Writing for Behaviour – The Scarcity Effect

There are two questions which pretty much sum up 2020 in its entirety:

“Why on earth are people buying all this bog roll?”

and

“Where the hell can I get some!?”

It still baffles the majority of us why – when a virus that causes breathing difficulties and flu like symptoms – there is a mad rush to buy as much toilet paper as you can get your hands on.

We wonder what could possibly be going on in people’s minds to warrant such panic buying when there is absolutely zero evidence that Covid-19 increases bowel movements.

And then we get to the supermarket, look at the near empty shelves of toilet paper and anything that looks even remotely like it that could be used to wipe one’s rear end, and go “Oh, well I guess I better stock up and buy as much as I can too, just in case.”

Why? The Scarcity Effect.

What is The Scarcity Effect?

The scarcity effect is a psychological heuristic first coined in 1975 by Stephen Worchel, Jerry Lee and Akanbi Adewole, but it’s been a factor in societal transactions for much longer – probably for as long as humans have been trading.

Simply put, if something is scarce, it’s more desirable. We’re more likely to want something that’s rarer or harder to get.

We place more value on an item when we think it’s scarce. 

The original experiment involved cookies. The same type of cookies. But when one jar of cookies had been snacked to near extinction, students rated them much more desirable than the jar which still had a healthy supply.

How does it work?

The scarcity effect works whenever we think something is in short supply (whether it actually is or not). It applies to anything we see as exclusive, unique or one of a kind.

It works because of several classic psychological traits: wanting what we can’t have, the fear of missing out, and the desire to have something that others do not.

It’s perhaps most common in the ecommerce sector, driven by supply and demand. You won’t have missed the signs when shopping online: “Hurry, low stock” or “Only 2 left”.

Because that’s the thing about the scarcity effect. Unlike many other behavioural heuristics, we’re often aware of it. We know we’re susceptible to the scarcity effect, and yet, it still affects us.

We can’t switch off from it. If we want something and it looks like we might not be able to get it, we act fast. It’s instinct.

It’s such a strong psychological effect, it’s enough to drive a little old lady into whacking you in the back with her walking stick to get that last pack of toilet roll.

And it doesn’t just work with products

Although ecommerce is the clearest, most obvious example of the scarcity effect, you’ll find it all around you.

It’s why diamonds are so expensive. Despite them being readily available in mines around the world, the industry stockpiles them and has built a strong message around their scarcity and exclusivity.

It’s why just the hint of something selling out in the supermarket sends us in a mad rush to buy whatever it is, whether we need it or not.

And it’s why countdowns work. Time is scarce, we have to act fast to get what we want. Time scarcity plays a big part in sales and advertising, with coupons expiring or discounts ending. It’s even used effectively by politicians who want to draw attention to their campaigns “we’re running out of time, we need to act now.”

How to use the scarcity effect in your marketing

If you’re in the ecommerce business – or even the traditional retail sector – I’m going to assume you already use scarcity in your marketing.

You probably already run promotions on products that tap into the ‘limited availability’ mentality, or have software that automatically tells your customers when you’re low on stock or only have one or two products left. (But point three will still be very relevant).

But what if you’re in B2B? You sell services or consultancy, not products. Or what if you’re a software company with an unlimited amount to sell because it isn’t a physical product?

1. Re-frame your offer if your products aren’t limited

Unlimited is not a good match for the scarcity effect. The idea of something being unlimited immediately devalues your offer, so you want to steer well clear of it.

Your prospective customers will know your product will never ‘run-out’, so instead, turn the other way. There might not be an end in sight, but what about being first?

Re-frame your offer so that the value – the scarcity – is in being first. The first one hundred to buy get a special bonus. Or the first thousand sign ups earn ‘founder’ status. You’ve immediately put a limit on something tangible. Limited in both time and amount.

And when something is limited, it immediately becomes scarce.

2. Focus on your messaging

That ‘limited availability’ is a key phrase to remember if you want to take advantage of the scarcity effect. Others include:

• While stocks last
• Exclusive
• Deadline / must end
• One of a kind
• One-time offer
• Lowest price ever

On their own, they don’t work. They sound like words you’d find on a giant pink sticker in a discount clothing store. See-through sales tactics that no-one would fall for, right?

Well 1) there’s a reason shops continue to use them, and 2) you shouldn’t use them on their own.

But when they’re deployed strategically, and used to inform your whole messaging platform, you can carefully build scarcity across your marketing.

If you sell consultancy for example, you might frame your entire message around the value of your time. You could sell lots of services – you could offer free guides and paid-for PDFs to clients, but if they want exclusive access?

They’ll have to pay for it. Or wait for it. Because time is limited, your offer is scarce.

You then use your messaging to tie into that, crafting a series of emails that slowly drip the unique offer you’re about to share and make clear that it’s a one time, limited availability deal.

You can only work with 5 clients, it is an exclusive offer, and if your clients don’t sign up now, they will miss out.

3. Be honest and realistic

But – and it’s a big one worthy of its own section – you should always be honest, and realistic when using the scarcity effect in your marketing.

It’s easy to overdo it, and when you do, it’s easy to spot and ignore.

Just remember these three letters: D. F. S.

Attempts at the scarcity effect run rife in their marketing, but have you ever rushed out to buy a sofa because their sale “Must end Sunday”? No. Because we all know that next week there will be another “biggest ever sale” or a “mega-discount bank holiday bonanza.”

There are always sales, so those messages lose their impact completely. The same is true when every product or service is on offer.

When everything is scarce, scarcity loses its value.

It loses that one-off, special appeal. That uniqueness that triggers the thought in your head “Oh, it’s not going to last that, and it’s really good, and everyone’s going to want it, so I need to act now to get it.”

The scarcity effect only works if you can trigger that reaction in your prospects.

So you have to be honest. You cannot say that your ebook is going to sell out, when it’s clearly not.

But you can say you only want to sell two hundred copies, and then you’re closing down the sales because you want to invite everyone to a member’s only group and you only have capacity to help two hundred people.

That’s more realistic.

Don’t overdo it, and don’t try the tactic too often.

The scarcity effect should be used scarcely.

We’ll show you where your marketing will benefit most from it. If you’re quick…