In their book Yes! 50 Scientifically Proven Ways to Be Persuasive, authors Noah J. Goldstein, Steve J. Martin and Robert B. Cialdini tell the story of an unexpected sales event that occurred in 2003.
In the year 2003, there was clearly one car line that exceeded all U.S. sales projections to a far greater extent than any other. Ironically, this car line had previously proven itself to be a completely ineffective profit-maker for the manufacturer. Strange, then, that all of a sudden and without explanation, its sales skyrocketed. But why? It couldn’t have been driven by advertising; in fact, because of disappointing sales, there was even less money available for marketing. Nor was there any engineering or price change to account for the unexpected popularity. Which car line was it, and why did it become so successful?
The car line was Oldsmobile, and the reason for it’s success was paradoxical: General Motors, its manufacturer, had decided it was going to discontinue the line due to consistently poor sales. In response to the announcement that the Oldsmobile would soon no longer be available, sales jumped like never before.
The question is why? Why did consumers flock to a product that they had previously ignored and sometimes disdained?
The reason goes back to that all-important concept of behavioral economics, the scarcity principle: people tend to show a greater desire for things that are unique or scarce. Or to put it another way: we want what we can’t have.
If something becomes scarce, we anticipate possible regret that we did not acquire it, and so we desire it more. This desire is increased further if we think that someone else might get it.
One way to leverage this powerful principle is through your messaging. Create the perception of scarcity and people will follow. The classic example of this is to advertise your product as available in limited quantities, or for a limited time only. Why do you think the Home Shopping Network displays a countdown timer for all its products? It’s the scarcity principle. Once the clock strikes zero, the product is no longer available.
Here’s the takeaway: The scarcity principle is one of the strongest components of behavioral economics. It drives consumer behavior in ways that are sometimes inexplicable. I’ll wager that most of those Oldsmobile buyers in 2003 had vey little desire to buy that same model a year earlier. Make sure that you utilize the scarcity principle in your current sales arsenal.
