Pressure groups. Parliament. The Royal family. BBC Watchdog. Court appearances. Directors sacked. A vehicle ‘held hostage’. And £50 million out of pocket.
This has to be the worst promotion of all time – and the words ‘bad marketing’ barely do it justice.
As a brand Hoover were so big its name became synonymous with their main product. As the Xerox is to photocopying in the US, Hoover is to vacuum cleaning in the UK. But in August 1993 they had a problem. The recession was tough for everyone and sales were low – leading to a backlog of stock beginning to pile up.
It’s reported that Maytag – the US parent company at the time – had noted the success of air miles schemes and instructed the UK team to contact a firm of travel agents to create their own travel-based campaign.
What they ended up with was a simple concept: anyone paying over £100 for Hoover products – including vacuum cleaners and washing machines – would be entitled to two free flights to one of six European destinations.
The campaign was a success! Hoover saw a huge increase in sales and products were flying off the shelves… but behind the scenes their travel agents were already struggling to source the tickets…
Unperturbed, the marketing team upped the ante. Now the campaign included flights to America.
“Two return seats: unbelievable” – said the TV advert.
And it was. Pay £100 and get a flight worth £600.
The British public leapt at the chance. Hoover’s factories took on 75 additional staff and operated seven days a week to keep up with demand.
But people didn’t really want Hoover products. They wanted the flights.
The second hand market became awash with vacuum cleaners and washing machines – with most still in their original packaging. Some retailers even reported that customers left the product in the shop once they had the proof of purchase they needed for the free flights.
Hoover forecast that there would be 50,000 applications for tickets – but there was a staggering 300,000. The travel agents couldn’t keep up. The demand for tickets was greater than the supply, so prices went up. Hoover found themselves buying tickets for a greater price than the retail price of the goods they sold. They had to find an extra £20m to buy the tickets!
Needing to limit ever-growing costs, they put the barricades up. They made it hard for people to redeem the vouchers. Phone calls went unanswered. Chosen flights weren’t available. People were starting to feel conned – and made their voices heard in the press. They were furious!
Hoover’s reputation was getting ground into the dirt.
Legal problems soon followed. Mr Sandy Jack became the first person to take Hoover to court over their failing to uphold the promotion (Hoover vs. Jack, Sheriff Court, Kircaldy, Fife 1993). Although he didn’t win – it inspired others to get involved.
Jack, along with Mr Harry Cichy, formed the Hoover Holiday Pressure Group and became the figureheads for the fightback.
They contacted the Office of Fair Trading and BBC Television’s popular Watchdog (a programme that fights for consumer rights) – who sent an undercover reporter to investigate and report on the situation. It was even discussed in Parliament!
The media were lapping it up.
Even more so when Mr David Dixon, who had bought a washing machine, was still chasing his tickets months later. To make matters worse, his machine was faulty. When an engineer came to fix it, he was told that anyone who expected to get two tickets to the US for buying a washing machine was an idiot! Incensed, he blocked the engineer’s vehicle in his driveway – and told journalists he was keeping it hostage!
This spurred people on even more. The Hoover Holiday Pressure Group had 8,000 members at its peak, and it helped hundreds of people take Hoover to small claims courts. They settled many out of court, only adding to the huge costs of this promotion.
In 1998 the last case was heard in court – meaning they had been fighting this for a full six years after the campaign!
The consequences were dire for three of the top executives responsible for the promotion, with the managing director of Hoover Ltd, the vice-president of marketing and director of marketing services all losing their jobs.
In 2004, the BBC filmed a follow up documentary of the disaster as part of their Trouble at the Top series. The episode was watched by 1.7 million viewers. As a result, the British Royal Family withdrew their Royal Warrant from the company – 12 years after they were first asked by Jack and Cichy.
All told, they lost a staggering £50m on the campaign – and ruined a reputation that was hard earned over nearly 100 years.
What does good look like?
If ever you plan to run a promotion, it’s essential you seek advice from a risk management consultant.
Hoover apparently did. Several told them their European promotion wouldn’t be financially viable (this was before they added the US flights!) – but they didn’t take their advice.
If you are wise enough to take advice from experts – please listen to it!
Please ensure you understand the financial implications, too. Did Hoover really understand how much the costs could soar to?
As they added the US flights, Hoover apparently made their cost projections based on the same conversion rate (eligible purchase to application for a flight) as the European flights. But the value of a US flight was much bigger – and so more people were keen to redeem the offer and apply for their ticket. This was how costs spiralled – and this error of judgement was where the promotion went from awful to unmitigated disaster.
Apply a variance test to your forecasts and projections – do the numbers still stack up if an extra 10% redeem their giveaway? 20%? 50%?
The value of the giveaway was greater than the product itself – and lead to people disposing of the Hoover machines, which reflected badly on their brand. Consider how your product compares to the giveaway – you don’t want to be the ‘necessary evil’ that’s immediately thrown away as your customer gets to what they really want.
This is my contender for the worst promotion in history – do you know of any other examples that could take the crown?