“We value things higher, when they become scarce”
We don’t like missing out on opportunities. We hate it when choices are no longer available. In this way, ‘scarcity’ can be seen as a form of loss aversion (we don’t want to lose an opportunity and become more risk-seeking when the clock is ticking).
When our perception of availability decreases, we tend to value things higher. Therefore we tend to prefer limited editions and scarce products. Therefore we are more likely to buy scarce products and we also like them better too.
Scientific research example:
Imagine you’re watching a tel-sell program late at night. Halfway through the program the presenter calls out ‘Call now, the operators are standing by!’. Chances are that you (and lots of others) will wait and watch more of the program.
Tel sell programs found that creating the impression of scarcity greatly increases the likelihood of calling. All they did was have the presenter call out ‘Call now, and if the line is busy, call again!’. That greatly improved the call volume, since it creates an impression that everybody else is trying to buy the same product.
Online Persuasion tips:
- Clearly promote the scarce availability of your products (or services)
Supersize your scarce availability by:
- Dividing your stock products into smaller sub-items (i.e. by color, or by splitting hotel rooms into the street- vs. garden side).
- Ranking limited available items on top in category pages and search queries.
- Congratulate your customer with the fact he acquired one of the last products.
- Especially apply this to items you’d like to sell.
Warning: Scarcity reduces rationality
Scarcity makes people value a product higher and drive them to buy or act quicker. But this is also because the emotions that accompany scarcity inhibit rational thinking and an irrational high appreciation of a product. Lots of studies found that scarcity consumes much of a person’s cognitive resources and moral standards. There is simply little mental space left to decide and act rationally (see for example studies by Sharma et.al., or Shafir & Mullainathan).
This can lead to mistakes, bad decisions, and regret.
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Further reading on Limited Numbers & Editions:
- The Science of Scarcity (Harvard Magazine)
- Scarcity on Wikipedia
- Sharma, E., Mazar, N., Alter, A. L., & Ariely, D. (2014). Financial deprivation selectively shifts moral standards and compromises moral decisions. Organizational Behavior and Human Decision Processes, 123(2), 90-100.
- Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. science, 341(6149), 976-980.