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Persuasion and Influence Part 7: Scarcity Principle
Rick Henkin
How many times have you bought something at a store because you were afraid they might run out of it? Have you ever made a purchase now because you were told the price would be going up soon? Ever watch a product being sold on the Home Shopping Network? The quantities are limited and as each one is sold, a countdown timer displays on the screen letting you know how many are left. How about something as simple as interrupting a face-to-face conversation with someone to answer your phone? If you don't take the call, you might miss out on something. These examples illustrate the principle of scarcity. Scarcity principle definedIn his book, Influence: The Psychology of Persuasion (Collins Business Essentials) 
, Robert Cialdini, Ph.D., writes that "opportunities seem
more valuable to us when their availability is limited." But what's
really interesting is his conclusion that we "seem to be more motivated
by the thought of losing something than by the thought of gaining
something of equal value." He goes on to say that the scarcity principle holds a secondary source of power: "as opportunities become less available, we lose freedoms, and we hate to lose the
freedoms we already have."
Consequently when a deadline or a limited supply limits our access to a product or service that was previously available, our desire for that product or service increases even more than before. Examples of scarcity in actionWhenever we're told that "an item is in limited supply", "the price is going up once these are sold (or after a certain deadline)","there won't be anymore once these sell out," "we just sold the last one, but I'll check the warehouse for you," or any number of similar variations, the scarcity principle has come into play. The desire for these items has just become stronger, simply because we may not be able to get them anymore, either for the same price or at all. They're not any more valuable, and we probably won't get any more pleasure from them than we would have before they became scarce but our wanting them has increased just the same. Researchers did a study where they contacted homeowners in the same neighborhood about insulating their homes. Half of the homeowners were told how much they could save by insulating their homes and the other half was told how much they would lose by not insulating their homes. One group was told that they could save 50 cents per day by insulating and the other group was told that it would cost them 50 cents per day if they didn't insulate. 150% more homeowners purchased the insulation when told how much they might lose, rather than how much they might save. In 1982, a student of Cialdini's who owned a beef importing company, called his customers who were buyers for the supermarkets. 1/3 of his salespeople made the standard pitch before asking for the order. 1/3 of his salespeople made the standard pitch and informed the buyers that the supply of imported beef would be scarce in the upcoming months (which was true). The final 1/3 of his salespeople made the standard pitch, followed by the scarcity news, but added that the scarcity news was not general knowledge but only made available to the beef importing company because of it's contacts (sort of like an insider stock tip- don't we all get more excited when we feel we possess some knowledge that others don't have?). The company's orders went up dramatically. Those who were just given the scarcity news bought twice as much as those just given the standard sales pitch. Those who received the scarcity news along with the "tip" that this wasn't generally known, purchased six times the amount of beef as the first group that were just given the standard pitch. Applying this principle to your businessSince people seem to be more motivated by the possibility of loss than that of gain, make sure your advertising copy reflects that. Emphasize what your customers will miss out on or lose by not using your product or service. Rather than "Save 15% on installation this week only", try "Don't miss out on 15% installation reduction this week only." Create offers that are limited by the quantities of product available, or limited by a deadline or limited by a certain number of available spaces. Let your customers know what's unique about your business. Point out features that your product or service has that your competition doesn't. When people perceive that your products, services or time are limited commodities, their value is increased. Combine scarcity and exclusivity. If the information or product you have is new, stress to your audience that they are among the first to hear about it or among the first able to purchase it. Don't use the scarcity principle to take advantage of others. You can easily fudge the limited quantity, limited supply or limited deadline aspects of this principle. According to Cialdini, "To honestly inform people of what they may be missing - that's the detective's approach to using scarcity as an influence tool. You simply register what things people might be losing in an arrangement, honestly, and bring them to the surface." Treat people the way you wish to be treated. ARTICLE DATE: 2009-03-30 REVISED DATE: Share this Article as a Tweet on Twitter
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