Sales Triggers to Boost Online Sales
In this article we shall discuss physiological triggers business owners can place in their e-commerce stores in order to drive conversions and sales.
Scarcity
Scarcity refers to the limited availability of a commodity, which may be in demand in the market. Scarcity is a psychological trigger where, when a product or service is limited in availability or has the perception of being limited, it becomes more attractive to customers. E-commerce store owners can utilise the psychological phenomenon of scarcity to improve sales. Customers become highly motivated after experiencing a “Trigger Event” like “scarcity”, and are thus more like to purchase a product or service. If something is rare or unattainable it becomes more desirable. Scarcity has a positive effect on product evaluation, because consumers assume that scarcity is a consequence of high demand for the product, which in turn arises from superior value offered by the product.
There are instances when scarcity does not work. In the research paper “Effects of Scarcity on Product Valuation” {http://www.acrwebsite.org/volumes/v38/acr_v38_16259.pdf}, researchers show that scarcity has a stronger positive effect on product evaluation when salience of persuasion knowledge is low, frequency of exposure to scarcity claims is low, decision reversibility is high, and cognitive load is high. What this implies is that when consumers have a higher knowledge of scarcity claims, they are less likely to place more value on a scare product. This finding is further reinforced by “ The Effects of Scarcity Appeal on Product Evaluation: Consumers’ Cognitive Resources and Company Reputation
”, which states We proposed that when consumers considered that scarcity claims signal a product is valuable, such claims would have a positive effect on product evaluation. However, when consumers interpreted scarcity claims as a sales tactic, the positive effect of scarcity claims on product evaluation would be diluted.
There are generally two types of scarcity that can be implemented to increase sales. These are:
- Quantity-related scarcity (2 items left in stock)
- Time related scarcity (Last day of sale)
Factors to consider when implementing a scarcity based strategy, should take onto consideration Persuasion Knowledge, Frequency of Exposure, Discussion Reversibility and Cognitive Load.
Persuasion Knowledge
Scarcity will have a stronger positive effect on product evaluation when salience of persuasion knowledge is low. scarcity increased purchase intent and consumer willingness to pay when salience of persuasion knowledge was low, but not high.
Frequency of Exposure
Consumers who are exposed to many (compared to few) scarcity claims, i.e., high frequency of exposure, are more likely to interpret scarcity claims as a signal of manipulative intent. For example, consider an individual who watching a Youtube Video where serveral Ads appear as popups, stating “Hurry , Product X only 2 items left” .
Seeing repeated use of these scarcity claims, may make potential customers wonder if these claims are manipulative techniques used by marketers to increase sales. The potential customers may see scarcity as a signal of manipulative intent. Thus, the positive effect of scarcity on product evaluation will be weakened. In contrast, when frequency of exposure to scarcity claims is low, potential consumers are less likely to assume manipulative intent, and hence scarcity would have a stronger positive effect on product evaluation.
Decision Reversibility
Decision reversibility is defined as the ability to reverse a purchase decision. When a scarce product is unconditionally refundable (“ 7 day money-back guarantee”), individuals are likely to interpret scarcity as a signal of product value. In this case scarcity has a poitive effect on the product valuation. In contrast, if a scarce product cannot be refunded once purchased (e.g., “All sales are final”), means that desion reversibility is low. This low reversibility protects sellers from the consequences of selling defective products. Consequently, scarcity with low reversibility highlights the manipulative intent on the part of marketers. This is likely to reduce the effect of scarcity on product evaluation.
Cognitive Load
Making assumptions about the hidden marketing tactics behind a persuasive message require cognitive capacity. Thus when the cognitive load is low, consumer have sufficient mental capacity to make assumptions about the hidden marketing tactics behind a persuasive message. With a low cognitiv e load consumers are likely to think about why the advertiser has created the advertisement containing scarcity triggers. Assumptions about the manipulative intent of advertisers are likely to reduct the positive effect of scarcity on product valuation. However, when cognitive load is high, then consumers do not have the cognitive capacity to make assumptions about the manipulative attempt of advertisers. In this case consumers are likely to just make assumptions about the product value. This would have a positive effect on product valuation.
In a study cited {http://www.acrwebsite.org/volumes/v38/acr_v38_16259.pdf} by the Association For Consumer Research Participants were told that they were participating in two independent experiments. In the first experiment, cognitive load was manipulated by asking participants to memorize either a seven-digit number (high cognitive load condition) or a two-digit number (low cognitive load condition) . In the second experiment, participants were asked to rate wines available through an online shopping website. A printout of the online shopping webpage manipulated scarcity using limited quantities of the wine products. The results of the experiment found that scarcity increased purchase intent and product choice when cognitive load was high, but not low. The results of the research alfo found that respondents were more likely to perceive scarcity as a manipulative intent when cognitive load was low, compared to when it is high.