Conversion
Scarcity
We value things more when they’re in limited supply
There’s a reason this Nugget is #1 in our library.
The concept of Scarcity lies at the core of economics, and greatly influences perceptions of value, status and our competitive desire to attain certain items over others.
Unfortunately, it's also one of the more poorly-applied concepts out there, along with Defaults and Loss Aversion.
Mastering quantity scarcity
An airline stating that there's
“Only 3 seats left” may well be using accurate data and not simply using faux-scarcity to artificially suggest that there's less supply of seats than there actually is.
However, from the user's perspective, the buildup of mistrust around the use of scarcity means cynicism is higher, so one must be careful with information presented.
Similarly, hotel websites telling you that “30 other people are looking at this item” engineer stress to compel people into action without changing supply yet highlighting demand in a manipulative way.
Instead, use quantity scarcity to focus on the craft and high quality of what you're selling.
Make your scarcity feel valuable, not stressful.
Mastering time scarcity
Ensure that any time restriction is highlighted primarily for the purpose of maintaining the quality of your product or service, and not merely to cause stress that could be avoided.
As an example, use time scarcity to launch unique or experimental products that are only available within a particular window (say a week, month or season).
This use of time scarcity is positive and encourages brand exploration, used creatively to highlight your unique value.
There’s a reason this Nugget is #1 in our library.
The concept of Scarcity lies at the core of economics, and greatly influences perceptions of value, status and our competitive desire to attain certain items over others.
Unfortunately, it's also one of the more poorly-applied concepts out there, along with Defaults and Loss Aversion.
Mastering quantity scarcity
An airline stating that there's
“Only 3 seats left” may well be using accurate data and not simply using faux-scarcity to artificially suggest that there's less supply of seats than there actually is.
However, from the user's perspective, the buildup of mistrust around the use of scarcity means cynicism is higher, so one must be careful with information presented.
Similarly, hotel websites telling you that “30 other people are looking at this item” engineer stress to compel people into action without changing supply yet highlighting demand in a manipulative way.
Instead, use quantity scarcity to focus on the craft and high quality of what you're selling.
Make your scarcity feel valuable, not stressful.
Mastering time scarcity
Ensure that any time restriction is highlighted primarily for the purpose of maintaining the quality of your product or service, and not merely to cause stress that could be avoided.
As an example, use time scarcity to launch unique or experimental products that are only available within a particular window (say a week, month or season).
This use of time scarcity is positive and encourages brand exploration, used creatively to highlight your unique value.
146 people were asked to rate identical cookies that were either presented in a jar as scarce or in abundance. They were then asked how likely they would be to want to eat a further cookie.
When scarce, the cookies were rated as more desirable and having a higher value. They were also seen as more valuable when going from an abundant state to scarce than when always scarce.
Scarcity comes in 4 flavors:
Quantity, Time, Access & Rarity.
Control quantity.
To increase perceived value of your product, release it in smaller and diminishing quantities, emphasizing its finite nature.
Restrict time.
When the clock is ticking and we’re overwhelmed, we take mental shortcuts that speed up decision-making.
Motivate customers by emphasizing the limited time remaining in which to act.
Limit access.
Restricting access to your products or services will increase desire and perceived value. Do this selectively for certain features and / or customer segments.
For instance, you might want to design valuable, unique rewards that are only unlocked for very special efforts on the part of the customer.
Experience
Prospect Theory
A loss hurts more than an equal gain feels good
You’re walking down the street. Consider two realities:
A: You unexpectedly find $10 in your pocket.
You feel positively-surprised!
Or:
B: You left the house with $10 in your pocket.
But you reach in and it’s gone.
The pain you feel from its loss is greater than the good feeling of finding it.
Prospect Theory explains that our perceptions of value differ based on how something is framed, and losing things feels worse than getting them feels good.
As one of the grand concepts that underpinned a lot of the early ideas within behavioral science, Prospect Theory is a beast with many aspects to it, such as Loss Aversion, Framing, Certainty, and Risk.
But for now, take your practical understanding a step further by reading the Aggregation Effect and Segregation Effect Nuggets.
You’re walking down the street. Consider two realities:
A: You unexpectedly find $10 in your pocket.
You feel positively-surprised!
Or:
B: You left the house with $10 in your pocket.
But you reach in and it’s gone.
The pain you feel from its loss is greater than the good feeling of finding it.
