Don’t be a fraudster

It’s Wednesday, January 31st, and today we’re talking about leveraging scarcity without being a clown.

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Don’t Be a Fraudster

Fake scarcity: it's the smoke and mirrors of the digital age, designed to pressure and manipulate rather than build genuine brand equity.

We know the usual offenders:

• The info product with the “limited time bonus”

• The evergreen webinar that pretends it’s live and limited

• The promo code that “ends tonight” but (surprise!) is still available tomorrow

Lame.

It’s even snuck its way into community through pretend gating (I FORBID you from doing this).

But there’s a bigger conversation to be had about what drives urgency in any aspect of business and how to use it ethically and effectively. Today we’re going to see examples of when it works well, when it’s a disaster, and (my) golden rule for scarcity with character.

Let’s get into it.

Capitalizing on scarcity is probably as old as man, but Robert B. Cialdini popularized the idea in his book, Influence: The Psychology of Persuasion.

He makes it pretty straightforward:

Aside from scarcity triggering the “need it now!” center of our brain, there are a few more reasons it works so well:

1. It’s a mental shortcut: Our minds seek simplicity in navigating a complex world, and scarcity allows us to gauge the value of items based on their availability. This shortcut is ingrained in our psychology and usually serves us well, though not always.

2. Freedom of choice: Humans instinctively resist limitations on our choices. We want options, even when they aren’t useful. Losing a choice triggers a visceral reaction within us, compelling us to desire that freedom even more.

Humans a wired to experience FOMO, so marketers leverage this fear to influence our decisions.

(Unless we’re Warren Buffet)

Of note: false scarcity has even given birth to an entire cottage industry.

For example, you see:

But the truth is:

Or you see:

But behind the scenes:

Countdown timers, false stock notifications, exclusive deal banners; when faced with limited-time offers or scarce products, our brains react with urgency, believing these items are valuable and must be obtained quickly.

🚨 Wait— what was that sound? Why, it’s time for a Seth Godin detour!

I am an unashamed mega-fan. For many reasons, I think Seth is one of the greatest minds humans of our time.

This is Marketing should be required reading for anyone in business. It brilliantly and eloquently reinforces one of Seth’s long-time assertions:

The world of marketing has become thoughtless to the point of predatory. In permission marketing, you get to communicate with people because they’ve decided to extend trust and allow you into their inbox. But by and large, the world of marketing has become permissionless.

It is wild to me how many careless and shameless marketers exist. Every week I get texts and emails from businesses I’ve never heard of and never want to hear from again. Or my favorite: the phone call where the recording pretends it’s a real person talking to you?

They’re not relevant to me, I'm not their core demographic, and everyone’s time is being wasted, yet they just DGAF—they’re coming into your world, like it or not.

Over a dozen times I’ve been placed on someone’s newsletter mailing list because I had one or two interactions with them, none of which included opting in.

Seth’s willingness to call this out as a violation of agency has made me a forever fan.

Because too many of us have grown complacent with really crappy, dishonest tactics. We say “that’s just the way it is” or “it’s the cost of doing business”, or worst of all “it works”.

Lots of things work. It’s a piss poor excuse for any tactic.

Community is no exception

I spoke previously about the strange experience I had where a “highly curated” event turned out to be…not curated at all.

Curation is a form of gating

• Hampton only allows CEOs and Founders with >1M revenue

• Chief was created specifically for senior-level women

• Canva for Teachers is a dedicated group for educators

All communities need a few pieces of gating.

It comes in many forms:

• Time: “Only accepting members through Sunday”

• Capacity: “Only accepting 100 members”

• Demographic: “For Boston residents”

• Shared experiences: “For Figma users” or “For bereaved parents”

All work well, but more and more of these so-called gating techniques are being used as false scarcity tactics, promising a curated experience and instead delivering a subpar one.

When it’s bad, it’s bad.

At its worst, the psychology of scarcity can be disastrous. Consider:

1. GameStop: January 2021 saw a massive surge in GameStop's stock price. Hedge funds heavily shorted GameStop and retail investors rushed to buy shares, resulting in unprecedented market volatility, regulatory scrutiny, and major financial losses.

2. The Enron Scandal (2001): Enron, once one of the largest energy companies in the world, manipulated energy markets and created artificial scarcity to drive up prices and profits. This unethical behavior ultimately led to the collapse of Enron, causing significant financial losses for investors and employees.

3. Good ol’ Crypto: The cryptocurrency market has experienced multiple instances of artificial scarcity driven by speculative trading, market manipulation, and regulatory uncertainty.

When it’s good, it’s great.

Lest you think I’m just a dramatic stick-in-the-mud, I think scarcity can be useful and powerful. I use it regularly. Wondry won’t accept more than 3 clients a month, and we’re upfront about it. I’ve no qualms about this because it’s true.

Genuine Scarcity is revenue’s best friend.

It’s rooted in honesty and transparency, grounded in real limitations rather than manufactured hype. And a few companies are nailing it:

1. Starbucks has a quarterly, rotating menu. Despite constant requests that some items remain year-round, they stick to their guns, resulting in multiple items selling out daily. (I still haven’t tried that damn maple butter chicken sandwich. It’s been sold out every time).

2. Amazon seamlessly builds scarcity into the purchasing experience by stacking multiple warnings into an item listing:

3. Netflix will add verbiage such as “last day to watch: February 10th” to its titles.

Doing it Right

There are two simple ways to approach scarcity in a way that’s both effective and ethical:

1. As a response to reality: We chose 3 clients a month because, between new clients and those that have stayed with us long-term, this is how many we can serve while maintaining quality.

   In almost every case, there is a quantitative or qualitative limit:

   • A no-code tool can only have so many users to keep up with support tickets and ship product updates.

   • Events have finite seats.

   • Service-based companies can provide a high-quality experience to a limited number of clients.

   • Communities are created for a specific type of person and (should) make gating criteria clear.

2. As a catalyst for reality: The reverse is also true. We know scarcity sells, so we can choose to serve only a limited number of people. There is a reason the Woot site built such a cult. They started by offering one deal a day, period, and when it was gone it was gone.
   
   They could offer more deals, but choose not to as the basis for their value proposition.
   

   Nike is notorious for its limited-edition SNKRS. They are choosing to limit the number of sales to leverage scarcity and build anticipation.

A scarcity power play: When you purchase one of Nike’s limited edition pairs, your post-purchase redirect takes you to a “Got Em” image, complete with a picture of the shoes you just purchased ready for sharing:

Bottom line: no one is buying the fake countdowns anymore. If they click the button, it’s because they want the info, not because cheap tactics work. Everything your company does fortifies your reputation for better or worse.

So you might as well choose better.

Onward,

April

Heads up!

Wondry has doubled its rate. New price goes into effect on February 5th. If you’re looking to work with us and want in at our current rates, book a call here.