Using Scarcity to Increase Sales

Using scarcity to increase sales - limited offer stampFor an online business owner, scarcity is a valuable tool that can turn a failing product into a winner. It is best to implement it in a subtle way that does not draw attention but still creates a potent urge to purchase. Scarcity can be a small part of your sales process that adds some additional revenue. On the other hand you can make it a major component of your marketing funnel that influences how you sell your product.

Scarcity in Action

Most major retailers have an element of scarcity, but it may not be immediately obvious. Some online stores provide stock inventory information, informing you if they only have limited availability of the product. It may be that a whole new shipment is coming soon, but if you see that there is only one left at the moment you will probably buy it.

Aldi Stores has the practice of bringing in new products every week. Once the specials are sold out Aldi does not replenish them for another year. As a result there are queues of customers waiting for opening time on Wednesdays and Saturdays. The specials usually fly out of the door!

Of course, sites like eBay have an end date attached to an auction. If the item is rare, there is no way of knowing when it may come up again for auction, so the temptation to purchase becomes harder to fend off. In the real world, closing down sales make all their product inventory scarce. The draw of a bargain, coupled with the fact that the item has become scarce, will encourage more customers to buy.

How to Implement It

So how can you use scarcity in your own business? There are various ways to gradually add it to an existing system you have in place, or you can create something brand new which uses it more prominently.

Adding a stock count, as mentioned above, can be a fairly simple way to start if you run an online store. In order to check the effectiveness, use an analytics program to ensure it is not having an undesirable result. Limited discounts and deals are very effective, and you can even run these offers sporadically throughout the year. Holiday periods are great for scarcity deals as they give a ready-made reason for you running the offer. Providing a reason for something being scarce is an important part of the process.

An example of a brand new use of scarcity is a product launch. Product launches are a regular occurrence in the internet marketing world, creating a huge buzz over a period of a couple of weeks. Regardless of your industry, there is a good chance you can create something that can recreate the product launch techniques. Create a sense of occasion and excitement, build this to a crescendo, then take the product off the market while you take care of your new customers. If your product is great quality, customers will spread the word and you can re-launch later in the year.

Things to Avoid

While the effect can be extremely powerful, there are some potential pitfalls to using scarcity. This is particularly when you draw too much attention to it. Faking scarcity is a tactic that can destroy any credibility you have earned. There are business owners who still try it, however. They may use automated countdowns which continually reset based on your cookies. Or they may say they have a limited bonus for early buyers but don’t remove it when the allocation is taken.

Always keep your integrity, even when the option of scarcity can benefit you in the short term. If you promise that a product will never return to sale, don’t start selling it again a few months later. Remember the promises you have made to your customers, and be sure to keep them at all costs.

Your state’s Fair Trading regulator will act on complaints from customers regarding misleading advertising and unfair business practices. For example, bait advertising. This where a business advertises a special offer without a reasonable quantity on hand. When a customer tries to purchase the product the business seeks to sell a more expensive alternative.

Increase Sales: Start Today

We have looked at scarcity in action, the best ways to implement it, and the things to avoid. Now try to think of a way you can add it to your business as soon as possible. There is probably an instance that could really increase sales for you, even if it is subtle and most of your audience does not notice it. The scarcity model is tried-and-tested in business, both on and offline, so add it to your arsenal.