For A Limited Time Only: How Companies Can Use Data To Create A Sense Of Urgency

0aaHamaad Chippa Informatica

Retail marketers have used scarcity — the diminishing supply of a product or service — as a way to attract customers for years. Research has proven that scarcity makes people perceive limited quantities as more precious and valuable. We’ve all seen and heard the advertisements:

  • “Limited time offer!”
  • “While supplies last!”
  • “This offer won’t last long!”

These types of marketing techniques are meant to create a sense of “FOMO,” fear of missing out, deep inside a customer’s psyche. This is an extremely effective technique when products are valued by customers and competitors are not able to fill the void. Retailers look to influence decision making and light a fire underneath the customer that will lead them to make an immediate purchase.

While calls to action from companies may not have had much truth to them in the past, information can now be leveraged to influence a shopper’s behavior since data is collected throughout the buyer’s journey, from sales channels to supply chain. Retailers now have the insights to turn their diminishing supply into a major revenue driver.


Short Supply Drives Exclusivity

When products are in short supply, marketing teams drive demand by pushing offers to customers that highlight the diminishing stock. As a product becomes less and less available, the desire to obtain the item increases, particularly if the item is popular and valued among peers. Cornell University’s research on scarcity identifies three major reasons why desirability increases when products are limited:

  1. Scarce items give an aura of exclusiveness: Access to scarce items gives off a profound sense of exclusivity, something that is not openly available to others. This feeling makes a scarce item more desirable. This is one reason why airlines and hotels have clubs and various status designations.
  1. Scarce items appear to have more value: Given economic laws of supply and demand, items that are low in supply, but high in demand, effectively cost more. Customers are willing to pay more to be part of the few that can obtain something uncommon. For example, tickets for the musical Hamilton, sold out during its Washington D.C. launch and are currently in high demand on the secondary market.
  2. Scarce items exhibit a sense of power: Having something that others want makes the owner feel powerful. This is best understood by looking at the geopolitical landscape. Countries with access to resources, such as clean water and oil, can influence power over those without.

Offering a whiff of exclusivity in times of limited supply can help companies drive sales. Retailers have begun to leverage key data points across sales channels and inventory to help inform when and how to best market these opportunities.

Stock May Be Limited, But Data Is Not

Retailers are collecting a ton of data from numerous internal and external sources. Access to scores of data has made communicating important information, such as total available inventory, shipping date and timing, and personalized offers, easier than ever before. Here are a few ways that retailers are using data to communicate scarcity with high levels of success.

Countdowns: Flash sale sites like and Ideel figured out very early on that offering exclusive, but limited, products at deep discounts resonated well with consumers. Customers opt-in to receive notifications on deals that would start at a certain time and would last for a set period, creating a race to purchase the items. Their sites keep an up-to-the-minute countdown on how long savings will last (usually four to six hours), as well as the number of items remaining. Inventory data from the warehouse and pricing information from partners can drive decisions on how long sales should last and at what price. Amazon has also had enormous success by employing similar techniques for their “Today’s Deals” and Prime Day programs.

Limited Release: As mentioned in the Cornell University study, exclusivity is a major reason why consumers chase scarce items. Adidashas partnered with musical artists Kanye West and Pharrell Williams to curate sneakers that were released to immense hype, selling out within minutes. These releases are so popular that they can resell for five to 10 times their retail value, enhancing the company’s popularity for future product releases. Understanding sales data across demographics and pulling in social media impressions for products can help brands continue to partner and design compelling collaborations with artists that resonate with consumers.

Customer Behavior: Consumers are likely to react with greater urgency if they know that demand for a particular product or service is high. Travel brands such as inform would-be travelers of the number of times a property has been viewed and the last time it’s been booked. Airbnb does something similar, but it provides information on how many times a property has been favorited by users.

JewelryTV (JTV) is using customer sentiment information to help sell products it offers on TV, online, and over the phone. To ensure that the customer truly understands the product, JTV hosts read and display sentiment data from tweets and Facebook posts on-air to guide consumers to make informed decisions over a smaller window of time. Access to real-time streaming data from all their sales channels and social sites is key to making this work. Being able to scrape web traffic data and user interactions helps these companies understand the demand to better communicate it to their users. Knowing that an item or service is popular and how similar people view the product will create that desired sense of urgency to purchase now, rather than face regret later.

Just as data can inform how scarcity can be leveraged to drive sales, sales data can inform how often scarcity marketing methods should be used. Not everything can be in limited quantity or put on a countdown to drive demand. Retailers should understand their customers’ preferences and needs to employ the right levers. Understanding customer information, such as purchase or browsing history, from various parts of the organization will help inform how scarcity can be used to increase engagement and sales.

Companies have loads of data at their disposal, and being able to use key sales, demand, pricing, inventory and social metrics can better create an informed sales and marketing strategy as product stock decreases. This information can lead to better engagement from customers and even create a loyal customer base as retailers get smart on how to use supply and demand to meet their needs.

Hamaad Chippa is Director of Industry Consulting at Informatica, responsible for identifying data management challenges, trends and best practices in the manufacturing, retail and CPG verticals. He also helps organizations understand the value improved data can have to important revenue, cost and efficiency drivers. Prior to Informatica, Chippa spent 10 years asa management consultant, specializing in providing leading-edge insights to help clients transform their businesses and attain high performance capabilities. He employed various methodologies to help clients with complexity/cost reduction, product development strategy and manufacturing operations strategy, improving operational efficiency and effectiveness. Chippa graduated from the University of Illinois at Urbana-Champaign with a bachelor’s degree in math & computer science and has an MBA from the University of Chicago, Booth School of Business.


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