Sep
17, 2012

The Scarcity Effect & SasS/DaaS Sales

By Scott Sambucci | September 17, 2012

Tell me if this sales anecdote seems eerily familiar:

After observing the couple so engaged, a salesperson might approach and say, “I see you’re interested in this model here, and I can understand why; it’s a great machine at a great price. But, unfortunately, I sold it to another couple not more than twenty minutes ago. And, if I’m not mistaken, it was the last one we had.” The customers’ disappointment registers unmistakably.

Because of its lost availability, the appliance jumps suddenly in attractiveness. Typically, one of the customers asks if there is any chance that an unsold model still exists in the store’s back room, warehouse, or other location. “Well,” the salesperson allows, “that is possible, and I’d be willing to check. But do I understand that this is the model you want and if I can get it for you at this price, you’ll take it?” Therein lies the beauty of the technique. In accord with the scarcity principle, the customers are asked to commit to buying the appliance when it looks least available—and therefore most desirable.[1]

Why doesn’t this work for SaaS and DaaS products?

Because Saas and DaaS are non-rivalous goods. There is no inventory or “last items in stock” for SaaS and DaaS products.  This presents a specific challenge in the sales process for these goods. Techniques like the example described above do not and cannot work in selling your software and data products.

What does this mean for your sales process?

1. You cannot use time pressure or the “takeaway” close, which includes both limited availability or even limited time pricing in most cases (See: “Considering a price increase to motivate your prospect?“.

2. You must identify a specific pain or problem for your prospect that your product will mitigate. Many times, the need is not obvious to the prospect, which means that you must be adept in helping the prospect learn this need for herself.

3. Inertia is frequently your biggest competitor in SaaS and DaaS. “We’ve done it this way for a while. We like your software and we know our current system isn’t perfect, but it works well enough…” Ever hear this as a reason to lose a sale? That means that the pain point you are addressing is not acute enough for the prospect to invest their time and money is making a change to your product. “No decision” is a legitimate decision from the prospect’s point of view. If you have a “no decision” prospect, then you don’t have a prospect, you have only a lead. It is your responsibility to help this person discover a need big enough and strong enough to initiate changes to their daily workflow.

[1] Cialdini, Robert B. Influence: The Psychology of Persuasion. Harper Collins, Inc.. Kindle Edition.