Creating tension between supply and demand is a strategy to make people want to buy from you.
Building relationships and spending time with customers creates a sense of trust and connection.
Marketing for signals, not just sales, can help create an oversubscribed state and generate demand and scarcity in the market.
Deep dives
Creating Demand: Logic, Emotion, and Urgency
In this podcast episode, the speaker emphasizes the three ingredients necessary for people to buy: logic, emotion, and urgency. The example of buying a Rolex is used to illustrate this concept. The logic behind buying a Rolex is its resale value and potential appreciation. The emotion is the perception of luxury and status associated with wearing a Rolex. The urgency is created by limited availability and long waiting lists. By triggering these three factors, businesses can create the right conditions for people to buy.
Building Relationships and Oversubscribing
The podcast explores the concept of oversubscription and the importance of building relationships with customers. It highlights the idea that spending time with someone creates a sense of connection and familiarity. The principle of Dunbar's numbers is mentioned, which suggests that spending around 7 hours with someone creates a sense of trust and belonging. The podcast also discusses the 7-11-4 principle, which emphasizes the importance of being seen in multiple locations to establish a stronger connection with an audience. This concept can be applied to marketing strategies to create an oversubscribed state.
Marketing Strategies for Oversubscription
The podcast delves into various marketing strategies to achieve oversubscription. It introduces the concept of marketing for signals, not just sales, by collecting signals of interest from potential customers. This can be done through online assessments, surveys, scorecards, or joining exclusive groups. The episode also highlights the importance of transparency in showing demand and supply tension, creating a perception of limited availability. The use of spotlight campaigns and repeating successful strategies are discussed as effective ways to maintain oversubscription. The importance of having a clear official capacity and sticking to it is emphasized.
Creating demand and scarcity in the market
The podcast explores the concept of creating demand and scarcity in the market to drive sales and increase revenue. The example of Rolex is given, where the company intentionally limits the availability of certain watch models, creating a high demand for them. By making these models scarce, they are able to sell more of their higher-priced watches, which in turn increases their profit margins. The podcast emphasizes the importance of understanding the psychological factors of logic, emotion, and urgency in influencing consumer buying behavior.
Applying the principles of oversubscription to service-based businesses
The podcast discusses how service-based businesses can apply the principles of oversubscription to their operations. It suggests setting a finite capacity for the business and sticking to it, as it creates the perception of high demand. The host recommends running three campaigns to achieve oversubscription: a perfect repeatable week to collect signals of interest, a spotlight campaign to create excitement and align the business with a bigger brand, and an annual big message to spread the buying belief and generate buzz. The conversation also touches on the importance of teaching entrepreneurial skills to children and the need for a reevaluation of the current education system in the context of the changing economy.
It’s common sense to think “I have a business. I should sell as much of my product to as many people as I can”. So why do companies, like Rolex or Ferrari, make so much money by limiting the amount of product that they sell? Why would anyone throw up road blocks in front of their own potential customers? And why is creating tension in the supply and demand equation a way to get people to want to buy from you?
Daniel Priestley returns to talk with Chris about his concept of being “Oversubscribed”. Daniel asserts that many marketers have forgotten the number one rule of marketing - An imbalance in supply and demand sets both the price and the profit of a product. An “oversubscribed” business, then, is simply one that has limited or constrained supply, and there are more people that want that supply than is available. Daniel argues that you can create this tension between supply and demand by creating an official capacity, make sure people know what it is, and understand that it’s in hot demand. But that’s just simple supply and demand, right? Well, yes, but Daniel is going to take you through some of his methods for artificially creating the tension between supply and demand, so that you can get your business to the point of being oversubscribed. He’ll discuss the three ingredients you need to get people to buy, why “signal collecting” is so important, and the five phases of a bullet proof campaign.
