What is the Scarcity Effect?
The Scarcity Effect is the cognitive bias that makes people place a higher value on an object that is scarce and a lower value on one that is available in abundance. Scarcity is associated in our brains with something positive, luxurious and exclusive as we automatically assume that it is scarce because everyone wants or has already bought this product and therefore it must be a good product. In other words, scarce objects arouse our interests and so immediately become more desirable than a product that is readily available.
Examples of the Scarcity Effect
Many brands make use of this through the way they market their products: by offering limited edition products, flash sales or only producing something in limited supply, brands are able to stimulate demand. For example, just one day after Apple launched the last iPhone, stocks had already sold out, which in turn made even more people want to buy it because it generated the scarcity effect and automatically branded it as a luxury item that people were willing to queue for hours to have.
The Scarcity Effect in Marketing
There are some simple ways to convey scarcity, used to great effect by some of the biggest E-commerce brands on the planet from Amazon, British Airways, Booking.com, Expedia and Salesforce to Urban Outfitters.
- Display low stock availability By showing the number of items left in stock you can motivate people to make their purchase more quickly because of the fear of missing out.
- Highlight Online-Only Offers By displaying “Available online only” visitors are encouraged to make purchases as the products will seem to be more scarce in comparison to those available in store.
- Use Smaller Fonts When Stock Levels Are High When you have more than 5 in stock of any given product, use the font size to display this as discreetly to avoid deterring visitors from making purchases immediately.
- Create Urgency by Giving a Limited Timeframe for Fast Delivery Offering fast delivery time is a strong motivator for your customers to complete a purchase as we always prefer to take an option that results in quicker gratification.
- Use Constraints on Offers For instance, when offering “free trials” think carefully about the constraints and length available to play into the idea of scarcity and urgency.
Scarcity is both a simple and powerful motivator to encourage your browsers to become buyers. With a few small changes to your digital marketing, you can significantly improve the speed, value and frequency of conversions.