It’s widely agreed upon that the fear of loss is more powerful than the fear of gain.
If you can communicate this in your influence attempt in a negotiation, then this creates urgency for them to purchase your product, service, or even buy-in to your idea. This gives them a sense of urgency and encourages them to act now, with the ‘fear of missing out’ as the catalyst.
Scarcity is found in many parts of our lives, often without us even recognising it. For many eBay showcases how powerful scarcity can be each time we try and buy or bid for something. For example, if you have had an item on your eBay watch list for the last few days, most people find that when it comes down to the last few minutes before the bidding ends and several bids come in, your heart starts racing out of fear that you will miss out. This is accompanied by the excitement that you could equally win if you outbid the others.
When you place your bid, you mentally trick yourself into thinking the item is yours and place an ownership on it. The more bids that come in, the more you desire it and the fear you are going to miss out on it increases making a compelling justification for you to bid even higher than you may have originally planned.
In 1973, before eBay, movie mogul, Barry Diller, who was a negotiation expert at the TV company, ABC, paid $3.3 million for The Poseidon Adventure TV show which at the time, was an obscene amount of money to be paid for any movie or TV show rights purchase.
The reason such a high price was paid was that this was the first time any TV or movie rights had been sold to networks in an open bid auction. An open bid allowed competitors to see each other’s bids and this was the catalyst for a bidding war that resulted in Diller paying over the odds for the rights. After winning the rights and on reflection, acknowledging he had paid over the odds, he then informed the industry that ABC would no longer take part in auctions again.
Similar to Barry Diller when we are browsing a hotel room booking site and see that there are ‘only 2 rooms left’ we get caught up in the idea that we are about to miss out on grabbing that ‘last minute deal’ which prompts us to take action. Similarly we are looking into booking our flights abroad, travel and aviation companies use a similar persuasion principle and suggest that there is a limited supply of airplane seats available. We are readily influenced by the fear of missing out on something which is presented as ‘scarce’.
When opportunities become scarce, we desire them more.
Even the idea of scarcity is incredibly powerful too. Take the recent Coronavirus pandemic as an example. Here in the UK people believed that if we were told to self-isolate the most important items they should stock up on were rice, pasta, hand sanitizer and toilet paper. In the first few days of the pandemic when the UK government declared a state of emergency and lockdown, shoppers bought all of the aforementioned items in bulk.
This created scarcity. For those who had plenty, they were then unsure when they would be able to buy these items next and got caught up in the stockpiling rush too. It became a vicious cycle of people paying over the odds for items which had only been made scarce by people panic buying and by the government suggesting there may be a shortage.
In turn this led to others buying the remainder of the stock. All of these actions came despite the assurances of both the government and supermarkets a few days later that their supply chains were strong and working well and if everybody remained calm and responsible and consistent in their buying patterns there would be no shortages. Thus it was just the idea of a potential scarcity that caused people to act and create scarcity as a side effect of them stockpiling.
GK Chesterton, the British author and philosopher, once said “The way to love anything is to realise it might be lost.”
Adjectives such as ‘exclusive’, ‘rare’ or ‘limited edition’ are all synonymous with scarcity and imply a greater worth and value. Scarcity is used visually and frequently in bricks and mortar shops with ‘adverts’ such as “Closing down sale” Last ones left”, “Limited stock available” etc.
Taking all of this psychology behind ‘scarcity’ into account, if you are able to influence your prospective client to imagine that they will miss out on something, this will increase their desire to buy so much more, making scarcity as a influence methodology, a formidable tool.
We can take this one step further. An even more powerful persuasive principle that overpowers people’s desire is when something is banned or forbidden from use or engagement in. For some who experience this, it makes them feel that they have had their liberties taken away from them, which is an extremely strong motivator. Forbidden or banned information or the ability to use, or take part in something, in many ways is even more desirable than the products and services themselves.
It is widely agreed that juries are more heavily influenced by censored information. If a jury finds out that an insurance company will pay any bill for damages, they tend to award larger damages to the plaintiffs. Furthermore, they are known to award even higher compensation pay-outs if they are specifically told by the judge to ignore the fact that the defendant has insurance.
Scarcity is something we can all relate too and understand how powerful it can be as a psychological tool to make us think, act or behave a certain way. To learn more about other psychological nuances to give us an edge in a negotiation and to supercharge our influence and persuasion skills, then Duncan delivers professional keynote presentations and masterclasses to clients around the world. To find out more get in touch using the button below.
