It’s all about FOMO, the fear of missing out.
Limited-time offers are common and effective at trade shows. Let’s first put ourselves in the mind of a buyer. The buyer probably only goes to this trade show once a year. He sees something he likes and notices that he can get a big discount if he buys today. He is unlikely to see this vendor again for at least a year, if ever. He decides to purchase. This is true even if he doesn’t really want or need the product right now; he might in the near future. It’s the fear of not finding the deal later that prompts the impulse purchase.
I’ve certainly fallen prey to this tactic. I justify it logically saying it’s the best deal I’ll find on this product, even though I may not need it. I purchase it anyway.
This also makes sense for the seller. They create a sense of FOMO, usually by setting a high list price on their products and then offering discounts at the right time. They also need to provide a strong incentive to purchase immediately, otherwise the buyer won’t feel FOMO and may not purchase.
Let’s look through a couple more examples where this works and one where it doesn’t.
I work a lot with professional speakers. Every one of them who has products to sell offers a deep discount if you purchase the day of the presentation. Why? If you leave and don’t buy that day, they know the odds of you buying later are low. They give you a limited-time offer to provide that extra incentive to purchase now.
You could argue in B2B that year-end discounts are a version of FOMO. The buyer knows the seller has a huge incentive to close deals to build the numbers for the year that’s closing. Yet, once the fiscal year has closed, the seller is under much less pressure. The buyer knows this so they have FOMO. If they are going to buy, they want to be sure to do it before the year ends.
However, limited-time offers rarely work at a retail store. If retailers put up a sign that says buy today or you won’t get this deal, you know that someday they will repeat that deal. Macy’s has sales constantly. Every Macy’s sale is a limited-time offer. However, I don’t shop the sales unless I really need something because I know the sale will come around again. I don’t have FOMO at Macy’s.
FOMO is a powerful driver of purchase behavior in situations where your buyers truly believe it is a limited-time offer. It works well for speeches. It works well for trade shows. It works well for year-end sales. However, it doesn’t work that well for retailers creating an artificial deadline. Will it work in your business? It might boost your sales.