Scarcity marketing strategies are everywhere.
Your favourite performing artist is coming to town. Tomorrow morning at 10 a.m. the tickets go on sale. You are ready at your computer from 9 a.m. You go to the ticketing website and are frantically pressing refresh for one hour. At 10:01 a.m., you press refresh, but the server is crashing because of all the load. And then at 10:03 a.m., you realize that all the tickets are sold.
What is going on here? How do 100,000 tickets get sold in three minutes? How can these scarcity marketing strategies make you so desperate to buy the tickets that you’ll waste an hour of your time (some people even line-up overnight in the freezing cold to get tickets), and when you run your poor little business event, you push and push and push for weeks and months and it’s a struggle to sell any tickets?
To understand the answer to these questions, first we need to open up the history books to see where this all started. Then we need to understand human psychology and why we do these irrational things. Then we need to understand the scarcity marketing strategies that these promoters use to sell out these events. And then finally, you can apply these marketing strategies in your campaigns.
Why are scarcity marketing strategies good?
If there’s something you really want, and you think it’s in rapidly diminishing supply, you’ll do anything to get it RIGHT NOW! It’s what psychologist Daniel Kahneman calls “loss aversion.” His theories are quite complex, but the root of them is that people are far more strongly motivated to act to avoid a loss than to gain something. Someone who misses out on an exclusive ticket loses more satisfaction than someone who gains satisfaction from a $100 windfall.
A note of caution: These scarcity marketing strategies is really powerful, and it’s extremely important that you use them for noble and worthwhile causes. Nothing stinks more than a fake scarcity campaign where people say something like “There’s only ten available” when there’s really an unlimited quantity available. People know when you’re faking it, so don’t do it!
Closely guarded scarcity marketing strategies from the 1600s that still work today
The earliest example of scarcity marketing strategies come from the sixteenth century “tulip bubble” that occurred in Holland. When tulips were first introduced to the Dutch from Turkey in 1593, they were a novelty that quickly became popular and, therefore, somewhat expensive. Then the tulips contracted a non-fatal virus, “mosaic,” that didn’t kill but altered them so that they had streaks of different colors appearing on their petals, creating a variety of patterns that made them more rare. With tulip bulbs already selling at a premium, those altered by the virus became even more desirable.
Soon everyone wanted to invest and speculate in tulip bulbs, and prices were believed to have no limit. The true bulb buyers began to pre-sell their inventories for the growing season, thus increasing demand for the bulbs as they became more scarce. Prices quickly rose so high that people started trading everything they owned to purchase more tulip bulbs in the belief that they could resell them and make a fortune. Within a month, the overpriced tulip bulbs skyrocketed to twenty times their original value!
But as happens with many speculative bubbles, a few people decided to sell rather than wait for prices to go even higher, and the selling created a domino effect. Soon everyone wanted to sell and few were buying; the lack of buyers caused the prices to drop dramatically, quickly causing people to panic and sell the bulbs for whatever prices they could get. This panic led to dealers refusing to honor contracts. People lost their homes, property, and everything they had of value over a simple flower. A person would have traded an entire estate for a bulb in the beginning, but by the end, a tulip bulb was worth no more than an onion.
The concept of scarcity is so powerful it can change an entire nation’s economy!
In 1982, Amram Knishinsky wrote a research study on the purchase decisions of wholesale beef buyers. He observed that they more than doubled their orders when they were told that, because of certain weather conditions overseas, there was likely to be a scarcity of foreign beef in the near future.
But their orders increased 600 percent when they were informed that no one else had that information yet.
Even Disney has been applying scarcity marketing strategies as a mainstream marketing tactic since 1937. The “Disney vault” idea started when Snow White and the Seven Dwarfs was rereleased to the cinemas a few years after it was originally released. Consumers were encouraged to watch the film again in theaters before it was confined again to the “Disney Vault” for an unknown period of time.
