Seth, Scarcity, and How to Value Your Fans

Thanks, Brian!

The Living Web

Got up early. Got my coffee. Switched on Twhirl (twitter app). Brian Kress had tweeted Seth’s post this morning on Scarity. I went over.

One day, you may be lucky enough to have a scarcity problem. . . . We can learn a lot from the abysmal performance of Apple this weekend. They took a hot product and totally botched the launch because of a misunderstanding of the benefits and uses of scarcity.

What Seth lays out is a solid definition of scarcity and how to use it to build and value the people who value your business. Seth points out that Apple might have used the scarcity to reward and value it’s iPhone 3G evangelists had it used a core customer strategy and the Internet to remove the risks and downside of the real-time release process. He puts the strategy forth in five principles. I say them in my own way here.

  • Use a virtual queue. Waiting in line isn’t an honor or a badge. People can order online and still “get there first.” It can still “sell out” in minutes.
  • Reward early adopters in visible ways. Imagine if the first 100K 3G phones had a gold back rather than the black or white . . . 3G first adopters edition. Sports cars do that all of the time.
  • Treat VIP customers as VIPs. Invest most in the folks who invest most in you and your products.
  • Use the Internet to lower real-time burdens and risks. You can manage and respond to what happens online easier than in real-time geographic locations.
  • Give customers the stage. Plan the release as a way for your customers to share the experience. Showcase their knowledge rather than your products. Isn’t that what we keep saying it’s about?

Thanks, Seth. I hope more than Apple are listening.

The idea of valuing key customers isn’t new. That’s why they’re called “key.”

Only think about your core fans . . .

Only care about your core fans. They are the only ones who give a damn about you–if anyone at all does. They are the ones who will drive 100 miles to see you and then tell [their] friends why they should [c]ome along the very next night when it happens again.

–ME “Liz” Strauss
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  1. says

    Liz, Great Post
    We own and manage a small boutique apartment management company Urbane Apartments in Royal Oak, MI and we exclusively use Digital Marketing and Social Media sites such as MySpace, FaceBook, Flickr, YouTube and now Twitter for traffic and branding. We also have implemented the Urbane Lobby, a completely open forum for residents to connect and we have a blog, Urbane Reflections. Our properties are hip and cool, as we breathe life into 1960’s vintage buildings with trendy rehabs. We are blessed with having more traffic/renters than we have apartments to rent. Until reading Seth’s and your blog post, I assumed that in order to control the supply and demand piece you just raised prices and that got you into the Scarcity Ring, but now see how we have likely alienated many would be renters or potential renters. How one channels scarcity is somewhat complex, or is seems as such and doing it wrong erodes much hard work and toil of your brand.

  2. says

    It’s really hard for me to be anything but cynical about this whole scarcity thing. One of my cow-orkers and his wife decided to get his-and-hers 3Gs. She went off to the Apple stores (she tried four) but was unable to score the phones.

    Seth said, “One day, you may be lucky enough to have a scarcity problem.” I disagree with Seth. I don’t think Apple was “lucky” to have a scarcity problem at all. And I don’t think there’s really any *good* way a seller can handle scarcity. There are things you can do to limit the damage to the brand, which Apple apparently didn’t do.

    Customers can and will find alternatives, and in the long run, scarcity can kill a product. Scarcity problems are symptoms of poor management, not something to be cherished as a “golden opportunity”. And while I can certainly understand that it can sometimes be difficult to forecast demand and set prices accordingly, I don’t think there’s *ever* a legitimate business reason for *creating* scarcity. What goes around, comes around, as the saying goes.

    I’ve never owned an Apple product. In the golden days of the 8-bit personal computer, I never had an Apple II. I never had a Mac. I never had a Newton. I’ve never had an iPod and I’ve never had an iPhone. Nothing I’ve heard about Apple in the past year or so, even from raving Apple fanatics, is likely to change that.

