Latest / The Marketing Funnel Podcast with Fexingo: Awareness, Interest, Decision, and Action Stages / How Luxury Brands Tighten the Funnel With Scarcity
Transcript
- Lucas: If you've ever walked into a Hermès boutique and asked to see a Birkin bag, you probably left empty-handed. Not because they were out of stock — but because you aren't on the list. Luna: The list. That mysterious, never-explained list that seems to exist only in the mind of a sales associate. Lucas: Right. And that's actually a deliberate marketing strategy — one that turns the traditional funnel on its head. Most marketers spend all their energy widening the top of the funnel: more awareness, more interest, more leads. Luna: But luxury brands do the opposite. They deliberately narrow the top. They make it hard to even find out about the product. Lucas: Exactly. And that's the thread I want to pull today: contrived scarcity as a marketing funnel strategy. If these marketing conversations have sparked something you've actually used in your own work, we'd love it if you considered supporting the show. We deliberately don't run ads on these. If you want to support that choice, the link is buy me a coffee dot com slash fexingo. Anyway — let's look at Hermès. The Birkin bag starts at around ten thousand dollars. But the real markup isn't just in materials. It's in the scarcity. Luna: Yeah, I've read estimates that Hermès produces maybe seventy thousand Birkins a year globally. That's nothing for a brand with that much demand. Lucas: And they don't advertise. No billboards. No digital campaigns. The awareness stage of the funnel is essentially word of mouth and the occasional celebrity sighting. By controlling supply so tightly, they create a perception of exclusivity that drives desire. Luna: So the interest stage isn't about getting people to learn more — it's about making them want something they can't easily have. Lucas: Precisely. And then the decision stage — that moment where a customer decides to actually buy — becomes a test of patience and relationship. You don't just swipe a card. You cultivate a relationship with a sales associate, you buy other products, you demonstrate loyalty. Luna: It's almost like a game. And the action stage — the actual purchase — is the reward. But the funnel is so narrow that most people never reach the bottom. Lucas: And that's fine for Hermès. Because the people who do reach the bottom are willing to pay a massive premium. The margin on a Birkin is estimated to be over ninety percent. Compare that to a typical luxury handbag at maybe fifty percent. Luna: So they're optimizing for profit per customer, not volume. A completely different funnel philosophy. Lucas: Right. Now Rolex does something similar, but with a twist. They don't have a mythical 'list' per se, but they tightly control distribution through authorized dealers. If you walk into a Rolex dealer and ask for a stainless steel Submariner, you're likely told there's a waiting period — often years. Luna: And I've heard that dealers sometimes prioritize customers who have purchase history. So you might need to buy a Datejust or a Cellini first to get on the shortlist for the sports models. Lucas: Exactly. That's a version of what marketers call a 'gated funnel.' The awareness stage is still broad — everyone knows Rolex. But the interest and decision stages are gated by purchase history and relationship. Rolex doesn't need to spend on demand generation. The demand is already there. They just need to allocate scarcity. Luna: But doesn't this risk alienating customers? I mean, if someone has the money and the desire, being told to wait feels like a negative experience. Lucas: It does — unless the brand is strong enough that the waiting itself becomes part of the value. There's actually research on what's called the 'IKEA effect' meets scarcity: people value things more when they've had to put effort into obtaining them. The wait becomes a signal of authenticity. Luna: So the funnel stage where most brands try to minimize friction — the decision stage — luxury brands actually add friction. Lucas: Yes. But it only works if the product truly delivers. If the Birkin were mediocre, the strategy would backfire. The scarcity has to be backed by exceptional quality and brand equity. Otherwise, you're just a pretender. Luna: There have been attempts by other brands to copy this. Remember when McDonald's launched the McRib and used artificial scarcity? It works short-term but doesn't build a lasting funnel. Lucas: Good point. The McRib comes and goes, but there's no enduring brand loyalty built on that. Luxury scarcity is different because it's consistent and authentic to the brand identity. Hermès has been doing this for decades. Rolex for even longer. Luna: What about the rise of 'accessible luxury' brands like Michael Kors or Coach? They seem to have gone the opposite direction — wide distribution, frequent sales. Lucas: And they've struggled with brand dilution. Coach had to pull back on outlet stores and discounting to restore its premium image. The funnel strategy itself became a liability when it was too wide. Luna: So there's a lesson there for any brand, not just luxury. If you try to capture everyone, you might end up pleasing no one. Lucas: Exactly. The funnel isn't just about moving people from top to bottom. It's also about who you filter out. Luxury brands are explicit about that filtering. They'd rather have a small number of highly loyal, high-value customers than a mass of one-time buyers. Luna: That makes me think about the subscription economy. Brands like Netflix or Spotify want as many users as possible. But a brand like MasterClass uses scarcity differently — they have a limited catalog and high price point. Lucas: Good comparison. MasterClass narrows the funnel by positioning itself as a premium learning experience. They don't offer discounts or free trials often. The awareness comes from celebrity instructors, but the interest stage is gated by price and perceived exclusivity. Luna: So the same principle applies even outside of traditional luxury goods. It's about controlling the narrative of access. Lucas: Right. And what's interesting is that digital products can also create scarcity. Think about the early days of Gmail — invitation-only. That scarcity created massive buzz. Google deliberately narrowed the awareness funnel to make people want it more. Luna: Yeah, I remember wanting a Gmail invite so badly. That scarcity was entirely artificial — there was no real supply limit — but it worked brilliantly. Lucas: So the key takeaway is this: sometimes the best way to optimize your marketing funnel is to shrink the top. But you need the product to back it up, and you need to be consistent. If you create scarcity and then flood the market, you lose credibility forever. Luna: And for brands considering this, they should ask: Does our product have the quality to justify the chase? And does our brand story support exclusivity? Lucas: Exactly. Because if the answer is no, you're better off widening the funnel and optimizing for volume. But if the answer is yes, a narrow funnel can be the most profitable strategy of all. Luna: I'm curious — are there any modern brands that have successfully built a narrow funnel from scratch, without decades of heritage? Lucas: That's a great question for next time. I've got a case in mind. Let's save it for episode thirty-three. Luna: Looking forward to it.