Disney uses this vault concept to control its marketing strategies and to allow Disney films to be fresh for new generations of young children. A side effect of the moratorium process is that videos and DVDs of Disney films placed on moratorium become collectibles, being sold in stores and at auction websites such as eBay for an expensive premium.
Reverse-engineering Apple’s scarcity marketing strategies
How come when Apple releases a new phone, there are people sleeping outside the stores for days before the product is released? How come on day one of the iPhone 5 launch, Apple sold 2,000,000 iPhones in twenty-four hours? How does its new phone launch get on the front page of every major newspaper around the world when poor old Nokia can’t sell a phone to save itself?
And here’s the funny thing, the user interface is basically the same thing since the first iPhone came out in 2007. Each device is thinner or lighter and only adds limited extra functionality.
But we’re still hungry to buy it.
Apple’s secret is that it keeps its secrets, or at least it acts like what it is doing is a big secret until its product is launched, which leads to a lot of speculation among users and the media. Apple is the master at teasing customers with its marketing strategies, keeping them in suspense until its new product is launched. Apple fuels the buzz by refusing to provide any information for weeks or even months before the release of every iPhone. For example, when Apple announced it would hold a press conference on September 12, 2012, it wouldn’t say what the press announcement would be about. This silence caused the media to speculate whether it would be about the new iPhone 5 or something else. All this speculation in the media led to a boost in consumer interest—and for free—Apple didn’t even need to advertise to get the buzz started. Only after weeks of this free publicity did Apple spend money on marketing strategies to keep the momentum high.
Apple then used scarcity marketing strategies to further the demand for the new iPhone. Just an hour after the iPhone 5 went on sale for pre-orders on September 14, 2012, the Apple website stated that heavy demand for the product would only allow for pre-orders of the phone because enough phones were not currently available. The result of this tactic: a record for first-day sales for the iPhone 5, and the phone remained on back order for the next several weeks, thus prolonging the ability (and desirability) of owning one.
I’ve adapted Apple’s marketing strategies for my book launch clients. When a client is ready to launch a new book, we often just send the book cover as an email to the list, without saying what the book contains, what is the price, or how to order it. As long as the list is engaged, we’ll always get a massive response. One time, our poor administration manager got swamped with people wanting to pre-order the book and had to spend all day telling people to be patient!
Reverse-engineering the major event ticket marketing strategies
Remember at the start of this article we were talking about how events get sold out in just minutes?
Dean Budnick and Josh Baron were so sick of missing out on major event tickets that they decided to interview 100 people in the events industry, find out all their marketing strategies, and then write a book about it, titled Ticket Masters.
Here’s the main secret: A very small percentage of seats are available to purchase during the initial general sale.
“Before that time a lot of artists have committed their ticket inventory to credit card companies they have alliances with, to their fan clubs for pre-sale, to the promoter who has a variety of opportunities, to sponsors and to the venue,” explains Budnick in the book. “Plus they also keep some inventory for themselves and the secondary market (eBay, Gumtree and other ticket selling websites).”
At Justin Bieber’s Nashville show in January 2013, only 7 percent of tickets to the show were available to purchase at the general sale, meaning 93 percent of tickets had already been set aside for other partners.
At Taylor Swift’s U.S. concerts, just 15 percent of tickets were available at the advertised on-sale date. For Miley Cyrus’ Hannah Montana tour, the numbers were similar, about 15 to 20 percent.
How CatchOfTheDay sells an item every second, 24/7
CatchOfTheDay is Australia’s number one shopping website. Here’s some stats about the business it does:
- CatchOfTheDay started in October 2006 with five employees and a small warehouse. Since then the team has expanded to 600 full-time staff working from two huge distribution centres.
- On average, one item is sold every 1 second, 24 hours a day, 7 days a week.
- Web traffic data agency Hitwise named CatchOfTheDay.com.au Australia’s number one shopping site with 14.73 percent of all retail traffic from Australia. The only retail website with higher traffic was U.S. giant Amazon.com.
- CatchOfTheDay is currently host to over 2 million registered members. The membership base has grown through word-of-mouth alone, which is testament to the value we offer.
