How to make limited-time offers effective
Limited-time deals work better offline than online. To make them more effective online, keep them short and justify them (e.g. company anniversary).
Thomas McKinlay
August 01, 2023
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📝 Intro
“Sale ends in 2 hours, 6 minutes, & 52 seconds”
You’ve probably seen a limited-time promotion like this before. Maybe you’ve run one yourself.
But how effective is the time constraint?
Does the limited time nudge people to make a decision to buy quicker, or does it put them off?
Scientists from Drexel, Wharton, and Vanderbilt researched the impact of limited-time offers, both offline and online.
Here is what they found.
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Online limited-time promotions must be short and justified
Channels: Promotions | Ecommerce | Retail
For: B2C. Can be tested for B2B
Research date: July 2022
📈 Recommendation
Limited-time promotions (e.g. 24-hour flash sale on all items) have a different effect whether you use them online or offline.
Offline (e.g. in-store), they are effective at driving attention and purchase intentions. Use them regularly.
Online (e.g. website, email), they are generally weaker. To make them more effective:
Justify why the promotion is only for a limited time (e.g. 24-hour sale for a customer on their birthday, a special sale of last season's stock before a new line launches).
Keep it short. The shorter the time duration, the more effective it is (as long as it’s long enough for your customers to both find out about it and buy it).
🎓 Findings
Limited promotions are more effective at driving attention, engagement (e.g. clicks, opens), and purchase intentions when they are offline rather than online. Online deals can be improved by justifying and shortening them.
In an analysis of 10 previous studies, and 3 online and 2 field experiments, researchers found that:
Limited-time promotions increase willingness to pay offline by 10% but had no effect online.
A Facebook ad had 93% higher engagement when it had a justification (Spring Sale) vs when it didn’t. The higher engagement happened only when less than a day remained, not 2 or more
People were 23% more likely to open an email with a limited-time promotion if it had a justification (i.e. due to an upcoming holiday)
🧠 Why it works
When something has limited availability, we take that scarcity as a sign of its value, which makes limited-time promotions work in physical stores.
Online we’re persuaded in different ways, and this tactic can come across negatively.
A limited-time deal online can feel like a gimmicky way to manipulate us to buy quickly, or a trick to distract us from the value of a deal.
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✋ Limitations
The study analyzed customer attention, engagement, and willingness to pay for a product, but not actual sales. More attention and engagement should lead to more sales, but this was not directly measured.
Limiting an online promotion by quantity (e.g. slots filling up fast) rather than by time (e.g. 48 hours to book your slot) did not increase engagement. Other research found that quantity scarcity can anger customers and backfire. So it’s best to use limited time, not limited quantity.
It’s unclear whether the negative perceptions of limited-time offers would be as strong for well-known brands (e.g. Amazon). People might be less likely to feel they are being manipulated.
🏢 Companies using this
Limited-time promotions are particularly popular in Ecommerce, including flash sales and event-based promotions.
Cyber Monday, Black Friday and 11/11 (popular in Asia, South America, and Africa) are three of the largest online shopping days, with heavy use of short, justified limited offers.
Some companies focus their limited-time offers on loyalty program subscribers, such as ColourPop Cosmetics’ limited-time VIP offers. Others offer promotions available to all customers, like Amazon’s Lightning Deals and Best Buy’s Deal of the Day.
Keto foods seller Kiss My Keto offers a limited deal giving potential customers 15 minutes to finish placing their order.
⚡ Steps to implement
If you’re running a limited-time offer in any online channels:
Keep it short. Usually, 1 day should work, but make sure to give customers enough time to notice it and buy
Justify it. Tie it with a specific event (e.g. a launch, a holiday, a personalized offer)
To make your promotions even more effective, time them to coincide with a special day. The more creative the better. It can be generic (e.g. World sleep day if you sell mattresses) or tailored (e.g. customer’s birthday).
🔍 Study type
Meta-analysis (of 10 previous studies), online experiments, and field experiments (Facebook ads with 18,157 impressions and an email campaign with 9,378 subscribers from a music school).
📖 Research
Examining the Efficacy of Time Scarcity Marketing Promotions in Online Retail. Journal of Marketing Research (July 2022).
🏫 Researchers
Jillian Hmurovic. LeBow College of Business. Drexel University.
Cait Lamberton. The Wharton School. University of Pennsylvania.
Kelly Goldsmith. Owen Graduate School of Management. Vanderbilt University.
Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.
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