Fear, as any marketer will tell you, is never a great motivator when it comes to long term sales in eCommerce. Particularly in a post-pandemic world. Customers want reassurance not alarm, and their purchasing habits reflect this. If they didn’t, home and kitchen items wouldn’t have remained one of the most consistently top selling product categories on Amazon in 2020.
But there’s one particular aspect of consumer psychology where fear can be a benefit, not a detriment: the fear of missing out on a great bargain. Fear of missing out (or “FOMO”) may sound like an unusual tactic in marketing. And it’s one which long term sellers might assume is almost too transparent to be effective. But FOMO has been a long standing strategy in brick and mortar retail; one which has consistently driven long term sales. And it’s equally as applicable in eCommerce, as well.
The Psychology of FOMO
The average consumer generally follows any number of patterns during their shopping journey typically based on either necessity, inspiration, seasonality or impulse. However, FOMO is a different phenomenon altogether. It might be triggered by any of those patterns, but underlying FOMO is one distinct motivating factor: anxiety.
FOMO can be defined as a relatively fearful attitude towards the possibility of missing available opportunities and the subsequent fulfillment of those opportunities. It’s an attitude which can be both conscious and unconscious. In commerce, opportunities generally translate to specialized bargains—because there’s no such thing as a customer who’ll pass up a bargain in favor of paying full price. Seasonal sales promotions result in conversions not out of consumer need, but opportunity. Both time and inventory scarcity are real and verifiable phenomena, resulting in a sharp uptick in sales.
A 2013 study conducted by the University of Nebraska found that perceived scarcity of goods had a definitive impact on both consumer competitiveness and a sense of urgency to purchase. But while that sense of urgency can have an affect on short term sales, what is its ultimate effect on creating long term brand converts?
FOMO and the Social Media Economy
In 2015, PR firm Citizen Relations conducted a survey among 1,200 millennial consumers on purchase intent and impulse buys. Among the survey findings, 33 percent of respondents intentionally created an attitude of FOMO among their peers, resulting in 68 percent of millennials making a reactionary impulse buy within 24 hours of seeing a peer’s experience online. Envy is, of course, one of the oldest human emotions ever recorded. But it took the rise of digital commerce to elevate and refine envy into a potent and applicable marketing tool.
It’s been estimated that the average social media user spends two and a half hours per day on social networks. That’s roughly one waking day of their life out of the week. And with virtually every digital consumer also maintaining a social media presence, it’s not unlikely that today’s digital audience is also using it for purchasing inspiration. Social media has an addictive quality, one which reaches far beyond personal interactions and into the realm of commerce. FOMO, on the other hand, is a natural psychological occurrence; one which affects both interpersonal relations as well as purchasing decisions. An increase of 18 percent was reported for impulse purchases in 2020, and there’s little doubt that FOMO played a considerable role in that growth.
Long term converts result from short term exposure. That is, if your product exposure is optimized strategically. How many of us have been lured by “limited time only” offerings into purchasing items we rarely even want, much less need? Approximately 56 percent of Americans. It’s not that the average consumer is impulsive. It’s that they seem to be wired to recognize and seize purchasing opportunities. A wiring which is engineered in no small part by marketing.
FOMO Strategies for Your eCommerce Business
Time limitations and FOMO. Pressure creates urgency, and there’s no greater pressure than time. Flash sales are an excellent example of time sensitive sales and you don’t have to look much further than the popularity of Prime Day for proof, which some estimates predicted generated as much as $10 Billion in 2020 alone.
Promotional exclusivity and FOMO. One of the keys to ensuring customer loyalty is by emphasizing exclusivity. Customers want to feel connected to a brand at all times, and they expect that loyalty to be rewarded. Email click-through rates resulting from promotions in 2019 were a staggering 15.91 percent for every 1.32 which were sent—and there’s absolutely every reason to expect they were driven largely by the opportunities afforded by FOMO.
Free shipping as a purchase incentive. There’s nothing more frustrating to sellers than reviewing their cart abandonment rates. But there’s nothing more frustrating to digital consumers than high shipping costs. In fact, 86 percent of respondents in a recent poll sponsored by FuturePay cited the cost of shipping as the number one reason for abandoning their carts mid-purchase. While free shipping is rapidly becoming standard for many small businesses, the impetus behind FOMO purchasing is driven by its promise of added value; something few e-tailers can afford to overlook.
Use FOMO to move overstocked merchandise. Immediately following the holidays, the vast majority of sellers aren’t faced with a scarcity of inventory. They’re faced with a glut of unsold merchandise. There’s a fine line between restocking and overstocking, and you can’t always rely on forecasting. Inventory needs to rotate, and FOMO allows you the opportunity to sell overstocked items quickly and effectively.
It may seem like FOMO is a relatively new phenomenon. But it isn’t. Brands have always relied on both urgency and time restrictions as a marketing tool. But brands haven’t always relied on social proof as a qualifiable factor in their success. That’s something entirely unique to eCommerce. But if you’re not leveraging FOMO as part of your business strategy, ask yourself what it is that you’re afraid of missing out on?
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