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Scarcity as a persuasive strategy

Article by: Nancy Tobler
May 14, 2018

 

“Limited time only!” “Close out sale!” “While supplies last!” “Rare and unique!”

These are all phrases sellers use to create scarcity as a persuasive strategy. Scarcity is the idea that as things become less available to us, they become more desirable. You can create scarcity by limiting how people can get the product, or by limiting the amount of a product. Unique or rare products have scarcity built in to them.

When I originally wrote about the persuasion strategies, I left out scarcity. At the time, scarcity didn’t seem to be a popular strategy in the direct selling world. It’s common to see MLM companies selling consumable products which don’t typically fit well with strategic scarcity. But today scarcity is on the rise in MLMs. Several companies such as LuLaRoeAvon Products, and Trades of Hope have succeeded at harnessing the persuasive power of scarcity.

LuLaRoe’s approach to scarcity

LuLaRoe’s business model is the most striking example of scarcity in direct sales and it launched them on a meteoric rise just a few years ago. You may have expected me to mention them. Their methodology was so nontraditional in the MLM channel that, for many, it’s been impossible not to watch their progress. If you haven’t been following their story, Forbes described the model as “creating a treasure hunt atmosphere.” How? By limiting the quantity of items produced and by randomizing which items go to each seller.

You cannot buy the product on the company webpage. You need to contact a sales consultant. Each consultant receives product from the company and then in turn sells that product, often using social media (another persuasion strategy—social proof). The consultant can pick the style but not the fabric pattern. Each pattern is used to manufacture a limited number of garments so that when you find a style and pattern combination that you love, you’d better buy it right away because you may never see it again. This also has the effect of encouraging customers to buy from more than one seller in order to get access to a broader selection.

Photo: Jonas Svidras @ STEP.CAMERA

Another way that LuLaRoe harnesses scarcity is by creating limited edition products such as when they partnered with Nena & Co.—a textile company that works with Mayan women. The Mayan women upcycle vintage fabrics into new products. This created a unique and limited-edition product.

Other uses of scarcity for sales

Other fashion companies use seasonal collections to create scarcity. At the end of a season, remaining stock goes on sale and when it’s sold out, it’s gone. Yanbal is just one example of a company that has seasonal catalogs.

Through the years, Avon has released limited-run collectibles to create scarcity. Many vintage Avon products are collected. Although the vintage products don’t sell for a lot of money, having products for a limited time means people will purchase to create a collection of, say, the holiday ornaments.

Having unique products has been a common strategy for direct selling companies. The uniqueness gets translated into rarity and rarity means that there is a limit. Many times, the product is so unique it requires education or training to explain how the product works.

Trades of Hope uses a different kind of uniqueness. To support and encourage women entrepreneurship, the business model is to buy products from artisan women around the world. Because they buy from artisans who hand make the product, each product has unique characteristics. By using artisans rather than mass producing items, each product has a unique story.

Thoughts on scarcity in recruiting

Sometimes direct sellers employ scarcity as a recruiting tactic. Distributors will sell the business by saying “get in on the ground floor.” We’ve all heard this one before. Whether it makes a difference when you join a company is debatable. But when people use this tactic, they are trying to trigger a scarcity response. This technique can backfire if those in the audience don’t already feel a connection to the product and the brand. In recruiting, it may be more effective to use the liking strategy prior to the scarcity strategy.

Conclusion

Scarcity is a powerful tool for triggering emotional responses in your customers. The technique works because fear of missing out motivates us into action. When done well and ethically, whether it’s by limiting the amount of your product (like LuLaRoe) or creating a unique story for your product (like Trades of Hope), scarcity can catapult your brand and your profits.

Check out these other articles for information on the other persuasive strategies of likingreciprocity, consistency, social proof, and authority.

Cialdini, R.B. (2003). The science of persuasion: Social psychology has determined the basic principles that govern getting to “yes”. Scientific American Mind, 14(1). 70-77.

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Recruiting for Direct Sales, MLM Success, Direct Selling and Sales Business News, All Articles

Nancy Tobler

Nancy Tobler has a PhD in communication from the University of Utah. She specializes in research on how organizations change,...

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