades. As the product improves it is not unreasonable to increase the price. Some suppliers offer a rate that does not go up unless you interrupt your order by cancelling it. This is an incentive for early customers to stay as customers. When the price goes up, you can attach a deadline for the increase. This way the old lower price will be a scarce commodity for a period.
- Arbitrary time limits are to be avoided. You should always have a reason for the time limit. So, if you’re offering a course, you will have a start date if it is an in-person course or if it is an online course, you may be able to support only a limited number of participants. So long as the constraint is genuine, this is not a problem.
- Your own physical products, eg books or CDs. Now, you might think these would be constrained. If you’ve ordered 1000 copies, that’s all you have. However, you can always re-order. But these days you can pay a company to prepare your product and mail it out in response requests. So physical products can be just as effectively infinite as digital products. Obviously this doesn’t apply to every type of physical product.
Take Care Using Scarcity
Be aware, you will turn off potential customers with any constraint for which there is no credible reason. Be upfront if there is a genuine limit. “To be sure I can provide the excellent service I promise, I have to limit my client numbers to xx per quarter.” Something along these lines communicates that you are aware of your constraints and limit your offers accordingly.
Scarcity is a powerful marketing tool when used properly. Don’t use it unless there is really no alternative.
Can you describe how you have used scarcity successfully? Or have you used it improperly and been found out? It is easy to do, without realising what you’re doing!