The Executive Summary
Less is definitely more. It sounds crazy at first. . . if you want to increase customer demand you can easily achieve it through scarcity and exclusivity. Crazy, but it is true. This is why it works – customers subconsciously put a higher value on something that is rare.
Ever hear of a bottle of wine that is the last of its vintage and sells for something like a thousand dollars? Chances are you are way more interested in tasting that than a bottle of Boone’s Farm. You may not plunk down a cool thousand bucks for it, but your curiosity is piqued. And if I could get you a thimble size taste for five buck, chances are you would try it. Shoot, a Boone’s Farm bottle probably doesn’t even go for five bucks, but you are willing to taste a thimble size cup for five dollars, simply because of the perceived scarcity and exclusivity.
The less available something is, the more value a customer puts on it and the more they want it. So, stop offering “unlimited quantities” and “24×7” availability. Instead start offering “only 5 left” and only for “the next hour, on a first come first serve.” Your sales will climb! And, if they don’t you can always throw back a bottle of Sun Peak Peach. Dee-lish!
The Details On How To Increases Customer Demand
Getting Inside The Customer’s Subconscious Behavior
There are many more subconscious influencers that drive consumers to buy from you. Beyond scarcity & exclusivity, you can employ social proof, name influence, reciprocity, and hundreds of other techniques. If you want to dig deeper in the subject, check out these books: Influence by Robert Cialdini or this little overlooked gem that I love: Get Anyone To Do Anything by David Lieberman.
A nice encapsulation of the scarcity theory … though curiosity, it has to be said, is “piques,” rather than “peaked.” Always have an editor look at your work!
Thank you for catching that!!!! It is being fixed as we speak!!!
Mike, this is so key and right on.
This is exactly our approach for our video marketing services. Our partners want to know that when we are
working with them, we will not work for their direct competitors within their
geographical area. It’s peace of mind for our partners. They
want to know that 100% of our efforts are being focused on their video
marketing campaign and not their competitors.
http://www.videobroadcastservices.com/exclusive-video-marketing-services
So TRUE, Mike! (embarrassed to admit how much extra we pay to be VIP on cruises) Thanks for another great post.
I feel your pain… I paid extra to meet the VIPs myself. Damn my subconcious.
Mike Michalowicz is a sensational speaker as usual!
. . . and I love you, Tracey. . . as usual.
Mike, this post comes just as I’m about to talk about the subconscious and pricing in my Las Vegas seminar next week. Now I have some added firepower, thank you for that! ;-D
I did want to add one of my recent finds to the pot of books: Consumerology: The Market Research Myth, the Truth About Consumers, and the Psychology of Shopping by Philip Graves. I’ll admit, this book does focus more on why market research groups are bad (think New Coke), but it certainly digs into the subconscious, and I’ve been loving it. Check it out here: http://amzn.to/Q4Aib2
Save and invest money whenever you can and never ever go into debt for something you don’t need. Make your money work for you.
That is the right “defense” strategy for a consumer.
Great video Mike. We have been running on the philosophy of exclusivity since we opened our doors. That’s what our clients want. In marketing they want to know that we work for them and not their competition.
Any one a Boone’s Farmer recovering addict?
Okay I just have to be honest, normally I love everything you write, say, do…but this time, not so much. Not because it isn’t true–the truth of it is what bugs me. I have always been about supporting the underdog, inclusivity, and being authentic with everyone–really authentic. The scarcity thing (especially as a marketing tool) has always bothered me–turned me off. It’s not a lack of ego–of course I have ego (you almost HAVE to if you want to be successful as an entrepreneur!)–but it just comes down to the people for me. When I think about what a gross waste of resources it is to pay for first class…I mean seriously? Regardless of how successful one becomes, does common sense have to decrease with the increase of one’s resources? Does a $3k plane ticket make that much of a difference over $500 when there are so many awesome ways that extra $2500 could be used to make the world a better place. Now think of that same amount time the 15 plane trips you’ll take this year. Same thing w/shoes…really? Okay, off topic. But it’s my core and maybe it will be the thing that will keep me from making it big…but maybe that kind of big I can do without…. Thoughts? Respectfully ~Norma
I like your point Norma. I feel that this technique, and all the others that are in the field of behavioral influence, can be used for both good or evil. I think the more that people are aware of it, the less then can be manipulated.
