Articles Tagged with: Marketing

Have You Heard of Scarcity Marketing?

Scarcity marketing plays on the cultural trope that most people want what they can’t have. It’s not a new phenomenon—it is based on decades of psychological research and not to mention a basic economic principle.

In economics, the law of supply and demand dictates that a low supply makes something more valuable in terms of price, all things equal. It’s one of the reasons why anything that’s limited edition will be pricey.

But what makes a limited edition so attractive and in-demand?

There are many other psychological principles in play here. Some people are collectors and are motivated to purchase anything that’s limited edition. There’s also the need to be distinct from others—getting your hands on a limited edition somehow grants you bragging rights. Then there’s herd behavior—when you see other people want something, you’ll start liking it, too.

Cue #FOMO or the fear of missing out. Millennial consumers were asked if they would buy something after experiencing FOMO, and 68% of them said yes – they’d even make the purchase within a day or two.

The bottom line is that scarcity creates demand. Scarcity also creates urgency. Demand and urgency lead people to buy NOW.

The pull toward things we can’t have develops at an extremely young age.

Jack Brehm shared his findings in his book, Theory of Psychological Reactance. For his experiment, he placed two of the same toddler toys in a room. He put plexiglass around one of the toys and let the other sit out in the open. By this point, you shouldn’t be surprised that toddlers were more interested in the one with the barrier.

What are popular and compelling examples of the use of scarcity by companies?

Amazon makes it known if a product is running low in stock. Some e-commerce sites will even send you notifications if a product is selling out quickly. Whether you were almost convinced to buy the product or not, it’s suddenly a lot more desirable. When you’re taking your time to decide on a purchase, you’re passively picturing your life with the product. As soon as you know that it’s almost gone, you’re forced to quickly and intensely imagine what your life would be like if you missed out on this product. The thought of losing this chance is likely enough to make you commit.

Booking.com and Agoda.com will alert you if someone has booked the room you’ve been eyeing. They’ll also let you know how many other people are currently looking at the room you’re considering, putting the pressure on you to book it before they do.

Door Dash and other food delivery companies will send members a coupon for a specific dollar amount off an order and only make it usable for the next week. If you were on the fence about getting food delivered in the next week, chances are you’re at least going to look at the options now. But who are you kidding – you’re definitely going to order dinner from that new Thai restaurant everyone’s been talking about.

Seasonal products or limited-time items are also compelling examples of the use of scarcity in marketing. Those Starbucks fall and holiday drinks? Those are made with the scarcity principle in mind. It must work because nearly every industry has adopted a seasonal offering of some sort. Pumpkin spice deodorant, anyone?

Studies also show that the average ticket price when buying a seasonal drink is higher than buying a regular drink. Seasonal beverages are seen as special and indulgent, so people are more likely to treat themselves to another menu item while they’re at it. Holiday self-care at its finest!

Some brands use limited-time freebies to encourage purchases. Lego will release limited edition polybags and other collectibles to entice collectors to purchase on particular dates, like May the 4th for Star Wars builds. Starbucks created a limited-edition holiday travel mug that shoppers got for free when they ordered a holiday beverage, increasing their seasonal sales by even more than usual.

An e-commerce clothing company tested two versions of a product page to see which one would prompt more purchases. They’re each selling the same jacket – the only difference is that one page has an “Order within 3 hours (counting down clock), get next day delivery” message just under the “Add to Cart” button. That offer increased their sales by 226%.

Airbnb lets viewers know when they come across a “Rare Find” – that is, a space that’s so spectacular it’s usually fully booked. Mix in some social proof with that urgency, and you’ve got yourself a sale!

Let’s go over some ways for you to use scarcity marketing in your own business.

Limiting your products’ availability triggers customers to assume that these products must be far better than other ones that are readily available. In our eyes, exclusive means superior. This assumption is so strong that we can assign a quality level to a product simply by noticing its availability. This works for limited bonus products, limited sale items, limited introductory price offers, limited time for free shipping or next-day delivery offers, limited offers through a specific channel (“Order through our app in the next 24 hours for 50% off), etc.

If you consistently run sales and each one is accompanied by a “Final Hours” or “Ends Soon” message, your customers will start to catch on. They’ll notice that your warnings aren’t compelling, and their sense of urgency will disappear.

Strategy and authenticity are the keys to making scarcity marketing work for you.

How about you? How do you leverage scarcity for your business? Got a question? Don’t forget to COMMENT below and SHARE your thoughts.

Sources:

https://sleeknote.com/blog/scarcity-marketing

https://sumo.com/stories/scarcity-marketing

What Do You Know About Social Proof?

