MBA2017 Does Scarcity Actually Get More Sales? + Free Ride Friday

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Hey oh. Welcome to the $100 MBA Show. Helping you build your business every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zedhome. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today is Free Ride Friday. On Free Riot Fridays, we give away a lifetime membership to one of our programs. If you want to win a free ride, just leave us an Apple podcast rating and review and you enter our weekly random draw. We call Free Ride Friday. We're giving away easy course, our 30 day course on how to build your own online course and you guessed it, 30 days. Just leave us a rating or review on Apple Podcasts and you enter our weekly random draw. Listen in on Friday just like today to see if you won. It's that simple. In today's lesson you will learn does scarcity actually get you more sales? Does it actually work? Recently I've been doing a bit of homework. I've been doing a bit of studying on this topic and my findings are fascinating. Many of us don't realize how powerful scarcity can be when you include it in your marketing and sales. Now I need to say this from the start. Your scarcity has to actually be real. I'm not talking about fake scarcity where your countdown timer refreshes when you refresh the screen. I'm talking about including real value scarcity to improve the chances of of your customers purchasing your products and services. I got so much I want to share with you on this topic. What I found out. We're going to go into a serious sales and marketing deep dive and realize how important it is to give a reason for your customers to buy now. So let's get into it. Let's get down to business.

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Researchers Wurchel, Lee and Adwall did a little experiment. They asked some participants to rate two jars of cookies. Initially, both jars of cookies had 10 cookies each. Now, after the participants witnessed this, the removal of eight cookies, they were asked to choose between the jar of 10 cookies and the jar that had cookies left. Which jar do you think people most often chose? Yep, the jar with the two cookies is the jar that got chosen the most. Now, the crazy thing is that the jars of cookies were a glass jar. They could see the cookies and the cookies in both jars were exactly the same. The only difference is that the jar with cookies taken away from made those two cookies more valuable than 10 cookies because it seems like those cookies are more desirable and therefore it increased the value of those two cookies. People want the best. People want the product that's better. And if they can sense that in some way, if they can see that, if they can feel that they're going to go for it, they're going to buy. And scarcity has been a big part of marketing from as far as I could find. I was studying some advertisements from supermarkets in the 1950s where they would advertise in newspapers that they were having a seasonal sale and they would have to hurry up and go to their local supermarket to buy these products or they will not be on sale after the time limit. Now, over the years, the use of scarcity in marketing and sales has really, really developed because not only are people now utilizing the power of scarcity of time, they're also using the scarcity of of product and the scarcity of numbers. For example, you might notice that sometimes when you go to the supermarket, it says, limit to per customer. Many people believe, oh, this is just about inventory. And they don't want people to buy in bulk and not leave enough for other customers. Well, that's very sweet to think that way, but unfortunately, supermarkets don't really care. They want to sell as many products as possible. And if someone's going to buy their whole inventory, one person, they're fine with it. They'll just get more inventory and pop it back on the shelf. But the reason why they do two per customer only, for example, is because they've learned and they've studied that when they do that. People always go for the max. They buy two packages of paper towels because they feel like, oh, this is a deal, there's a limited time I can get this deal, I might as well stock up. This is very, very popular non perishable goods and the supermarket knows that if we do that, we can double our sales or even triple if we make the limit. And their total sales will be more if they had no limit. Because that one person trying to stock up on a great price so they can sell it on ebay is a lot rarer than the common supermarket visitor. Scarcity makes your product a commodity that is going to go away, that you need to take action and grab this opportunity. It leverages the psychological power of fear of loss, or fomo, fear of missing out. Many people will go and grab something and buy it because they feel like they'll regret the fact they didn't buy it when it was available. This is why NFTs are so popular and so successful on the Internet these days, is because they work on a scarcity model. There's only a certain number of NFTs that somebody is releasing at a time and once they're gone, they're gone. They're rare. Now there's three major points to why scarcity works in marketing that I found in my research. The first one is quite interesting. Scarce items feel exclusive and it doesn't even matter how much the limit is, as long as there is a limit. People don't really have a perception of how much something needs to be limited to. For example, in Australia, they recently passed a law in the state, New South Wales, where they're going to give you a rebate for an electric car. If you buy an electric car, you're going to get a cash rebate. And they announced that they're only doing this for 25,000 cars. So this caused a lot of demand for electric car, electric cars in the state of New South Wales. In Australia, people are going out and saying, hey, I want to get a cash rebate because it's going to end up being cheaper than me buying a gas car. And just because there is a limit of 25,000, people feel like this is a valuable deal, that this is exclusive and it's going to go away. Interesting thing is, is that I looked up how many electric cars were sold in the state of New South Wales every year in the last few years and it was something like 1500 cars. So there's really no rush because even if sales go up, it might take a decade before that. Limit of 25,000 cars is met. The second finding is that scarce items seem more valuable. So the first one's more exclusive, but the next one is more valuable. Like it actually feels like it's worth a lot of money. Have you ever watched the Home Shopping Network or qvc? You'll notice that every item has a countdown timer. There's a timer before they stop talking about this product and move on to the next one. And that deal, that discount, that offer will end when that timer goes zero. Now, QVC does intensive studies when it comes to scarcity, and they know that people feel like the product is super valuable. Now, what this does is that it lowers the chances of returns of that product because people already feel like it's valuable, and therefore it lowers their buyer's remorse. And thirdly, this one is very interesting. Scarcity makes people feel like they're powerful. When somebody snags a scarce item, finds the last pair of shoes at the store, gets the last cake on a busy weekend at a bakery, or buys that last red car on the car lot, people feel like, yes, I won. I got it. And I experienced this myself back when I had my own clothing line and my own e commerce store. My store, just as a feature, would show the quantity that's left in the inventory. It was just a way for people to see that, hey, these are how many items are left, Just so you know. And I really didn't think of it as a scarcity strategy. Now, the interesting thing is that certain colors of the shirts I was selling, like blue and white, they were very popular. They were big sellers. So I would stock the inventory to make sure we could fulfill those orders and less popular colors like yellow and orange and even beige. I kept low stock because they weren't big movers. But when I started revealing how much stock is left, the numbers reversed. People started buying the things that they never bought before. They started buying yellow dress shirts, and it became a best seller because people saw there's only two left. So they're like, hey, I'm going to buy both of them and give one to my friend before somebody else grabs them. Here's the bottom line. The more scarce an item is, the more people want it. Just like the cookies I mentioned at the top of the episode, Guys, it's.

