WHAT IS SCARCITY AS AN INFLUENCE STRATEGY?
The journalist and author G. K. Chesterton once said that ‘The way to truly love anything is to realize that it might be lost’. The Scarcity Effect is the cognitive bias that makes people place a higher value on an object that is scarce and a lower value on one that is available in abundance.
People say yes to goods, products or services, that are rare, scare or dwindling in availability. When availability or access to something is restricted or limited in to us it becomes perceivably more attractive to buy or engage with.
Even the idea of future scarcity is a powerful influence principle as it taps into our evolutionary modality of survival and as a result humans have a predisposition to hoard to avoid a threat to their survival. The global covid pandemic highlighted this as people hoarded pasta, toilet rolls and more for fear they would run out. Lack of time or the scarcity of money or even a combination of the two can also result in anxiety that ends in poor decision-making. In business, we can activate the scarcity effect through the following:
Countdowns: Purchase, sale price or next-day shipping countdowns can be leveraged as powerful influence techniques or activate the scarcity effect. Other strategies to activate the scarcity effect include seasonal offers, low or reduced stock notices, limited edition products, items or services or simply highlighting numbers that indicate the level of popularity or demand in a particular product.
In time-limited offers, this forces or influences the purchaser, customer or decision-maker to make that decision before a specified deadline. As a result, this adds a sense of real urgency to the decision-making process.
Quantity-limited scarcity is in many ways a more powerful influence strategy than time-limited scarcity. The reason for this is that the availability depends on the popularity or supply and as a result is unpredictable – which consciously and subconsciously humans know.
Items with limited supply are valued more highly and desired more. The popularity of a product, service or item highlights the social proof in it that it must be appealing and valuable and triggers us to buy without much hesitation.
Access-limited products and services can also be leveraged as a compelling influence strategy. When access to certain products, information, or services are limited or restricted they are perceived as having higher value because of their exclusivity, especially when their are connected to social status.
This can be taken even further to include a full ban or censorship to make goods, products or services appear even more desirable. When anything interferes with our access to a product, item or service, we desire it more and go to even greater lengths to get it.
Breaking down scarcity event further – there are essentially 3 types of scarcity:
Demand-induced scarcity. This happens when the demand for a product, service or resource exceeds the supply that the economy can deliver.
Supply-induced scarcity. This happens when there is an environmental degradation or another unforeseen circumstance that causes the supply of a particular resource to decrease significantly despite the demand being within the normal range.
Structural scarcity. This happens when there is unequal access to particular goods, services or resources across the buying group.
So why does this happen?
This is due to the phenomenon of heuristics. In the case of the scarcity effect, the scarcity heuristic is a mental shortcut that places a value on a good, product or service based on how easy it may be lost, or how rare or scarce it is. The scarcity heuristic comes from the idea that the rarer or more scarce an item is, the more value than it is as a result. In many situations we use an item’s abundance or availability, to estimate it’s value. Our perceptions of scarcity can result in irregular buying behavior that could be perceived as highly competitive. This can result in systemic errors or cognitive bias.
As with many principles of persuasion, they are often enhanced when used in unison with another. There are two social psychology principles that can work in unison with scarcity to enhance it’s power of influence. The first is social proof.
The way that this enhances the power of scarcity is because if a product is sold out, or inventory is low, humans make the assumption (wrongly or rightly) that the product must be of high quality because everyone else seems to be buying it. The second principle that contributes to the power of scarcity is commitment and consistency. Generally, if someone has made a commitment in their mind or publicly to buy or do something, then find out they cannot reach their goal, have it, or do it then it makes the person want that particular item even more.
TO DISCOVER MORE INFLUENCE STRATEGIES LIKE THE SCARCITY EFFECT:
To learn more influence strategies similar to the scarcity effect you should check out on his Youtube Channel on Youtube.com/duncanstevens to learn more about the Scarcity Effect and how it can impact our ability to make decisions and be influenced. You can also hire him to speak at your event about influence, sales, leadership or collaboration you can follow the link below. Duncan is a professional keynote speaker and global authority on influence and persuasion.