Let’s talk about the power of social proof: why it’s important, how businesses are using it, and how you can start using it to your advantage too.

Business psychology professor Robert Cialdini coined the term “social proof” in his book Influence (1984). The concept of social proof is simple: When we don’t have enough information about something, we base our decisions on how others decide and act.

We follow the masses and feel most comfortable conforming to a group decision.

Psychologist Solomon Asch conducted a conformity experiment in 1951. Eight male college students (participants) were put in a group with two other people (influencers) who were secretly in on the experiment. Each group was shown an image of a line and then another image with three different lines. They were asked to choose which of those three lines matched the first line. The influencers always gave their answers before the participant. In 12 of the 18 trials, the influencers gave wrong answers, even though the correct answer was obvious. On the other hand, 75% of the participants gave the wrong answer as well. In the other six trials where the influencers gave the correct answer, the participant gave the wrong answer less than 1% of the time.

Asch determined that these participants followed the consensus because they wanted to fit in with the group. Some even believed that the group was better informed than they were.

Why is it essential for businesses to pay attention to the power of social proof?

Think about how we decide on which smartphone to buy. Most of us will do the research. Some will take a careful look at the specs. But not everyone will have the tech know-how to understand everything. So, we look to other people to fill in the gaps for us, such as family and friends.

If it’s a new product, you’ll probably join a forum or tech group to ask around, see what people know about it. You’ll also probably scour YouTube for review videos from the tech experts—AKA tech influencers. If they say that it’s a good product, you’ll be more likely to buy it when you get the chance.

This is why many brands work with influencers, who create content and review products. In doing so, they prime the mass market and influence them to buy the product when it gets released.

We tend to trust well-known people who have earned our confidence more than actual brands.

Let’s talk examples.

Ever wonder why restaurants have such small waiting areas inside the building? They want you to have to wait outside where people will see you. If you drive by a restaurant that has a large group of people waiting in front of it, you’re going to take a mental note that this restaurant must be fantastic. So, you’re more likely to come back to it. It’s hard to be impressed by an empty restaurant because our instinct is to assume that it must not be any good if nobody is there.

Another aspect of social proof is our want to be a part of a community. Canva plays on this with their sign-up landing page. It says, “Join over 10 million people designing on Canva.” This call to action is especially effective because it’s framed as an invitation rather than a statement. Sure, having 10 million customers is notable. However, people will want to sign up because they can join that large number of users and become part of their community.

Subaru has included a “Reviews and Awards” page on their website that shows potential buyers they’ve gone above and beyond the industry standard and have been recognized by institutions that matter. They also have a “Dear Subaru: Owner Stories” page set up like a collage. This personal touch lets customers see real people who have had wonderful experiences with Subaru.

There are stores and country clubs that use the idea of exclusivity as social proof. Whether they need a waitlist or not, they’ll use one to give the impression that their establishment is so popular and extraordinary that they must limit access.

Social proof is one of the most accessible marketing tools for small businesses.

You can utilize customer reviews in nearly every type of marketing collateral. Social media posts, blogs, sales pages, product descriptions, landing pages, and more can all immensely benefit from the addition of positive customer reviews.

People tend to check 2-3 review sites, like Yelp and Google, before deciding about a brand, so it’s best practice to get positive reviews on as many different sites as possible.

What’s even more powerful than reviews? Testimonials. These show the big picture, a whole experience rather than simply stating that a product worked. The key to great testimonials is value. The best ones address common objections and overcome them, giving viewers confidence in the product or service.

We trust authentic, peer recommendations far more than paid advertisements, so don’t be afraid to reach out to past customers for testimonials. You can create a short survey for them to take, ensuring that you get the exact information you need.

If you want to work with an influencer or a celebrity to promote your brand, finding the right match is crucial. The person you team up with will only help your conversions if your audience knows them, likes them, and trusts them. You’ll be out a lot of time and money if you choose the wrong fit.

Social media is ground zero for social proof. If you see a customer tagging you on Facebook or Instagram, acknowledge the post and share it on your feed or stories. Encourage your customers to tag you on their social media posts and reward them with engagement.

Remember that people are more likely to buy or do something when they know that other people are doing it, too.

How about you? How are you using social proof in your business? Got a question? Don’t forget to COMMENT below and SHARE your thoughts.

Sources:

https://sproutsocial.com/insights/social-proof/

https://optinmonster.com/11-ways-to-use-social-proof-to-increase-your-conversions/

https://www.subaru.com/index.html

Are You Familiar with the Framing Effect?

We’re going to talk about the framing effect, what it is, and how it’s used by savvy brands.

