The Scarcity Principle is not a fictitious online marketing tactic. It is based on the economic value of Supply and Demand. We live in a consumer society, so if you have a company that wants to grow, you need to generate demand and grow your business based on that. One of the best things that you can use is to increase conversions naturally, but finding the right way to do such a thing can be a bit frustrating. This is where the scarcity principle comes into play.
What is the scarcity principle?
Simply put, this is an economic principle that shows how limiting the supply can lead to a very high demand for that product. According to this principle, a customer is more likely to pull the trigger if he sees that the product is selling fast. Of course, this goes with the assumption that the customer can afford such a product. That doesn’t happen all the time though, and in the end, it can be rather challenging for sure.
When a consumer sees that the product is scarce, he/she is faced with a rash decision. They need to focus on performing a cost-benefit analysis in order to see whether the benefits of that particular product are worth it or not. Most of the time, if the consumer already had that product on their wishlist for a long time, he/she will pull the trigger and purchase the product. It is similar to a leap of faith in your product or service. I need it, better now than later because …… (it might be gone, or I will save)
However, the scarcity principle is necessary here, because there will be no urge for the customer to purchase that item unless he sees that the quantity or offer is limited. And that’s why the scarcity principle increases conversions. It manages to make the most out of a person’s urge to purchase an item by offering a choice between buying or losing that product or deal forever.
Obviously, the scarcity principle won’t work all the time. If a person has a very high knowledge of persuasion, this principle will not bring any urge to acquire that product.
2 methods that work
Two scarcity principle methods that are widely used in the online and offline world and which are harnessing the power of the scarcity principle. This includes the time-related scarcity and the quantity-related scarcity. The time-related one usually brings a timer that shows you for how many hours/minutes that deal is still on. Then you have the quantity-related scarcity principle that requires you to offer only a limited amount of purchases.
When you see things like “Only 1 left in Stock” or “Offer available for the next 60 minutes”, customers are more likely to initiate a purchase. And that’s what you need to focus on. If you have a business, you need to use the scarcity principle to your benefit. You have to concentrate on increasing conversions to the best of your capabilities.
So, how can you use the scarcity principle to generate more sales for your business? You can create limited production runs, create closed and open periods for the ongoing offers. You can provide some benefits to people that are willing to be the early adopters. All of these are great ideas that harness the power of scarcity and use this principle to accumulate a significant ROI. The results can be significant. So you just have to try this out, and the value will be there at all times. Use these ideas and understand that scarcity can indeed help your business grow, you just have to make the most out of it!