For example, my local car dealer has a “last time ever – red tag – everything must go – sale” about once a week. It frustrates me, not because they are doing, but because some people fall for it.
On the flip side, if you have a product or service that is better then your competition you basically have an obligation to get it to customers. They are being dooped into buying inferior stuff, so we need to fight back and get them to buy the superior stuff. Even if they don’t understand the technique… if they are going to be buying, and we are truly the better product/service with the most value, we kinda need to do techniques like this. We need to fight fire with fire and do it ethically.
Well definitely food for thought, Mike. I think everyone (even those who are selling the inferior products/services) thinks they have an obligation to get it to customers though. I think I want to find a way to create urgency and communicate the exclusivity of amazing service that is as transparent as possible. Not sure how yet, but lots to think about for sure! That’s why I pay attention to you…you always provide so much to think about! Appreciate you 🙂 Cheers ~N
So what if you are unable to limit? We have a new business – virtual business cards. The card name can be letters, numbers, ad some special characters (hyphen and underscore)and up to 254 characters long, which means we have 38 to the power of 254 available cards. Thats quite a few.
One of the selling points is growth – the more people using their 411card, the more value it will have.
We built the site with nice hard-sell techniques you supplied in a recent quite wonderful article, and it seems to have worked – we have been really launched for a week now, and have among our customers one true wild card – we do not know him, none of our family/immediate friends know him, and he is not a part of any of our networking groups..
So that (and our Google prowess!!!) works, Very cool, thanks Mike, you bought me a sale.
But (like you have time to focus just on me!!) how would you work this thought into that model. I think I may have to pass on this one, for this model. :o)
Thanks again, love your work, and frequently send friends/clients to your site.
Mike… Right on the money. About the First Class vs Business class vs Coach arguement… sure that extra $ made by selling those First class seats is substantial, but (now this is pure speculation) it may reduce the rest of our fares a little, or allow the airline to offer better peanuts. I don’t know, but I don’t feel bad because someone can afford a comfortable ride, while I’m crammed in the back. That’s what’s great about America… it’s just one more thing that gives me more incentive to grow my business so I can sit up front some day. And, BTW, I am already donating to good causes to help make “the world a better place.” A comfortable ride for someone else doesn’t offend me, it pushes me. Do we also stay at Motel 6, because it costs less, or do we stay in the best place we can afford? I used to think it was crazy to pay more for a nice hotel… until I stayed in one.
OK, now to my point. When I started my business I charged much less than I do now. When I presented my product to an Interior Decorator as something she could offer her clients, she looked at what I had, loved it, and then asked me what I charged? When I told her… she told me that her clients wouldn’t even consider it at that price. I thought, “Oh no, I’m too expensive!” but then she said that the reason they wouldn’t consider my product, even though it was unique and really nice was because it was too inexpensive.
She said that they wanted to know that not everyone could have the same thing in their house. They wanted it to be unique and hard to get. That was eye opening. So, I went to work on making my product much better… better than anything else that was similar (if I was going to raise my prices, I wanted to be able to justify it to myself). After time, I had a product that was the bet there was… so I raised my prices. Sales didn’t drop off… only the neighborhoods where I worked did. After a time I raised prices again. Business stayed steady. I recently raised my prices again, because I was too busy and wanted to decrease my workload… but the opposite happened, I am now getting calls from all over the world.
Now, while I doubt that I would be as busy as I am if my product didn’t meet expectations… but I have found, from experience, that raising my prices and limiting my market, has kept me busy and traveling the world (which I doubt I would be doing if I’d kept my product just average and marketed it to the masses).