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In 2005 Ben Fischman CEO was from Smartbargains. It was a discount website that sold everything from bed linen to luggage.
The offers were fantastic. Visitors flocked to the site at prices of up to 75% discount. It was a success overnight.
But the sums had disappeared until 2007.
The competitors had appeared. Dozens of newer websites offered better offers and cheaper prices.
Smartbargins lost its market share and the visitors were in droves.
So Fischman tried again – except this time, he finally sold its comparable website for 350 million US dollars.
So he did it and what it means for marketers.
The power of scarcity
In 2008, Fischman started a completely new website: Rue la la.
Rue la la sold the same products. Same dresses. Same shoes. The entire inventory was the same.
And yet Rue La La exploded more and more popular. It quickly generated the demand and landed Fischman at a considerable payment day when he sold the site just a year later for $ 350 million.
The secret? Fischman understood the power of scarcity.
Rue la la was completely exclusive. Visitors needed a registration for evenly Search the page. Access was only by invitation. The buyers could not simply register – they had to be invited.
The site threw its members urgency: The turnover only lasted 24 hours and the shares were sold out in minutes.
Suddenly the buyers not only sought. They hurried. They were excited.
The results are impressive, but the psychology behind it is relatively simple:
• If so hard To be entered, it must be Good.
• If so limitedIt must be worth have.
Smart examples in marketing
There is an incredible abundance of evidence that prove that Rue la la’s success was not a single game. Sure, copy the execution Exactly Maybe not work for you, but the principles behind your model are proven.
Accept these three studies:
1. Researcher Iyengar found that sales with JAM rose when the number of options was reduced from 24 to six. It turns out that consumers prefer fewer options, even if this limits their decisions.
2. Books made of a glass with two cookies are more tasty than that from a complete glass (and the willingness to buy increases by 43%). Our brain is wired to prefer scarce resources.
3. Restriction of the amount of soup consumers that can buy consumers (e.g. “only 12 can soup per person”) increases sales by 112%. If a consumer can buy, it promotes more sales.
Fischman knew intuitively what scientists had proven: people don’t just want big offers. You want exclusivity.
Rue La La did not sell any shoes. It sold scarcity.
How marketers can use the scarcity principle
Let us end with three tips that you can apply today.
- Limit the amount that a customer can buy. KFC Australia 90 different Facebook ads tested. The winner was “chips for 1 US dollar, limited to four per customer”.
- Shorter deadlines take faster measures. In Happy money, The authors share how a promo with a two -month expiry date was only redeemed by 6%. However, the same offer with a three -week period was redeemed by 31%.
- Reduce product fluctuations to increase sales. Proctor & Gamble reduced head and shoulders shampoo variations from 26 to 15, which leads to A 10% sales increase.
This blog is part of Phill AgnewThe Marketing Cheat Sheet series, in which he reveals scientifically proven tips to improve their marketing. To learn more, listen to his podcast, ThrustA proud Drift Kings Media podcast network member.