Tapping Into the FEAR of Short Supply to Sell More

Believe it or not, danger, pain, and loss are the drivers behind the flash sale and the law of scarcity to motivate a purchase action. The imminent threat of missing out on a deal induces a psychological response that is similar to the primal-based fear we associate with imminent danger. Sounds like a bad thing!

imagesKnowing this, I would hope to avoid scarcity based fear so I will not become an emotional buyer. Who am I kidding? Just last week several airlines announced a 24-hour online flash sale. I found myself booking a flight to way in the future event, with minutes to spare before the rates changed.

I faced my fear of losing out on an opportunity and avoided the pain of spending more for the same airline ticket that I got at a big discount.

A Fleeting Sales Event Creates Long Term Results

Also known as daily deals, the word flash grabs our attention.  Flash deals are high-value discounts or promotional codes or coupons that last for a limited period of time, from a few hours to a few days.

When done right the benefits are:imgres   

  •     Increased profits
  •     You will grab the attention of new customers
  •     Sell off excess inventory
  •     Expand retargeting efforts
  •     Provide opportunities to cross-sell or up-sell

Beware of Creating Negative Perceptions

We all have seen those Black Friday deals gone terribly wrong at the retail level. Shoppers grabbing at the limited supply item, causing fist fights and arrests to occur, which make it to the national news.

 Anger is often the emotion driven to the surface with fear-based scarcity marketing

Anger is often the emotion driven to the surface with fear-based scarcity marketing

How’s that for instantly building a negative perception for the retailer, or the limited supply featured product. With fear-based scarcity, anger is often the emotion driven to the surface when the need for satisfaction is not met.

When I am in the market for an item or service I am inclined to perform a web search where I am taken to daily deal sites.

Yes, I am easily sucked into the excitement of getting a big discount. I am often frustrated because the flash sale sales available are not exactly what I am looking for.

Being denied purchase at final checkout due to a too late to the party message is frustrating

Being denied purchase at final checkout due to a too late to the party message is frustrating

Then, when I finally decide on an item, I have been denied purchase at final checkout due to an out-of-stock, too late to the party message,

After finding a great deal I have also experienced delivery problems where my item got delayed, or lost along the way. My fear of not getting the deal has now morphed into anger. This is a common problem.

Often a flash sale is put together quickly or without thinking through all of the steps that follow a purchase.

In today’s world of vocal online reviews, you don’t want anyone bashing your product or store due to a fulfillment or processing issue.

How The Law of Scarcity Works When Done Right

According to a Return Path survey, over 50% of emails received by consumers are promotional in nature. This has created Flash Sale overload.

So how does one enter into a flash sale promotion without eroding brand image, profit margins, and customer loyalty?

The negative perception examples provided above were the result of casting too wide of a flash sale net. There is a balance between driving traffic to your store or site and creating a public relations nightmare, or at the least a sour experience that drives prospects away.

Consider the types of customers the flash sale is for and test the offer with specific segments

Consider the types of customers the flash sale is for and test the offer with specific segments

The goal is to have enough product at a fair discount that will satisfy the demand you create. You want the benefits created from a flash sale, without making potential, or worse established loyal customers, feeling left out.

The first step is to consider who are the types of customers the flash sale is for.

If time allows, test the offer with a targeted, limited audience. Choosing your advertising medium, based on the specific target it reaches, is an example of limiting awareness to your targeted segment(s).

For e-commerce businesses, consider creating a targeted list such as existing customers that expressed interest in the product. Targeting your competitors’ customers, developing analytics on past purchasers or some other finite measurement can be used to limit your test or sub-set audiences.

Thoughts on Flash Sales Success Strategies

Since a flash sale is a limited time event, it is a good idea to connect your sale with an event, celebration, occurrence or something external that is happing now. This gives the deal a higher purpose and takes the pressure off, should things go awry.

1. Flash Sale as a Celebration

Provide a broad base of customers with an offer they can actually use

Provide a broad base of customers with an offer they can actually use

An anniversary, a new store opening, a merger or anything that is cause for celebrating the customer relationship works. Using this tactic allows you to share your joy with select groups of prospects and customers as a thank you.

If you are using email it is relatively easy to select customer segments and test response. You can choose your high-profit customers, inactive customers or other strategies based on purchase history.

2. Flash Sale For A Cause

Associating a flash sale event with a charity or nonprofit cause, that changes the world for the better, creates a winning combination. Specifying a targeted dollar amount to be donated from each purchase and limiting time and product motivates action.

When time limit and/or product quantity expires you can direct shoppers to similar products and an alternative to donating. This gives everyone drawn to the cause a chance to celebrate the shared achievement of raising funds for a worthy cause.

the technique may also be a good way to tie-in a product benefit with the supported cause to create a positive brand perception.

Think TOMS, originally an online shoe store, they have expanded their product line beyond shoes. TOMS provides their One for One advantage.  For every product you purchase they provide the same product to people in need.

3. Flash Sale as a Reward

Rewarding loyal customers, or those that signed up for membership, are your best audiences because they have already indicated their support. One thing to consider is that you don’t want to anger customers that paid full price and may feel buyers remorse.

An unintended consequence is that you may be causing them to wait for the next deal instead of paying full price again.  If you can suppress those that have purchased, from your email or other announcements, it may avoid this issues.

Passion and Impulse

The simple truth is that using the Law of Scarcity plays with people’s emotions, and emotion-driven buyers can become very passionate when acting on impulse.

You want the experience to be a win/win. If your sales event creates dissatisfied customers, they may turn their emotions on you in the form of negative reviews on social media sites, or worse.


Kevin Danaher

Kevin’s career spans over 30 years where he worked for New York Sales Promotion and Advertising agencies such as Ventura Associates, and BBDO developing promotional campaigns for some of the world’s leading brands including VISA, General Electric, Kraft/General Foods, Fidelity Investments, and Chrysler. Read More