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To wrap today's episode. I'm going to share with you a bunch of ways you can use Scarcity to sell more of your products. Here are a few strategies we talked about. Sales have seasonal sales where you have three days to buy the product at a discount. This works every time I do this. It works because scarcity works. Another way to use scarcity is to use bonuses. So you might include a bonus or two or three if they buy and those bonuses go away after a certain time. If you have a service business, maybe offer a special discount to your most loyal customers, whether to renew their service for a year or buy your next thing now. It really actually works when it's on a special day or a special period of time like Christmas or their birthday, because the discount relates to that time period and once that period is over, it's over. Limited Availability we talked about the stock in my e commerce store. How many units that you're going to sell having a limited edition version of your product or service. Another great way is to use coupons that expire at a certain time and the coupon gives them X discount or bonuses. Another great Scarcity tool is called a bump sale. My buddy Jason Zook invented this thing called bump sale where basically every time somebody buys your product, the product price goes up by an increment like say $1. So it's going to be the lowest price ever. When they see the price. So say for example, I jump in and I see this course and the course is $200. It's most likely going to be more like $247, something a little bit odd. So in that moment I'm thinking I should buy it now because if I don't buy now, it's definitely going to go up the next time somebody buys. This is incredibly powerful because it actually encourages the first few people to start buying as quickly as possible. And you could start the bump sale at a certain starting price. Now a few warnings about Scarcity marketing. You don't want to go to extremes when you push people too hard to buy something because the time is up and you give them like eight emails on the last day of the sale. That can be really annoying. Everything in moderation, guys, because too much Pressure could be a bad thing. I like to recommend that you should always offer and send more emails or more offers to people that have proven that they're interested in what you have. So I like to do like a click sequence, meaning that I first share a video or a piece of content with people on email. If they click it, if they actually go to the page and enjoy that content, or at the very least view it, then it means they're interested in this topic and then I can give them an offer. They're much more of a warmer lead than somebody who's never clicked and shown interest in my content. The other thing is that scarcity is indeed a good fix for lagging sales, but you can't do it every day, okay, because it's going to be more of like boy who cried wolf. So be selective of when you run these offers. That wraps up today's episode. I hope you enjoyed it and found the research that I dug up on on this topic useful. If you've implemented any of the things I shared with you today or about to implement, share it with us. Tell us in a rating and review on your favorite podcast app. And while you're at it, hit subscribe or follow so you don't miss an episode. Today's episode's on over. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is sergi1983. That's the handle on Apple podcasts. Sergey says. Useful and inspiring. 5 stars. Thanks Sergi. Thank you so much for the great review. All the way from Spain. Your mission is to email me at omar00mba.net so we can hook you up with the lifetime membership to easy course, our 30 day course on how to build your own online course. Before I go, I want to leave you with this. I always tell my students that I work with other entrepreneurs that you got to give people a reason to buy now because by nature people are procrastinators. They're going to push back or they're gonna say, hey, I could do this later. I could buy it later if there's not a reason to take action. And this is where scarcity marketing comes in. Thanks so much for listening and I'll check you on Monday's episode. I'll see you then. Take care. Hey Fidelity. How can I remember to invest every month?

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