Scarcity is a psychological tactic that's been used by marketers for as long as there has been something for sale.
It comes down to the simple economic concept of supply and demand: the less of something there is, the more people want to have it.
Like toilet paper during the COVID-19 pandemic! Even though the coronavirus has absolutely nothing to do with toilet paper, everyone panic purchased jumbo packs of toilet paper at Costco when they found out that it was running out.
How is scarcity used in online marketing?
In online marketing, scarcity is used to increase interest and demand for a product or service. Many online course creators, coaches and digital marketers will use scarcity by:
- Limiting seats in a live webinar
- Offering a limited-time discount
- Closing the registration window for an online course
- Offering a service to only a few clients
Is scarcity ethical?
There's a simple answer to this:
When the scarcity is true.
Like most marketing tactics, the tactic itself is usually not unethical. Instead, it's the marketer's intention behind the use of the tactic. There is nothing inherently wrong with scarcity, but if the marketer is touting a product as scarce when there is an unlimited supply, that is a lie and, therefore, unethical.
For example, if you have ten widgets for sale, eight of them are purchased, and only two remain, it would be ethical for you to say, "there are only two widgets left! Buy yours before they're all gone."
And here's another example. If you have an online course with the capacity to enroll an unlimited number of students, it would be a lie to say, "there are only ten spots left of my online course, so buy now before they're gone forever!"
So, how can an online course marketer use scarcity to sell an "unlimited" supply of a digital product?
Just be honest! What if you offered a private 30-minute coaching call to the first ten students of your online course? You could sell that for a higher price, and market the limited availability with honesty because your time is limited and you cannot spend 30-minutes with every single student who joins your online course!
Scarcity encourages a decision
Let's imagine a young courting couple. The lady is in love and wants to get married, but the guy is content and doesn't see the need to propose — he's comfortable on the fence.
That is, of course, until the young lady says,
"If you like it, then you better put a ring on it."
In which case, the guy must get off the fence, be a gentleman and make a choice.
The offer isn't staying on the table forever.
Are you in, or are you out?
Using scarcity in your business is a tried-and-true way of helping customers to make a decision. I recently had a student of my Launch course thank me for having a personal countdown timer on the order page because it encouraged him to make a decision — yes or no.
I believe it is okay to encourage somebody to make a decision by making it scarce, so long as the scarcity is not fake.