Thing is, it actually works. That is, it works in the short term. It does make immediate sales.
The problem is that it doesn’t work over the long term. It doesn’t build brand loyalty. It doesn’t create raving fans that come back again and again.
It doesn’t posture you as a thought leader, nor does it create an educational hub that consistently draws and keeps new customers.
Rather, it makes people feel manipulated and drives them away over time. It attracts price-centric bargain hunters who leave you as soon as they find a cheaper, albeit less valuable, alternative.
It makes people increasingly immune to your pitches, forcing you into a hamster-wheel business where you always have to find new customers, rather than keeping customers for life.
The following are four specific sales tactics used by these types of businesses that always backfire.
Below each you’ll find appropriate ways to use the tactic.
1. Scarcity (Limited Supply)
“The way to love anything is to realize that it might be lost.” -G.K. Chesterton
Generally speaking, the perceived value of an item is proportional to its abundance or rarity. By manufacturing scarcity–using the “limited-number” tactic–businesses can generate quick sales.
The problem is that sales-mentality businesses use this principle to manipulate.
In Influence: The Science of Persuasion, Robert Cialdini describes his observance of this tactic in an appliance store, where 30 to 50 percent of the stock was regularly listed as on sale.
When a prospect would show interest in a particular sale item, a salesperson would approach and say “I see you’re interested in this model here, and I can understand why; it’s a great machine at a great price. But, unfortunately, I sold it to another couple not more than twenty minutes ago. And, if I’m not mistaken, it was the last one we had.”
Disappointment would register on the prospects’ faces, and typically they would ask if there was a chance that there would be an unsold model in the back room or warehouse.
“Well,” the salesperson would respond, “that is possible, and I’d be willing to check. But do I understand that this is the model you want and if I can get it for you at this price, you’ll take it?”
“Therein lies the beauty of the technique. In accord with the scarcity principle, the customers are asked to commit to buying the appliance when it looks least available–and therefore most desirable.
“Many customers do agree to a purchase…Thus, when the salesperson (invariably) returns with the news that an additional supply of the appliance has been found, it is also with a pen and sales contract in hand.”
Sure, they could sell a few appliances this way. But how likely do you think people would be to buy from them again?
The Right Way to Use Scarcity
Credibility is the key to using scarcity appropriately.
People will see through manufactured, manipulative scarcity over time. But if you legitimately have a scarce offering, you absolutely should highlight that in your ads.
For example, we recently marketed this event for our client Williamsburg Academy. Their webinar software has a limit of 500 participants. We highlighted that in an email and registrations shot up immediately.
Every time Wizard Academy markets an event, they highlight that they only have 14 rooms in their student mansion. The first 14 people to register get to stay there for free, and other registrants must pay for a hotel.
When we wrote an email to Atlantic Seafood Market‘s database telling them that they only had 31.7 pounds of blackfish available, that was precisely accurate and therefore credible. We didn’t manufacture scarcity to manipulate; it’s a commonly-understood reality of the industry that blackfish is hard to come by.
Their scarcity of bay scallops was another effective tactic, particularly since the scarcity was created by their fierce adherence to quality.
2. Urgency (Limited Time)
Stephen recently demolished this tactic in this blog post about New Vitality, a health supplement company that emails their database 10 times a month, and almost every email is a “Hurry! Act Now or Lose!” message.
This tactic is usually accompanied by a low-price, “once-in-a-lifetime” offer.
When overused or used without credibility, this tactic quickly loses its efficacy. It trains prospects to only buy when things are on sale.
Prospects also suspect that these low prices are simply evidence that the business’s regular prices are too high.
And as prospects become immune to urgency, it takes increasingly cheaper (as in less profitable for the business owner) offers to interest them.
The Right Way to Use Urgency
Again, the key is credibility–the offer must be trusted as authentic, not fabricated or manipulative.
For example, on this website look for the 50% off ad that says “Take advantage of this limited time offer.” Does anyone actually believe that it’s a limited time? It’s glaringly obvious that that always stays up on their website.
