I think many of us already know that limited time offers are effective in generating consumer interest and a certain conversion rate, higher than regular offers.
However, I don’t know how many of us have actually asked themselves WHY the limited time offer works this way and manages to gain attention and interest and eventually increase sales?
There are some things going on “behind the scenes” of a buying decision of a limited time offer (LTO).
Some studies have shown that people weight gains and losses pretty differently. Namely, when an individual is paid with $50 for a particular task he feels a happiness sentiment. When he is fined with $50, the same individual feels a much deeper pain sentiment as compared to the happiness one.
A matter of ego
So earning $50 does not = losing $50. The balance doesn’t take our individual to a neutral feeling, his ego will keep feeling hurt. And this is the “magic” behind the way how most people work, in some situations. People can’t stand knowing they have to lose something, attention, EVEN IF they didn’t own it in the first place. So losing the opportunity to have something is very bad for the ego of people.
This is exactly what happens when some consumers chose to buy LTOs.
They see a special opportunity to posses something and they don’t want to lose it. What if tomorrow the LTO won’t be there anymore and they just lost a great chance to have that pair of snickers at half-price?! This would feel just like paying a $50 fine for something their ego thinks it’s innocent. (and just as a hint, think about this: people almost never blame themselves for something wrong going on, for their entire life)
- People don’t like waiting
Another thing going on behind consumers’ decision of actually buying LTO’s is one of the general true facts about human nature. Namely, people never like waiting. They always want things to happen now, they want to get “that” now, they get bored fast and they want to change something in their lives as soon as possible. This also explains why LTOs use command terms most of the time, like “Buy NOW”.
Some may say people are willing to wait for a while when they know it’s waiting for a benefit. This is true – WHEN they know how much they have to wait and WHEN they know WHAT exactly they’re waiting for.
But when an LTO is up and running on your e-commerce platform, you usually only tell consumers that the LTO is “available today”. What consumers logically understand is that, after today, they will not benefit from this special offer, it will be over and they will have to make a normal purchase. So they are not told they have the option of waiting longer for more benefits (and what benefit? Your LTO says nothing about other benefits outside the LOT itself). Hence, they buy.
- Your limited time offer meets consumers’ desires
Have you noticed what happens when people share their opinion on something, an idea they have, a thought and the others don’t agree? It’s usually a moment when the individual who shared the thought back off and stops sharing, because the other don’t endorse him. On the other hand, when the guy who shares is endorsed by his entourage that will make him go even more passionate, he recounts even more about his ideas, experiences, or whatever.
Same phenomenon happens in the conversation between an LTO and a consumer. When the two get in touch, IF the consumer is already interested in the category of products the LTO addresses, the chances to convert him into a sale are great. Imagine yourself desperately wishing for some latest gadgets for kitchen and you stumble upon a website where you meet a bunch of LTOs for precisely that niche. And they all meet your desires, you can make good use of all those interesting things. And you can have them as a bundled product, for 35% off if you buy today. Wow! You’re buying NOW!
water in the dessert illusion
This is how some human psychology at work when it comes to buying decisions, influencing consumers, e-commerce as today we’re all online. When you’re marketing for growth of a business it’s about knowing how people behave, how to communicate a message effectively to them, understanding behavior patterns which are also strongly influenced by cultures. Of course, there is also the rest of a marketing strategy, but about that in future articles inside The Marketing Box.
Article Source: http://www.the-marketing-box.com/how-limited-time-offers-work-in-marketing/