The Scarcity Principle: How FOMO Drives Consumer Behavior

For many marketers, it’s natural to assume that the secret to success in the marketplace is making the consumer experience as seamless as possible. But this line of thinking neglects the importance of scarcity as a driver of purchasing behavior. 

Scarcity is one of the most powerful tools available to B2C marketers. When people perceive something as exclusive or rare, we’re apt to become hyper-focused on obtaining it, proving our own exceptionalism and worth by owning or using a high demand product or service. 

And scarcity doesn’t just apply to the quantities of your product that are available to consumers. It’s also connected to concepts like time, langage, and emotional valiance, all of which can be effectively leveraged to drive purchasing behaviors and increase customer motivation. Here’s how scarcity works—and the experiment we designed to see its power in action.

How Scarcity Works

According to behavioral science expert Richard Shotton, scarcity is one of the most common, and most ubiquitous, tools used by marketers to leverage social proof—or the idea that other people in your target consumer’s peer group are already using and enjoying your product, putting your target consumer at risk of missing out.

Scarcity connects with the idea of social proofing by citing the rarity of your product as evidence of its popularity with consumers. A product is hard to obtain, this principle implies, because so many other people desire it, and have already managed to get their hands on it before you. Act fast, or you risk missing your chance to be one of the chosen.

t seems to be a near universal experience to want what other people have—and to act quickly to make sure we aren’t the last to obtain it. But how can B2C marketers take advantage of this effect? 

The Hypothesis:

Interested in testing the impact of perceived scarcity on consumer behavior, we set out to experiment with restricting the number of items visitors to our test website, a direct  to consumer company selling high quality polarized sunglasses. 

We wanted to examine the impact of increasing perceptions of scarcity of a product that was otherwise seamless to obtain. Would consumers increase their purchasing to take advantage of a perceived limited supply?

The Experiment:

To test this hypothesis, we implemented an artificial limit on the number of items that could be purchased by an individual consumer. 

While this number was significantly higher than our average purchase number, we were curious to find out whether the existence of a limit, however high, would trigger a sense of scarcity and urgency among potential buyers, and be a driver for increased purchasing behaviors.

We created a coupon code that could be used with a minimum of two pairs of sunglasses. However, consumers couldn’t use this code to purchase more than four pairs of sunglasses, a number which was higher than the average number of pairs a typical consumer would purchase during their visit to the site. Our goal was to see whether consumers would then increase their purchase numbers to meet this limit, resulting in higher average order value. 

We created two versions of the Shady Rays site, one with an artificial limit on purchase, and one without, and A/B tested the two otherwise identical sites to see if the perception of scarcity would increase consumer demand. Would purchasers be convinced to increase their orders so as not to miss out?

The Results:

The results of our experiment showed that this method was effective. Consumers who had an artificial limit placed on their purchases had an average order value of  $74.43, while consumers who were free to purchase as many pairs of sunglasses as they liked without the restriction of an artificial limit had an AOV of $69.91. 

This 6.5% increase in average order value signifies the profound impact of scarcity as a lever of social proof. Consumers perceived the products they interacted with as rarer, and thus more desirable, and worthy of an increased investment.

We’ll continue leveraging scarcity by using this approach on standard promotions like first-time customer offers, large public promotions, promotions to segmented audiences, and all other marketing materials where social proof is likely to drive consumer purchasing behavior. 

The Takeaway: Effectively Leveraging Scarcity to Increase AOV

Our experiment showcased an effect that psychologists have long identified as one of the core drivers of consumer purchasing behavior—but how can your brand take advantage of scarcity? The science says that there are many levers marketers can pull to increase consumer perception of their product as desirable and rare, but the approach you take depends on the values, product offerings, and aesthetic of your brand.

You might limit purchase volume, create exclusive editions designed to sell out, or even decrease the time your product is available in order to motivate decisive purchasing behaviors. Create a tiered reward system, offer some products or services on a limited time basis, or increase your number of limited time offers that consumers must take advantage of before it’s too late.

Whatever path you decide to follow, increasing consumer perceptions of scarcity will increase the desirability of your brand. As the author and critic GK Chesterton once said,  “The way to love anything is to realize that it may be lost.” Once consumers realize your product isn’t in limited supply, they’re more likely to act.

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