I recently came across a great post, 9 Essential Ways to Use Scarcity to Increase Sales, on how to use scarcity to increase sales, something we all strive for. Scarcity is a technique used by traditional retailers for ages but something that applies to digital and virtual goods as well. By creating a perceived scarcity, customers are more likely to make a purchase quickly. It boils down to the phrase, “you always want what you can’t get.”
There are several ways to use scarcity, including for virtual items:
- Limited time sale. Make an offer that lasts for only a limited time. For example, players can get twice the normal amount of virtual currency with a purchase if the purchase is made in the next 24 hours.
- Purchase countdown. Building on a limited time sale, Putting a timer or countdown within a sales context means defining some scarcity parameters. When the customer has a firm grasp on how much time he or she has left to make a decision, it adds a sense of urgency to the process.
- Sale price countdowns. Countdowns can also be used in the context of a limited time sale price to remind viewers how much time is left to act before the discounted offer goes away.
- Limited number of redemptions. Offer a sale that is only available for the first X customers.
- Limited edition item. Sell a product where there are only a limited number made. This can be modified for virtual goods, there will only be a certain number of the good sold.
- Low stock notices. While largely for retail, this can also be used with virtual goods, particularly limited edition virtual goods.
- Limited time item. A virtual item or package that is only available for a certain number of days or hours.
- Seasonal offers. A sale or item only available for a certain season. It can be anything from a Halloween Pumpkin latte to a Independence Day Virtual Chip bundle.
For scarcity to work, there are several criteria that you need to meet. The first key is that it is useful. Making something that has no value scarce does not magically impart value on the item or offering. There needs to be an underlying value that can be accentuated by scarcity.
The offering should be transferable. By allowing people to share the offer, the offer filters to those who value it. Finally, you need to be able to own it, even a virtual good. One of the values of scarcity is that you can show it off and there is no way to show off something you cannot possess.
There are several reasons why scarcity works, and understand these reasons can help you create a stronger offering:
- Scarce items feel exclusive.
- Scarce items appear more valuable.
- Scarce items make people feel powerful.
In the article, the authors also point to four limits on using scarcity:
- Test to know what works. As with anything, testing is always recommended. AB test different techniques, time limits, product limits, etc.
- Too much pressure is a bad thing. Give the user or customer time to make their decision.
- Everything in moderation. Limited edition or limited time sales work if they feel special, if there is one every day people soon realize they are only a sales tactic.
- Scarcity tactics are not a fix for lagging sales. If your product is not appealing, offering less of it will not turn things around. These tactics make a good product more successful, they are not a way to trick people into using a bad product.
Scarcity is a tool
Scarcity can be a very useful tool when building your promotion strategy. It is not a silver bullet but used effectively can help improve sales and conversions.
- Scarcity, or perceived scarcity, is a very useful tool for increasing sales.
- Scarcity works because it makes items feel exclusive, appear more valuable and make the buyers feel powerful.
- Scarcity is best used in limited time sales or limited edition items.