Scarcity mentality: Boon or bane?
Actually it could be either, depending upon where it exists.
To get a clearer understanding of how the scarcity mentality influences buyer behavior, let's examine three buying situations:
- The seller possesses a scarcity mentality.
- The buyer possesses a scarcity mentality.
- Neither possesses a scarcity mentality.
Seller's scarcity mentality
You know immediately when sellers possess a scarcity mentality because they are willing to do almost anything to make the sale. They appear hungry, even desperate. You've all had that kind of buying experience. What was your reaction?
Here's what most buyers tell me:
- I'm leery that I'm not going to receive what I'm buying.
- I don't have the confidence I need to feel that I'm making an informed decision.
- I'm worried about service after the sale; the seller seems so hungry for business.
- Is the product/service any good, he/she seems so anxious to get the sale?
- The seller seems more interested in making the sale than assuring that my needs are met.
Not exactly the kind of impression that instills confidence or encourages buyers to part with their money, is it?
The reality is that buyers want to deal with sellers who are confident, successful and genuinely interested in the buyer's welfare. When sellers don't care whether or not they make the sale, they immediately become more attractive to buyers. Why? Because their confidence instills confidence in the buyer. It's contagious in all the good ways in which that word can be defined.
The key to developing this kind of confidence in your offerings is being clear about the kinds of buyers who value what you have to offer and saying "No" to the others. After all, there is really only one thing that any of us ultimately sells, that's success. The more we're able to point to our customers' success and link it to our products/service, the greater our confidence in what we're selling. As was just noted, buyers draw their confidence from ours. It's counter-intuitive, but the more we demonstrate a lack of concern for making the sale, the more likely we are to make it.
Now let's contrast that with a situation in which the buyer possesses a scarcity mentality.
Buyer's scarcity mentality
When buyers think that a product or service in short supply, what do they do? Bid up the price, right? That's why artwork often rises in price after the artist's death.
Fortunately you don't have to go to that extreme to create a scarcity mentality in your buyers. You simply need to create a set of criteria that defines your ideal customer in ways to assure your and their success. You'll notice that I'm not suggesting that you deceive your customers to generate a sale. That strategy will bite you and it should.
The key to creating scarcity in the minds of your buyers is to stick with your ideal customer profile when evaluating potential customers. That means saying "No" to those who don't fit the profile. It's this willingness to say "No" to business that creates a scarcity mentality in buyers which, in turn, makes your offering more valuable in their eyes. Create this scarcity mentality in your buyers and you'll:
- Enhance their satisfaction with their purchase.
- Enjoy higher revenues with less work.
- Enjoy higher profits, again, with less work.
There are no losers in this scenario; you can enhance your buyers' experience and your company's profitability by creating a scarcity mentality in your buyers.
Now, let's look at the third scenario posed at the beginning of this article - neither buyer nor seller possesses a scarcity mentality.
No scarcity mentality
This would seem to be the ideal situation: neither buyers nor sellers feel that the offering is in short supply so there's no reason for either to do anything exceptional to get what they want. This is the scenario in which everyone gets a fair deal, right? Unfortunately not.
Here's what's really happening. The seller's offerings are viewed by both buyers and the seller as commodities, precluding the possibility of getting premium pricing. Sellers don't enjoy much customer loyalty because buyers have so many readily available alternatives at similar prices. Nor do they enjoy much profit potential.
Buyers gain little satisfaction from the purchase. After all it is readily available at a reasonable price whenever they want it. There is no WOW experience to be gained from something that exists in abundance.
As you can see a scarcity mentality is essential to business success, as long as it exists in the customer's mind.
Dale Furtwengler / Dale Furtwengler is a professional speaker, author and business consultant. His latest book, "Pricing for Profit," is dedicated to helping organizations break the bonds of industry pricing.