Is the glass half-full or half-empty? Do you like frozen yogurt that is 90% fat-free or one with only 10% fat in it? Would you invest in something with a 10% risk—or are you more willing to invest if it had a 90% chance of earning money?

What is the framing effect?

It is a cognitive bias (aka an error in thinking) that leads us to decide on something based on the connotation presented. If an option bears a negative connotation, like “20% risk of loss” or “20% trans-fat,” you’ll likely decide to stay away from this option. But if it bears a positive connotation, like “80% chance of winning” or “80% fat-free,” you’re more likely to choose this option.

It matters what you say and how you say it. It matters how you frame it.

The study of the framing effect began in 1981 with psychologists Tversky and Kahneman. They ran an experiment where participants had to decide between two treatment plans for 600 people who contracted a fatal disease. Treatment A would end 400 lives, and Treatment B had a 33% chance of ending no lives but a 66% of ending all 600 lives. When framed as saving 200 lives, 72% of participants supported Treatment A. However, when framed as ending 400 lives, only 22% of participants were in favor.

People’s choices are influenced by the way the options are framed.

The information itself is often irrelevant.

We put more focus on how the information is given rather than the information itself.

Behavioral economics has us pegged as irrational decision-makers, remember?

We despise risk and loss, both of which are associated with negative connotations. If you want to sell a product, don’t try to use a characteristic that could be perceived as negative. We’re programmed to avoid loss, so we’ll respond better when positive benefits are highlighted.

Making decisions is hard, so we tend to pull on the most readily available information to help us with the task. Rather than take the time and energy to try and process, evaluate, and understand information, the framing effect gives us a mental shortcut.

It also appeals to our emotions, another huge factor in making choices.

Let’s look at the framing effect in action.

You go to the store to buy hand sanitizer, as one often does during a pandemic. You find two completely identical options. However, one claims to kill 98% of bacteria, while the other claims to only let 2% of bacteria survive. What is the single most important benefit of hand sanitizer? The fact that it kills bacteria. Therefore, you’re going to pick the first one because it highlights the one thing that hand sanitizer should do. You don’t want to be reminded that 2% of bacteria are left to roam around.

It’s nacho night, and you’ve been tasked with the grocery shopping. When you get to the meat section, you choose the package that defines the contents as 75% lean meat. Would you feel as good about buying this meat if it was identified as 25% fat meat? Nope, that sounds a bit gross. Is there a possibility you wouldn’t even buy it and just get more cheese for your nachos instead? Absolutely.

There’s a new show on Netflix that everyone has been talking about, and you want to watch it, but you don’t want to pay $8.99 just to be in on the latest binge-watching trend. One more look at their website couldn’t hurt though, maybe they’re having a promotion. To your surprise, a new number catches your eye: “Just 30 Cents Per Day!”. They must be running some once-in-a-lifetime special! Everything suddenly seems more than worth it, and you start to get excited about all the other shows and movies you’ll have access to as well.

It’s almost tax season, and you’re starting to realize you need some help. You begin researching free finance tracking software and find one that’s recommended by 7 out of 10 professional accountants. If the same software exclaimed that only 3 out of 10 accountants would oppose it, you would keep looking for something with a more positive spin.

Home Depot is having a sale on vacuum cleaners. Which promotion do you think would sell more? A $75 discount on a $500 vacuum cleaner or a 15% discount on the same $500 vacuum cleaner? People are more likely to be attracted to a $75 discount because it sounds like a better deal than a 15% discount—even if it’s the same amount (15% of $500 is $75). Most people don’t like to do math problems anyway—and the brain easily recognizes a large number.

How can small businesses use the framing effect to their advantage?

Delve into your target audience and gather as much information as you can about who they are, what they do, and what they seek. You could theoretically be framing something in a successful way, but if the characteristics presented don’t appeal to your audience, you’re at a loss. There’s a better chance of them buying your product if you frame it with positive attributes, but you need to know which attributes to present to make them care.

As we tend to avoid loss, we actively seek out positivity.

There are countless ways to persuasively guide your customers to make a purchase, just be careful not to cross over into misleading them. Focus on positive influence and pure intentions, and you’ll end up making their lives easier.

So, the next time you’re offering a new product or selling something at a discount, remember that framing is important. Communicate the positives and remember that sometimes, giving a dollar discount is better than a % discount. It’s all about how you frame it.

How about you? How do you make choice-making easy for your customers? Got a question? Don’t forget to COMMENT below and SHARE your thoughts.

Sources:

https://www.digitalalchemy.global/framing-in-marketin/

https://boycewire.com/framing-effect-definition-and-examples/

https://www.crowdcontent.com/blog/2018/04/03/the-framing-effect/

https://thedecisionlab.com/biases/framing-effect/