Prospect Theory explains that our perceptions of value differ based on how something is framed, and losing things feels worse than getting them feels good.
As one of the grand concepts that underpinned a lot of the early ideas within behavioral science, Prospect Theory is a beast with many aspects to it, such as Loss Aversion, Framing, Certainty, and Risk.
But for now, take your practical understanding a step further by reading the Aggregation Effect and Segregation Effect Nuggets.
Prospect theory is explained with a graph. Negative losses and positive gains recorded on the horizontal are set against a vertical intensity of feeling for those losses or gains.
As we gain more, we feel less for each gain. In contrast, even a small pain (shown in red) feels a lot more negative than an equal-sized gain feels good.
Package pain. Consumers will feel less overall pain from any costs incurred when you package and deliver them all together rather than when they're felt as separate, smaller pains.
Spread out rewards.
Instead of offering larger, chunkier benefits to consumers, break these down into smaller pieces, spreading them out across time.
$10 given 4 times feels more valuable overall than $40 given once.
Offer mixed product bundles.
We feel less good with each thing we consume. Therefore, the first can of soda tastes better than the fourth.
This means we'd get more complimentary value from a bag of chips instead.
Look for ways to offer relevant, mixed product bundles to offset diminishing consumer sensitivity.
Product Development
Risk Aversion
We don’t like uncertainty and generally stick to what we know
11k people were offered a new job that had a 50% chance of doubling income for life, but it wasn't without risk, with an equal chance of it falling by either 20, 33 or 50%. Questioning started with the 33% gamble; if people took it, they were asked if they’d take the bigger 50% gamble too. But if they didn’t, they were asked about the smaller 20% one.
Results put people into four risk categories showing the majority were not willing to take any risk at all.
Focus on an improvement metric.
We prefer the certainty of what we’re used to, so the benefits of switching to a new product need to feel substantial.
Outline a goal (relative performance, efficiency etc.) to anchor your product strategy around.
Doing so will reduce uncertainty and boost comparisons against better-known, lower risk alternatives.
Offer a trial or free sample...
...to create familiarity and reduce the risk around a new product.
This sets the cost of new product usage at zero, during which the consumer will adjust their future preferences.
Utilize your brand umbrella.
For any new sub-brands, reduce risk by clearly indicating the relationship to existing, familiar brands you own (Erdem, 1998).
Product brands take note. Risk aversion is higher for material purchases than for experiential ones such as restaurant meals or holidays (Roche et al., 2015).
Conversion
Framing
We make very different decisions based on how a fact is presented
Information has a wonderful way of looking very different, depending on how it’s communicated.
From turning glasses half empty into those half-full, as Designers, we have a great role to play in using framing to help people see things differently and hopefully, for the better too.
Framing is one of your most powerful behavioral tools. Everything can be reframed, depending on what you want.
For example, online second-hand clothing marketplace Vinted has devised a clever strategy to reframe the commonly-used “Service Fee” as a “Buyer protection fee”.
By reframing it as buyer protection and clearly communicating how this amount is calculated, this assurance goes beyond merely paying for the item.
Now, customers will also feel confident that they’re taking extra steps towards safeguarding their purchase.
Information has a wonderful way of looking very different, depending on how it’s communicated.
From turning glasses half empty into those half-full, as Designers, we have a great role to play in using framing to help people see things differently and hopefully, for the better too.
Framing is one of your most powerful behavioral tools. Everything can be reframed, depending on what you want.
For example, online second-hand clothing marketplace Vinted has devised a clever strategy to reframe the commonly-used “Service Fee” as a “Buyer protection fee”.
By reframing it as buyer protection and clearly communicating how this amount is calculated, this assurance goes beyond merely paying for the item.
Now, customers will also feel confident that they’re taking extra steps towards safeguarding their purchase.
96 people were told they’d be given some ground beef to taste, with half told it’d be “25% fat” (negative frame) and half told it’d be “75% lean” (positive frame). They were then asked to rate the quality of the beef out of 7.
Those presented with a positive frame rated the beef as higher quality than those presented with a negative one.
Create a frame using context, words or imagery to help others to see things according to your needs.
Wildly different perceptions are made possible by reframing the same evidence.
Reframe statistics as factually-accurate positives against competitors.
Facts are dramatically reinterpreted when set amongst different data.
• Create an opportunity to act.
We’re more likely to take up a special offer when the marketing message is framed as a potential loss than a gain (Gamliel and Herstein, 2012).
