Designing Scarcity
For generations, we competed for scarce resources to ensure survival. Then, this idea of money came along and made gold, diamond and other scarce things tradable and intrinsically valuable.
So consequently, we developed an instinct to use scarcity as a mark of value. As Designers, for better and for worse, we can leverage this cognitive bias and build scarcity into systems to drive intended behavior.
The classic Effects of Supply and Demand on Ratings of Object Value paper proved that the appearance of scarcity improves the perceived value.
With internet products, the two dials we have available to turn are quantity and time.
Scarcity of Time
Deadlines force our brain into prioritizing and decision making. The perfect candidate for using scarcity of time is a decision unimportant enough that it could be infinitely deferred without significant harm.
Some things, by their very nature are time-sensitive, so scarcity of time manifests itself more organically. People want to be #first to break the news on Twitter, fill out a new Wikipedia article, talk about the new iPhone, etc. Sometimes, all it takes is just creating an empty space for people to fill out with the new shiny.
I tend to think of scarcity of time as a tool that creates a sense of urgency and helps get over indecision when the scales are already tipped in your favor.
Scarcity of Quantity
Gmail invites are a classic example of generating buzz by artificially limiting quantity.
Limiting quantity, or creating a perception thereof adds a layer of exclusivity, and immediately appeals to our desire to belong to a group.
There’s many other examples of this — Amazon somehow only has 4 copies of a bestseller in stock and censoring news drives up search demand. Having a limited quantity and a constant rate of change also implies a sense of urgency.
In designing products, I think of limiting quantity as a tool to create a sense of exclusivity and increase perceived value of a product, and together with a model for rate of change, it implies a scarcity of time.
Putting Them Together
The Groupon example above combines both scarcity of time and quantity. The problem with trying too many psychological tricks at once is that the overload triggers our brains to call BS and move on.
One of the more subtle examples I’ve come across recently that combined scarcity of time and quantity was Classpass. The home page asks you to request an invite, implying scarcity of quantity.
But where it got really interesting was this email I got a couple of days later.
Unlike Groupon, the combined effect of time and quantity scarcity was amplified by putting them a day apart.
Another subtle example I really like is Booking.com’s “There are 2 people looking at this hotel” notification, which is ambiguous enough to both create the idea that this hotel is popular, and also that it may be gone soon.
A good rule of thumb to apply scarcity is when you’ve piqued the user’s interest to the point where the main thing you’re competing with is not another product, but indecision. In general, I think of scarcity as a tool to generate focus and a decision, then use it at the optimal moment, which varies depending on the product.
Scarcity + Loss Aversion
Finally, a note on how scarcity is even more powerful together with another tool. Loss aversion is another classic psychology trick — we’re more afraid of losing the $20 in hand than excited by the prospect of winning that same $20. Even when there is no real risk, we’ve proven to be loss averse.
Scarcity and loss aversion are really powerful together. The prospect of losing something is even worse when that something is hard to get. I’ve seen friends work tirelessly to prevent their Yelp Elite status from fading away.
