Aug 13, 2013

Quirky, Rare, and Limited

Scarcity

Thirty-five thousand dollar penny
How would you feel if you lost $100 in the stock market? How about if you gained $100 in the stock market? Most people are twice as motivated to avoid a $5 surcharge than they are to gain a $5 discount. Losing $100 moves our emotional dial in the negative direction twice as much as winning $100 moves it in the positive direction (Kahneman 2011). So, when making a decision, people weigh losses about twice as much as gains. People are loss averse. We are much more likely to take action to avoid a potential loss than to seek potential gain. This is why appeals to Scarcity – the idea that if you don’t act, you will miss out – are powerful.

Amazon alerts customers to limited stock

The most familiar forms of appeal to Scarcity are probably limited-time offers, or limited stock availability. In order to establish scarcity, the proposition (the offer) must in some way be unique, making it difficult for your customers to find an alternative or substitute. Differentiators such as special prices, exclusive features, private access, distinctive styling, new-to-market functionality make the proposition unique.
Travel24 uses countdown timer and stock counter to
frame the proposition in terms of potential loss

Appeals to scarcity focus on the proposition’s differentiator, framing the offer to emphasize the potential loss the customer will suffer if they fail to accept the proposition. For example, when Amazon shows customers that stock of an item is limited, it implies that, it may not be available later if they don’t purchase now. Remember, customers are twice as likely to act to avoid a loss as to secure a gain. Stock counters encourage customers to think of the offer in terms of losing a chance to buy the item, which is twice as powerful a motivation to purchase than simply gaining the item.

The holiday booking site Travel24 uses countdown timers as well as stock counters to frame the proposition in terms of lost opportunity. Customers are encouraged to think of the holiday they will lose out on if they don’t purchase now. To the customer, the actual purchase of the holiday feels like a loss averted, which is twice as satisfying than a simple purchase. Either way, let’s hope it doesn’t rain.

Bottom line

  • Emphasize the unique elements of your proposition. 
  • Frame your proposition to emphasize what your audience stands to lose if they don’t accept your offer.
  • Stock or time limits can serve as differentiators of your proposition. Exclusive features, private access, distinctive styling, or new-to-market functionality, can also be effective. Low price as a differentiator should be the last resort.


This post is part of a series on Design for Engagement. Persuasion is the second phase of Customer Engagement. Attention is a limited and precious resource, so humans have evolved a system of shortcuts to lead us to choices most likely to be reasonable and reliable decisions. The system works automatically, based on 6 types of cue: Reciprocation, Consistency, Social, Liking, Authority, and Scarcity (Cialdini 2009). These are the cues
that lead people to act. 

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