GNZY
A new gen digital marketing agency aimed to help businesses stand out to gen z and millennial audiences.
Ever wondered how companies manage to create significant, sell-out hype around their latest product launches? One of their main principles is scarcity.
The scarcity effect is a cognitive bias where people perceive something to be more valuable when it's limited or scarce in availability. This principle is based on the idea that when something is rare or in short supply, it's seen as more desirable or exclusive.
Apart from the obvious benefits, using this principle can help your business by:
- Increasing urgency: Scarcity can create the sense of urgency and thus drives sales faster. When people believe a product is limited, they are more likely to purchase the item fast to avoid missing out.
- Differentiating from competitors: In competitive markets where many businesses offer similar products or services, scarcity can help businesses stand out and capture the attention of consumers. Limited-edition products or exclusive offers can set businesses apart and attract customers who are looking for something unique.
- Improve brand loyalty: There are several ways that scarcity can improve brand loyalty. One way is due to the sense of exclusivity that scarcity creates, this can strengthen the bond between the customer and the business. Another way is through the community it creates. Through shared experiences and collective pursuits whereby people come together to acquire the scarce items.
You either love ‘em or hate ‘em but one thing’s for sure – they had a strong chokehold on all streetwear lovers at one point. Their tactics were simple; have a small product line and release limited quantities in one go. The response? Stock selling out seconds after release. And then some of those lucky enough to nab an item would go on to sell it for around 3 times higher than its RRP.
Known for their extensive range of beverages and perhaps slightly overpriced food (I’ll keep my opinion out of here from now on), Starbucks have also utilised some scarcity marketing into their strategy in the form of limited time access. Every so often, Starbucks launches a limited-edition drink (think Pumpkin Spice Latte in Autumn or their USA only Unicorn Frappuccino) that is only available for a short period of time. This evokes a sense of urgency amongst their consumers to take advantage while they can.
However, these companies all offer products as opposed to services. So, how can we extend this principle to services?
Businesses offering services can emulate scarcity by limiting the number of clients they take on at any given time. In doing this, it will appear to people that your business is client focused rather than solely trying to make as much money as possible. This approach not only increases the perceived value of the service but also creates a sense of urgency among potential clients who don't want to miss out on the opportunity to work with a sought-after provider.
Hosting webinars is a common strategy for service-based businesses to educate and engage with their audience. By restricting the number of available spots for a webinar, you can create a sense of exclusivity which may encourage prospective attendees to register quickly before all spots are filled. This tactic will not only boost your webinar attendance but will also increase the perceived value of the content being offered.
Similar to product-based businesses, service providers can offer exclusive access to certain resources, content, or experiences as a way to incentivise engagement and loyalty. For example, giving access to premium content, exclusive events or workshops. In doing this, businesses can create a sense of belonging and community amongst their audience and strengthen their relationships with clients.
Flash sales, traditionally associated with retail, can also be used in services. Service providers can offer limited-time discounts or promotions on their services, creating a sense of urgency and encouraging prospective clients to take action before the opportunity expires. This can be particularly effective for filling appointment slots or securing bookings during off-peak times.
The scarcity effect is a highly effective tool for businesses to use when looking to increase their sales, drive faster actions amongst their audience and strengthen loyalty. While this effect isn’t a new concept in business, it has been proved effective amongst all types of businesses.
So, what are you waiting for?
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