Now, imagine you receive two direct mail letters with offers for the exact car you want. Let’s call them Car A and Car B. You like them equally well and the price is exactly the same.
However, the Car A letter offers a limited-time offer of 0% financing for 24 months. The Car B letter does not offer any special deal.
Which would you choose? More than likely – Car A. And you’ll likely purchase it before the limited-time offer is up.
You’ll be happy with your purchase because you think you’ve found a great deal. The company selling Car A will be happy because they’ve closed the sale. If a limited-time offer was not presented, you may have purchased Car B. Or, you may have decided to wait around for a better deal.
The Psychology of a Limited-Time Offer
Human psychology is behind the success of a limited-time offer. Here’s why:
– We procrastinate when we have to make a purchase. We already have so many decisions to make in a single day – another one can be overwhelming. Sometimes, it just takes the extra push of a limited-time offer.
– We don’t want to miss a good deal. One of the most powerful human emotions is regret. Acting on this emotion is why urgency works in offers.
– Timelines spur decisions and purchases. If there is no timeline associated with the offer, we will wait around for a better deal. Think about it. Have you ever bought something, only to have it go on sale a week later? We all have. And once the price was lowered, you felt a little regret regarding your purchase. That’s why we have to push the timeline or you’ll get stuck in the waiting game.
– Create a sense of urgency. Just like we said a moment ago, we are lazy purchasers. We know the products will be out there. For instance, when you go shop for tennis shoes, you expect to find the usual suspects – Nike, New Balance and Adidas. Unless we have a floppy sole, we may not be urgent in our decisions. The limited-time offer spurs that urgent decision and helps move product when it is used strategically.
A Word of Caution
If you do use a limited-time offer, be sure you live up to your end of the bargain. No one wants to do business with someone who’s deceived him or her.
Also, don’t extend the limited time offer indefinitely. It’s not good for your reputation, and it’s not good for your sales. Customers can become wary of businesses that run these “sales” for long time spans. You’ll turn them off after a while with the same tired offer. A payday loan company offering a quick cash loan with no fees would be looked on with far more urgency if there was a 24-hour limit set than a similar company who had EXACTLY the same deal, but with no time-limit set.
The bottom line is: limited-time offers work. If you decide to do any kind of direct mail package, be sure to include a strong limited-time offer. It’s been proven, time and time again, to increase response rates and help your direct mail succeed