For an online business owner, scarcity is a valuable tool that can turn a failing product into a winner. It is best implemented in a subtle way that does not draw attention to itself, but the urge to purchase remains very potent. Scarcity can be a small part of your sales process that adds some additional revenue, or it can be a major component of your marketing funnel that influences how your product is sold.
Most major retailers have an element of scarcity, but it may not be immediately obvious. Amazon, for example, provides stock inventory information, so you are informed if they only have limited availability of the product. It may be the case that they have a whole new shipment coming soon, but if there is only one copy left at the moment, chances are high that you will buy.
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.
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 get started 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 can be 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, word of mouth will spread and you can re-launch later in the year.
While the effect can be extremely powerful, there are some potential pitfalls to using scarcity, particularly when you draw too much attention to it. Faking scarcity is a tactic that can destroy any credibility you have earned, but there are many business owners who still try it. They may use automated countdowns which continually reset based on your cookies, or suggest they have a limited bonus for early buyers, but don't remove this when the allocation has been 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.
Having looked at scarcity in action, the best ways to implement it, and the things to avoid, try to think of a way to add it to your business as soon as possible. There is probably an instance that could really benefit sales, even if it is subtle and goes unnoticed by most of your audience. The scarcity model is tried-and-tested in business, both on and offline, so make sure it is a tool in your arsenal.
|Tags: Business Strategy Business Growth|