- In a period of 24 hours, it sold 4,300 Toshiba laptops, 320,000 Ferrero Rocher chocolates, and more than $1.4m worth of Samsung TVs.
Lucky for you, I’ve done some analysis on CatchOfTheDay and I’ve reverse-engineered some of its closely guarded scarcity marketing strategies for success!
In the above image, great scarcity marketing strategies are being used. The banner “HURRY – ALMOST GONE!” makes you urgently want to click on the image. So one of the glasses is almost gone, and one is sold out. Real proof that the range is almost gone. If you want the gold/green glasses, you better hurry up!
After you add the gold/green glasses to your cart, there is a message near the header that says: “Stock is not reserved until you complete checkout.” This is brilliant marketing. The company is forcing you to check out quickly and not abandon your cart so you don’t lose the stock. Also, the site makes a limit of five per customer.
CatchOfTheDay also uses these scarcity marketing strategies with its Facebook marketing. One of its recent Facebook posts said:
“Woah, we’ve sold almost 2,000 pairs of Ugg boots in 2 hours. These will sell out guys, don’t miss out!”
Amazon’s Marketing Strategies Which Boost Sales By As Much As 98%
The final marketing strategy I want to share with you is how to bolster your sales by as much as 98%.
This astonishing tactic was actually discovered by US scientists studying buyer behaviour in supermarkets.
And it is so effective that Internet giants like Amazon.com use it in their marketing strategies all over the place!
But you don’t have to be the world’s largest online shop to use this breathtaking strategy. It will work perfectly for any business that needs more sales or a quick injection of cashflow.
The best part is…
It takes just a few minutes to set up. You can implement it today. And in many cases you will see money flooding into your bank account in just a few hours…
I discovered this while I was at my local supermarket. I was walking down the baby aisle pushing a trolley full of groceries…
Suddenly, I noticed a sign out of the corner of my eye….
It was advertising baby formula and simply read “Limit 4 Per Person”.
I thought to myself, “Why would they limit their supply? Perhaps they are running out of stock?”
And because I love my baby and want care for him, I impulsively reached out to buy as much as I could – the maximum number of tins allowed.
As I was driving home, I thought about how desperate I was to buy those four tins… and then it suddenly occurred to me that scarcity marketing strategies were being used on me without realising it!
Curious, I researched the psychology of the offer more deeply. And what I discovered was eye popping:
A team of Cornell University researchers were studying why buyers can’t resist offers like this in supermarkets.
They secured the cooperation of 86 supermarkets and 13 different product manufacturers.
In half of the supermarkets, they put the 13 products on sale with signs like ‘Sale: Buy 4 for $2.‘ In the remaining stores, they put the same products on sale with the offer: “Sale $0.50 each’…
Then they waited with bated breath to see the results…
When the sales figures were released, the data was jawdropping…
The signs that said ‘Buy 4 For $2’ were as much as 98% more effective.
That’s right, simply adding a number to the offer creates an urgent need to buy right now that almost doubles sales!
That’s why I snatched up the four tins of baby formula.
And as I mentioned earlier, Internet giant Amazon.com uses these scarcity marketing strategies in their product listings. Have you ever noticed the “Only 3 left in stock” warning?
The good news is, you can use this ‘numbers strategy’, too.
Simply look for a way to add restrictions to your opt-in form, sales page, or free consultation request form…
- Can you limit your one-on-one consultations to 3 a week?
- Can you give a special discount on one of your products for the next 5 days only?
- Can you restrict your mastermind size to 100… 50… even 10 people and then charge premium prices for entry?
The opportunities are endless!
Of course, these are just a few strategies that work extremely well.
- Can you see any similarities from these historical examples of scarcity marketing strategies and your current business?
- If you’re trying to sell out an event, can you release a limited number of tickets for general sale, and then sell tickets through other channels? What other businesses or channels would be a good candidate to sell your tickets?
- Can you apply any of CatchOfTheDay’s scarcity marketing strategies to your offering?