June 19, 2007

Universal Principle of Influence #2: Scarcity

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.
--- Thomas Sowell
Professor Robert Cialdini identified six universal principles of influence: Reciprocity, Scarcity, Authority, Consistency, Consensus and Liking. This time, we're looking at #2: Scarcity.


We want what more of what is less available. That's why we're motivated by offers which are today-only or limited quantities.
The Nintendo Wii game console is an example. As an experiment, I signed up at Console Watch which checks online retailers every 30 seconds and sends an email whenever the Wii (or Xbox 360 or PS3) are in stock. Usually, they'd be gone before I could click to the site. Except once. So I ended up buying the Wii in January for no particular reason. Fortunately, my 12 year old son was kind enough to make use of it.
You Yourself
You have a one-of-a-kind offering ... yourself.

Within reason, you can increase your value by being less available. For example, unless you're working for 911, answering the phone the moment it rings can have two drawbacks
  • putting urgent (the disruption) ahead of important (what you were working on)
  • reducing your perceived value
Loss Language
Loss is the ultimate form of scarcity. Use loss language: show your clients what they stand to lose, not their gain. For example, "you save $10/day with insulation" is less compelling than "you lose $10/day without insulation".

Loss language is especially effective when clients are uncertain. They become more risk averse because they don't want to lose. With insurance, are we better off focusing on tax savings or the losses from doing nothing?

Our clients have a scarcity of attention. So how can our messages stand out?

Information is like bread --- best fresh and hot. You can give your clients new information: "I just learned..." or "You're one of the first people I'm telling ...".

This is especially effective with information that's exclusive or hard to get: "I just got this information today. It won't be released until next week but I wanted you to get an advance copy."

I'd write more, but I'm running out of time ;)

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