June 8, 2017 by Speakers' Spotlight
Here’s How Behavioural Science Helped Create the Best-Selling Sneaker of All Time
Did you know that Adidas sells the most popular sneaker of all time? Since its release in 1973, Adidas’ iconic Stan Smith has sold close to 40 million pairs. In a new report by Bloomberg, we learn about the marketing masterstroke that propelled the Stan Smith to the title of the best-selling sneaker.
First, a little science on consumer decision-making. According to behavioral economists, we want more of, and will pay more for the things that we can have less of. It’s called the Scarcity principle and entire industries use it every day to sell their products. Think Birkin bags, Rolex watches, concert tickets, airline seats, hotel rooms, to name a few. With limited supply – artificial or not – demand increases, and the prices follow.
So what does Adidas do to capitalize on scarcity? It literally stops shipping. According to Bloomberg, Adidas “stokes demand” for the shoe, by completely withholding the product for two years. “The tactic worked beautifully,” reports Bloomberg. In 2015, the Stan Smith returns and Adidas moves 8 million pairs. That’s 20% of the total number of pairs shipped since they first went on sale in 1973. Whaaaat?
Does this mean you should stop selling your products to fuel demand? Of course not. Yet, too often businesses play the needy provider. We fail to build scarcity into the offering. There’s no sense of urgency, and thus no need to act. Customers who know that they can wait will do exactly that.
We recently worked with a client that offers in-store product promotions to a network of 500 stores. Every year, they pitch the event as a way for store-owners to draw more customers and increase sales, hoping the stores sign-up. And every year, like clockwork, the store owners complain that it’s too much work or that it takes up too much space. They ask “Is it really worth all the effort?” and our client struggles to reach their targets. No sense of urgency. So the uptake is slow and it takes weeks to complete the sign-ups. They’re stuck by a plague of ‘maybe-later-ism’. You likely see where this is going. One small change – one flip of the scarcity switch – and they fill up all the available slots in a matter of days.
So what did we do? Well, we don’t change the offer, that’s for sure. All we do is inform store-owners there are only a limited number of available promotion slots left… and that if they don’t book a date right away, then another store will grab it and they’ll lose out. Bingo! Problem solved. We know the stores increase their sales, to the client wins. All they need is a little pull in the right direction. Notice also how nothing unethical is going on here. No threats. No phony sales tactics. No desperate emails. Zero neediness. We share the idea of limited supply to motivate action the want.
Scarcity works. The only question is, how can you make it work for you?