Talk About a Product that Sucks: The 1992 Hoover Free Flights Promotion Failure
A good marketing campaign can lead to increased sales and a beloved brand. Of course, there’s always the possibility that a bad campaign can tank a company and its reputation.
Which is exactly what happened due to the 1992 “Hoover free flights promotion” campaign, put forth by the Hoover company. After all, in four years, Hoover’s profits dropped from $147m to $74m. To bolster sales of Hoover products, the company came up with what might very well be one of the worst promotions of all time.
To give some background to why the company was so desperate to increase sales, the promotion ran during the midst of the early 1990's recession. The global recession was caused by a multitude of issues including new monetary policies enforced by banks, the 1990 oil price crisis, a marked drop in defense spending following the end of the Cold War, and other issues.
Now, in particular, in the United Kingdom, where Hoover’s ill-fated campaign was conceived, the 1991 recession was caused by reduced house prices, overly inflated interest rates, and more. Towards the end of the 1980s, economic growth had risen by 5% coinciding with increases in consumer spending and net wealth. But when the UK joined the Exchange Rate Mechanism (“ERM”) in 1990, they began to feel the recession that was rocking the globe. Faced with losing value of the pound sterling, the government increased interest rates up to 15%. As a result, consumers were forced to borrow more and spend less, with rising housing payments, a devalued currency, and an overall distrust of the economy. To add to the issue, unemployment was at a high of 10% in 1992 and consumer spending was at a low. People just weren’t willing to spend, especially for non-essential Hoover products.
In short, this was the perfect time to roll out a dazzlingly market campaign to generate consumer interest. Sadly, things didn’t work out quite as expected for Hoover Company. Now by 1991, the 84-year-old company was facing decreasing sales and an overabundance of product.
At the same time, also faced with sharp sale decreases, a travel agency, JSI Travel, needed to dump a host of previously bulk purchased flights that were no longer being bought. So, the two companies came together and thought up a simple plan that ended in disaster.
The pitch was simple: any customer who bought over £100 worth of Hoover products would get two free round-trip tickets to any destination in Europe. This was later expanded, shockingly, to include round trip tickets to New York City or Orlando, Florida. So, for £100 worth of product, the customer could get a £600 trip. Sounds like a pretty great deal, with about £530 saved by the consumer.
It’s worth noting that JSI Travel had sold less than 10,000 tickets to Hover. If we consider that each person is entitled to two free round-trip flights, that means that if one ticket counted as round-trip, 5,000 people could receive the offer. If a ticket was sold as one way each, only 2,500 would have two free flights waiting for them.
But Hoover buckled down and launched their promotion.
Due to the list of restrictions and fine print for redeeming the free flights, it’s obvious that Hoover knew what they were offering might led to disaster. They made redeeming the free flights as hard as possible which, in and of itself, led to some pretty harsh criticism.
1. A customer buys a Hoover product for £100+ and mails in a receipt + application within 14 days of purchase.
2. Hoover sends a registration form; the customer has 14 days to send it back.
3. Hoover sends a travel voucher; the customer has 30 days to select 3 departure airport, date, and destination combinations.
4. Hoover has the right to reject the customer’s choices; the customer can select 3 alternatives.
5. Hoover also has the right to reject these alternatives and select 3 combinations of its own choosing; if they don’t work, the customer is out of luck.
Once again, Hoover was trying to make it as hard, frustrating, and time consuming for customers to redeem their free flights, even putting an expiration date by when the customer could get their flights by after purchasing their product.
But Hoover, like McDonald’s marketing fail in 1984, underestimated the ability of the consumer to aggressively follow up on the promise of free anything. And while I don’t know about you, I’d be willing to take off a couple of days off work to scream at customer service if it meant getting two free transatlantic flights. So, consumers might not have been happy with the restrictions, but they were certainly willing to work them.
And the promotion worked, too well. Soon Hoover was overwhelmed with customers buying their products. But a single customer didn’t buy multiples of the £100 that Hoover had hoped. In fact, they bought just enough to qualify for the free flights. In fact, unfortunately for Hoover, they had a product (the Hoover Turbomaster Upright) that was only £19 more than the qualifying amount for the free flights. And this was the product consumers clamored for. After all, why buy £500 worth of product when £119’s worth would get you the free flights?
The free flight frenzy grossed £30m in sales for Hoover. After all, factories were forced to stay open seven days a week to try to meet the sudden consumer demand and extra staff were hired to sell Hoover products. But Hoover quickly incurred a cost of over £50m. While they had estimated only 50,000 customers might follow through on the free flights, quickly over 200,000 did. And Hoover was so quickly bombarded with consumer demands that it took 10 extra staff to handle calls from frustrated customers.
Hoover then dealt with the failure in a way that would later bring about the company’s death kneel. While they did originally try to honor the deal, partnering with British and Virgin airways, they simply couldn’t keep up with the consumer demand. Eventually, they resorted to doing everything possible to get out of giving consumers their free flights, from lying that consumers had filled out forms incorrectly to putting unreasonable time limits on when the forms could be returned by. And, worst yet, they eventually canceled the promotion, refusing to honor their promise to consumers who had already bought Hoover products in order to get the free flights.
The fallout was swift but not shocking. Public opinion of the company tanked. Consumers threatened and eventually went through with legal action against Hoover. And the European branch of Hoover folded into a previous competitor, Candy, as the entire promotion left such a bad taste in the mouth of consumers that the branch could never recover.
So, what’s the morale of this story? It might be don’t over promise to your customer or to have a basic concept of math. Or it could be simply to never underestimate the ability of the customer to try and cash in on the promise of free stuff, a lesson companies seem to have an issue learning.