In the midst of The Great Toilet Paper Shortage of 2020, there’s no better time to talk about the power of fear and what it means for your business.
Scarcity is a huge motivator, and right now, the fear of not having toilet paper is driving people to raid the shelves of their local supermarket.
Does this seem like sensible behaviour? No. But can we stop ourselves from being caught up in it?
Fear has a contagious element, so when we see others getting scared, we tend to as well. Panic sets in.
It doesn’t take much for the veneer of civility to break down, by the way. Every time a train is cancelled at peak hour, we see scarcity in action. Otherwise kind and respectful people get their elbows out to jostle for a seat. Lord of the Flies on the 5.58 to Frankston.
So if scarcity in ingrained in our wiring, how does it play out in our businesses?
Panic arises when people can’t trust the ‘system’.
If you don’t know when the next train is coming, you are more likely to push to board the one that has arrived. If you don’t know when you will be able to next get toilet paper, you are more likely to buy more than you need.
In business, that means you need to keep customers informed of what’s happening so they can trust you have it under control and that any (real or perceived) scarcity is temporary.
Panic also arises when people don’t trust each other.
At a macro, community level, I might understand that if we all buy toilet paper it means we are self-perpetuating the crisis.
At a micro, personal level, however, I don’t want to be the one left without.
This is beyond any business to solve, but policies that seek to treat people fairly will be important. Instituting a cap on how many units a person can buy, for example, will help as long as it is accompanied by a message about equity.
On the flip side, scarcity is something you can harness in your business to compel action. Because it’s so primal, it can bump people out of their inertia pretty quickly.
I’m not suggesting you milk people’s fear in times of crisis, but when things are more settled you might consider using the following strategies.
Putting a cap on the amount your customer can buy — only four tins of soup, for example — makes your product look more attractive. People think: ‘Gee, if I can only have four this must be really popular!’
Not only are you using people’s fear of missing out, but you are also anchoring them to a higher number. While they may have only wanted one tin, having four as the setpoint is likely to make them buy more.
Limited time offers are a well-worn marketing ploy. Whether it’s the ‘closing down’ sale at the rug store, or the ‘time left to order’ on a ticketing website, fear of the product being taken away at a set time can stimulate people to commit.
The absence of any time constraint can mean people defer the decision and it ends up getting forgotten.
For that reason, always add an expiry date to any quote you provide.
Contracting the supply of your product or service can also create scarcity. Accommodation booking sites use this to advantage by telling customers there are only a few rooms remaining (and have been called out for doing so in a misleading manner).
You can use this principle to create exclusive, or limited edition, product ranges. If you are a consultant, you can limit access to your services to push up your perceived value.
A recurring issue in most businesses is having too many priorities. It scatters resources and focus. We get ourselves into this predicament by not wanting to say no to anything for fear we miss out on something good.
To get around this, and make sure you don’t end up with too much to do, and add ‘the downside of proceeding’ into your prioritisation process. This will help balance your fear of not proceeding with the opportunity cost if you do.
Bri Williams is an authority on behavioural economics applied to everyday business and personal effectiveness.