No credibility. While that may be a good deal, it’s not an urgent deal; you know you can get it at any time, so the effect of urgency is lost.
With the Williamsburg Academy event mentioned above, they were able to convince world-class professional speaker Warren Macdonald, who typically charges $10,000 for speaking events, to give them two nights for free. It really is an urgent offer because people aren’t likely to have this opportunity again.
Credibility can be strengthened when scarce and/or urgent offers are predicated on things outside of the company’s control. John Young‘s famous air conditioner sales letter is a great example of this.
Simply put, reciprocity is the psychological principle that we feel obligated to repay gifts and favors.
And, once again, the abuse of this potentially powerful persuasion principle is rampant among short-term manipulators.
As is scarcity, reciprocity is covered in detail in Cialdini’s Influence.
He tells of his study of the Hare Krishna Society, an Eastern religious sect. Their early fundraising efforts were to simply send devotees out into the streets to ask for donations.
It didn’t work well, so they switched tactics. They solicit in public places with a lot of pedestrian traffic, such as airports and train stations.
Now, before a donation is requested, the target person is given a “gift,” such as a book, a magazine, or a flower. Only after invoking the reciprocity rule does the solicitor ask for a donation.
It worked phenomenally well–for a short time.
As Cialdini writes:
“…the reciprocation rule has begun to outlive its usefulness for the Krishnas, not because the rule itself is any less potent societally, but because we have found ways to prevent the Krishnas from using it on us.
“After once falling victim to their tactic, many travelers are now alert to the presence of robed Krishna Society solicitors in airports and train stations, adjusting their paths to avoid an encounter and preparing beforehand to ward off a solicitor’s ‘gift.'”
The Right Way to Use Reciprocity
Two Hub Mentality principles are used for appropriate reciprocity: permission and free content.
You give away valuable and relevant content in exchange for the permission to market to those wanting your content. Then, you continue giving them free content over time.
And implicit to the permission is their ability to opt-out of your database at any time–there is no manipulative chain of obligation hanging around their necks.
Not only does this engage reciprocity, but it also demonstrates your expertise, creates trust over time, and builds authentic relationships.
Free samples of physical products is an excellent way to engage this principle as well, as Atlantic Seafood Market did with their recent holiday open house.
Like scarcity and reciprocity, these related tactics are the counterfeit, transactional sales version of the principle of “Liking” found in Cialdini’s Influence.
The abuse here is to rely on smooth talk, rather than genuine, consistent action. We’ve all been taken by slick talkers who didn’t deliver what they promised.
It’s sad but true that these types have given legitimate salespersons a bad name. This is why we’ve all learned to be suspicious of salespeople, and to put up defensive barriers when we encounter them.
The Right Form of “Liking”
This principle states simply that we prefer to do business with people we know and like.
But to use this principle for long-term customer retention requires much more than personality and being facile with words.
The key here is to let your actions speak louder than your words. In other words, earn your likability through integrity.
Be what you say you are. Do what you say you’ll do. Ensure that your backstage systems support your front stage claims.
Switch to Hub Mentality for Long-Term Persuasion & Retention
Charles H. Sandage said:
“Advertising is criticized on the ground that it can manipulate consumers to follow the will of the advertiser. The weight of evidence denies this ability. Instead, evidence supports the position that advertising, to be successful, must understand or anticipate basic human needs and wants and interpret available goods and services in terms of their want-satisfying abilities. This is the very opposite of manipulation.”
People can be persuaded through misguided and manipulative advertising tactics, but those only work in the short term.
If you want to increase trust and sales, make your marketing dollars more efficient, retain more customers, and build a sustainable business, you must be authentic, trustworthy, and credible.
You must solve people’s needs, deliver what you promise, and be transparent in your offerings.
Stephen Palmer is a marketing consultant and writer with KGaps Consulting. His firm uses their methodology Hub Mentality to help small businesses generate more leads, sales, and referrals while making their marketing budget more efficient.
Stephen is the co-author of as Hub Mentality: Shifting from Business Transactions to Community Interactions as well as the co-author of the New York Times bestseller Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity.
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