Scarcity tactics can anger customers

When a product is promoted using scarcity (e.g. “only 5 available, limited editions) people who miss it get angry and may switch to competitors.

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📝 Intro

We’ve all been targeted by promotions or appeals that play on a product selling out (e.g. “Only 2 rooms left”, “3 items left in stock”, “500 pieces limited edition”).

Perhaps we’ve even used this technique ourselves. 

It generally works. It attracts attention, which can boost immediate conversions and might generate hype.

But rarely do we think of the bigger picture when using this tactic. What’s the impact on our brand, long-term sales, and customers’ emotions and health?

In particular, what happens to those who wanted to buy your product, but missed it because it sold out?

They’re not happy, that’s for sure.

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Be careful when using scarcity to promote products, you’ll anger customers who miss out

Impacted metrics: Customer satisfaction | Customer lifetime value
Channels: Promotions
For: Mostly B2C
Tip type: New research (April 2021)

📈 Recommendation

Try to avoid limited quantity promotions that will leave many customers missing out (e.g. only 1,000 items available).

Those who miss it will get angry and are more likely to switch to a competitor.

To reduce customer anger (and switching to competitors):

• Use ‘time limited’ offers instead (e.g. available only on this day) and make sure you have sufficient stocks

• Recommend suitable alternatives in case the product sells out (e.g. this is sold out, but you may like this similar product)

🎓 Effects

• When people are unable to buy a product (e.g. because it was sold out), they are more likely to switch to a competitor if it was promoted using a scarcity appeal (e.g. “only 100 pieces available”)

• This happens because people get particularly angry when this happens. 

• In this study:

  • People were 11% more likely to buy from another brand if they were trying to buy a fountain pen that was out of stock when they were told only limited numbers were available

  • Shoppers on Amazon Prime Day who couldn’t buy an item because it wasn’t in stock reported they were 63% angrier and bought it elsewhere in 68% of cases. In comparison, only 32% bought it from another brand if scarcity wasn’t the reason (e.g. the price wasn’t what they expected)

• Previous research found customer anger can have other negative consequences as well. For example, when people get angry at a company, they:

  • Rate the company and their satisfaction lower

  • Are unlikely to become or stay loyal to the brand

  • Spread negative word of mouth

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🧠 Why it works

• Appeals of scarcity increase the intensity of emotions (e.g. feelings of hope, higher testosterone levels).

• Given our heightened emotional state, when we don’t manage to buy the limited product we wanted, we react with anger towards the retailer.

• We’re then more likely to see competitors in a better light because of our experience - and switch to them.

✋ Limitations

• The study focused on online sales. While it wasn’t tested, the principle should also apply in offline retail.

• We don’t know how customers that do manage to buy a scarce product feel afterwards. Do they develop such strong positive feelings (and word of mouth) that it could outweigh losing customers who weren’t able to buy? Or are they largely indifferent once the race to buy is over?

• It’s unclear how long customers will stay angry with a brand in this situation. Is it a long term effect, or will they be back in no time?

• This research did not look at luxury products, where limited edition product dynamics may be different.

🏢 Companies using this

• Many brands use scarcity either in their promotions or to nudge people to buy. A notable example is Booking.com’s use of appeals like “Only 2 rooms left”.

⚡ Steps to implement

• When running a limited edition or limited stocks promotion, consider whether it’s worth the risk of losing customers who won’t be able to buy it.

• If other alternatives to boost sales can have the same desired effect (e.g. limited time), use those instead.

• If you sell out a product, always have recommended alternatives at hand and easy to find.

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🔍 Study type

Online experiment and survey (of 143 Amazon Prime Day shoppers who didn’t manage to buy items they wanted). United States and United Kingdom

📖 Research

Biraglia, A., Usrey, B., & Ulqinaku, A. (April 2021). The downside of scarcity: Scarcity appeals can trigger consumer anger and brand switching intentions. Psychology & Marketing.

[Link to paper]

🏫 Affiliations

Leeds University Business School, University of Leeds and Norwich Business School, University of East Anglia. United Kingdom

Remember: Because of the groundbreaking nature of this paper, it could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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