Written by: Steve Feld, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Can you take on hundreds of clients or only a handful?
Can you only have a specific number of people inside your store, building, business?
Do you accept appointments 24-hours a day? Or do you limit the number of appointments during specific hours on certain days?
Have you created scarcity in your business?
Scarcity is a deeply rooted psychological principle that states that a limited supply of a product will increase the demand for certain products.
A new bar recently opened up that created scarcity out of the gate even before they opened their doors. The bar can only hold 28 people – very limited. You must have a reservation in advance to be in the bar – no walk-ins allowed. They are booked 4 months out before officially opening up. You must adhere to their dress code. They promise an experience that you have not had before in a bar that is under a restaurant. It makes you feel like you are sitting in the middle of a greenhouse. The drinks are created using elements such as fire and smoke.
I bet you want to go and check out this bar right now, even if you don’t drink alcohol.
Why?
They created scarcity.
In Michael Port’s book, “Book Yourself Solid,” he talks about the ‘red rope.’ The red rope is the rope outside your business that keeps the prospect you don’t want out and allows you to only let those you want in to do business with you. Think of that hot nightclub and the bouncers on the inside of the rope only letting who they want into the club or those on the list.
Scarcity
Scarcity does create attraction if it’s done correctly.
Think of a restaurant, a bar, an event, or a store with a line out the door or a waiting list month’s long. They all created scarcity.
If you are a Green Bay Packers fan that wants to get a season ticket for their football games, you will have to wait 30 or more years to get a season ticket at Packer Stadium. Scarcity.
How about a manufacturer who produces oversized wood benches? This business has only 4 people working-including the owner, and produces around 2 (maybe 3) benches per month. Here’s the kicker. All his clients are Fortune 500 companies. When they place an order, it is usually for 30 or more benches. Do the math. That means one order keeps his company busy for 15 months straight. You may be thinking he should get more staff and produce more benches, and you may be right. All his staff is highly trained woodworkers with years of experience. Each bench goes for around $15,000 to $50,000. Lifetime guarantee. They are customized to the company that purchases them, and they are immaculate. His waiting list is 5 years long, and the clients are more than happy to wait on him to get their benches from him. Why? He created scarcity for his product.
There is a difference between creating scarcity and just running out of your product. Knowing that a scarce item generates more attractiveness is a delicate subject for any business, and overusing this principle or using it falsely will most likely lead to the opposite desired outcome. It will decrease sales and even the business’ reputation overall.
We could provide you with many examples of scarcity.
Why are there only 1 or fewer Lamborghini dealerships in a major city but more than 50 Toyota dealerships?
When Tesla started selling their cars, they didn’t sell the cars through dealerships-appointment only showrooms?
You may be thinking. I am giving you high-ticket examples. Here are very low-ticket examples.
McDonald's only has the McRib available for 1 to 2 months every few years.
People travel hundreds of miles to go to a corporate-owned In and Out Burger restaurant.
Chick-fil-a receives over 60,000 applications from wanting to be franchisees owners, and they only award less than 1% (.13 according to Business Insider magazine) of them a franchise per year. It’s easier to get into Harvard than own a Chick-fil-a.
All these companies created scarcity.
Think of your business. Do you cater to everyone, or do you focus on a particular target market and only cater to them?
Why not improve your service? Improve your product? You may have to work with fewer people or not have as many items to sell as you did before. But that will eliminate those penny-pinching clients that are beating you up over price because they don’t see the value you are bringing them.
Scarcity will not work for every business. Do you believe that Coke-a-cola would want to create scarcity? They will lose their market share fast if they reduce the number of outlets around the world. They do create scarcity with limited edition collector sets and cans/bottles.
What can you do in your business to increase the value of your products or services? Put up the red rope and control who you want as a client. Create scarcity.
Steve Feld, MBA, Certified Business Coach, Author, provides training and business performance coaching to business owners, professionals, and executives. Steve also speaks to organizations, conducts workshops and training. Focusing on lead generation and revenue creation to get growth results for the business.
Contact Biz Coach Steve today to see how he can assist you in getting the results you want in your business, steve@bizcoachsteve.com, or www.bizcoachsteve.com. He is in the business of growing businesses. Need a speaker, contact Steve today.
Steve Feld, Executive Contributor Brainz Magazine
Biz Coach Steve Feld, MBA, is a Certified Business Coach, Author, Professional Speaker, and award-winning Business Management Executive. Over 300 businesses have sought out his services to work with them on gaining much-needed clarity, implementing solid strategic plans, and achieving positive growth results. Steve is passionate about business growth, efficient operations, and long-term success. He has built, owned, and operated 6 lucrative businesses. He has consulted with other businesses providing change management and process improvement. He operated within 3 Fortune 500 companies, manning and boosting an entire division for them.
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