There's nothing more devastating to an advertising campaign than an unconverted prospect. After all, brands can spend thousands of dollars on a high volume campaign which promises everything but delivers virtually nothing.
As inflation rates and fears of a possible recession continue to rise, consumers are being shrewder in their purchasing decisions. A certain sense of hesitation may have always been part of the sales funnel, but many newer brands are finding it difficult to hold a customer's awareness in 2023.
No one likes to feel left out, both brands and customers alike. Is it possible to use that fear to your advantage? And if so, how can you do so responsibly?
FOMO and Human Behavior
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 and 2022.
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.
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 intrinsic motivation: anxiety.
FOMO can be defined as a 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, be it digital or brick and mortar, opportunities generally translate to specialized bargains. And 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 a 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 Social Media Engagement
In 2015, the PR firm Citizen Relations conducted a survey among 1,200 millennial consumers on purchase intent and impulse buys.
Among their findings, it was revealed that 33 percent of respondents experienced an attitude of FOMO compared with their peers, resulting in 68 percent of millennials making a reactionary impulse buy within 24 hours of seeing a peer's experience online via social media.
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 user spends approximately two and a half hours per day using social networking sites. 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 usage has an addictive quality; one which can have devastating consequences. Problematic internet use was estimated to be as high as 9.7 percent of the population in 2019, with common side effects including isolation, depression, diminished self esteem, social anxiety and even threats to a user's physical well being being liked in the form of fatigue and insomnia.
FOMO, on the other hand, is a basic psychological occurrence; one which affects human behavior—and subsequently, their 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 conversions can 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 inherently impulsive. It's that consumer behavior is frequently wired to recognize and seize upon purchasing opportunities.
A wiring which is both engineered and maintained in no small part by marketing.
The Ethics of FOMO
Despite its advantage in marketing, there are obvious downsides to FOMO.
The pressure to stay continually connected may not have been the sole cause of the increase in mental health conditions noted by psychologists over the past fifteen years, but the threat of social exclusion is a palpable one. And to make matters worse, research shows that the behavioral correlates of FOMO have been linked to an increase in isolation and depression—an increase which has only been amplified by the pandemic.
There's a thin line between persuasion and outright manipulation. And it's one which consumers are becoming acutely aware of.
Brands who prey on the emotional vulnerability of a shopper by appealing to FOMO may achieve short term sales. But those sales can come at the cost of long term customer loyalty and brand reputation, both of which are becoming increasingly critical factors in a crowded retail marketplace.
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 third-party sales during 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 15.9 percent for every 1.3 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.
FOMO: A New Strategy or an Old Hat?
If it seems like FOMO is a relatively new phenomenon, it isn't.
Brands have always relied on both urgency and time restrictions as marketing tool. But brands haven't always relied on social proof as a qualifiable factor in their success. That's something entirely the result of eCommerce.
As marketing continues to evolve to match more nuanced changes in consumer behavior, the need for a more consistent motivator behind those changes becomes necessary. FOMO is just one such motivator. But it comes at a price.
If brands don't act ethically in 2023, consumers will notice and respond accordingly. Sales tactics based on anxiety and fear aren't just unethical. They're transparent. And consumers demand one thing above all from a brand: authenticity.
FOMO demands subtlety and finesse if it's going to be an effective marketing tool. And not every brand will be able to use that subtlety effectively.
.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?
Your product demands a long-term growth strategy based on experience. Our strategies are based on two decades worth. Find out more at Color More Lines.