  3. says

    Hi Eric!
    With relationships we value, if we stand back from the business and look to what our customers care about, we’ll keep them happy and they’ll convert their friends.

    It’s when we get “greedy” to grow faster than our ability to care that we mess up. Keeping head, heart, and focus on them keeps the bottom line strong.

  4. says

    Hi Ed,
    I think that the reason Seth started with the word, “lucky” is because he meant it. Scarcity is lucky if you put out your best shot and more customers than you imagined show up on the first day. It’s a choice if you engineer it by timing and pricing, which I think is the problem here.

    When customer care is authentic, people forgive problems. . . . When things are engineered to make them work, they don’t.

    When we get too clever, we forget people are people. Unfortunately they’ll find a way to remind us. Not usually a pleasant one.

  5. says

    I’d consider myself lucky to have a scarcity problem right now, a scarcity of me that is. Oh, I don’t mean from my family, but from other sources. But that scarcity would only be a good thing if I were in a position to somewhat control the flow of my time and resources very well. Most individuals aren’t and sadly, neither are even big and successful corporations.

    For a seller, it’s always better to have more demand than goods as long as the difference isn’t unbearably steep.

  6. says

    Well, I guess I have to believe that Apple’s customer care *is* authentic. It’s the management and planning part that I question. I’m (among other things) a Ruby programmer, and the majority — maybe as high as 75 percent or higher — of Ruby and Rails developers develop on Macs, regardless of where they plan to deploy their code. So I talk to passionate Apple customers just about every day.

    I hear them threaten to leave the Mac, but somehow they never do. Apple is clearly doing a lot of things right on the Mac. I’ve simply gone a different route — Windows at work, because that’s what IT knows, and Linux at home, because that’s what *I* know.

    And everybody loves iPods. The only reason I don’t have one is that I mostly listen to classical music, and I have a couple hundred CDs that I don’t want to spend the time ripping (uncompressed) just so I can listen to them the two hours or so a day when I’m on the Portland MAX. I can think of better uses for $350US.

    But the iPhone is a whole different beast. There is lots of competition, the operating costs are well above many other mobile phone systems, and Apple is vulnerable to someone making a better phone for a lower price. It may be cool, but so is a Blackberry, the Motorla phone that runs Excel, the little LG ENV that I have, and the ASUS Eee. For that matter, a $500US dual-core Athlon64 X2 Windows Vista notebook with 2 GB of RAM and a big hard drive is cool too.

    So … I think Apple understands the customers they have very well. It’s the ones they *don’t* have that I think they need to attend to.

  7. says

    Hi Ed,
    I think management and planning — no matter their title — if they’re touching customers are part of customer care. That’s what I meant.

    I agree with your analysis of the products you lay out there, but I’m not so sure that Mac hasn’t started believing it’s own PR.

    I have an iPhone original and I love it. :)

  8. says

    Dear Liz,
    I left the same comments here #74:

    I can see a connection between Jason Calacanis’ move and Seth’s Godin recent post about scarcity: Btw, here’s a good summary by Liz Strauss – ***think about your core fans***: I think that this is what that Jason is trying to do.
    I hope that Jason is not right and blogging is not dead but it is hard to ignore the bad taste left some time after reading people’s comments.


  9. says

    Hi Liz – this is a really interesting idea. I’ve seen these ads where the first 100 purchasers get something special and I used to think they were a bit of a scam.

    But, I guess those early adopters are the ones who influence everyone else, so it would really pay off to make them feel special.

  10. says

    Thanks Keren!
    I can see Jason’s point. He was everywhere and highly accessible. As a person, not a blogger, he seems to have made a thoughtful move. His comments that blogging is dead might have had more power in the context of the prepositional addition “for me.”

    People will look for a way to make their voices louder. Unfortunately, blogging offers that to some who only want to make noise.

  11. says

    Hi Cath,
    Sometimes the first 100 not only influence the next, but they also make it possible for the product to survive so that it’s there for the second 100 to try. :)

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