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The worst sales promotion in history
The worst sales promotion in history
27 years ago, Hoover offered two free international flights with any £100 purchase. Today, it’s remembered as the worst sales promotion in history.
BY ZACHARY CROCKETT
AUGUST 10, 2019
In late 1992, the UK branch of the vacuum manufacturer, Hoover, offered an impossibly sweet promotion: If a customer bought any product worth £100, he’d get two free round-trip flights to the United States. ... For the 84-year-old electronics brand, it was meant to be an eye-catching way to boost dwindling sales, escape the gloom of a recession, and shrug off increased competition. ... Instead, it led to the destruction of the company — a precipitous downfall that saw multimillion-dollar losses and customer revolts.
....
“UNBELIEVABLE!”
In the early months of 1991, Hoover’s UK branch was approached by a tiny (now-defunct) travel agency called JSI Travel. Like Hoover, JSI was feeling the squeeze of the recession and was looking for a way to offload cheap flights. ... So, they pitched the company a novel idea: A sales promotion where anyone who spent more than £100 (~$250 USD today) on a Hoover product at a qualifying department store would get two free round-trip tickets to a destination in Europe. ... On paper, it seemed like a win-win: Hoover would sell its excess inventory and boost sales; JSI would sell flights in bulk to Hoover and handle the bookings.
....
The trans-Atlantic disaster
On November 1, 1992, Hoover expanded its free ticket offer to include flights to America. ... Under a new promotion, that same £100 Hoover purchase could net a UK-based customer two free round-trip flights to New York or Orlando — a package worth £600+ (£1200, or $1,460 USD, today). ... When Hoover ran this plan by risk management professionals, the company was warned that it would be an absolute disaster.
“To me it made no logical sense,” recalled Mark Kimber, one of the consultants. “Having looked at the details of the promotion [and] attempting to calculate how it would actually work I declined to even offer risk management coverage,” recalled Mark Kimber.
Unfortunately, Hoover chose to ignore this advice. They decided to proceed, mainly based on two fatal assumptions:
Initially, things went according to plan. Department stores all over the UK became an “uncivilized scene” as thousands of people clammored to buy the cheapest Hoover products they could find.
....
But as paying customers would soon find out, this “deal” was something of an illusion.
“We don’t want blood. We want tickets.”
{snip}
27 years ago, Hoover offered two free international flights with any £100 purchase. Today, it’s remembered as the worst sales promotion in history.
BY ZACHARY CROCKETT
AUGUST 10, 2019
In late 1992, the UK branch of the vacuum manufacturer, Hoover, offered an impossibly sweet promotion: If a customer bought any product worth £100, he’d get two free round-trip flights to the United States. ... For the 84-year-old electronics brand, it was meant to be an eye-catching way to boost dwindling sales, escape the gloom of a recession, and shrug off increased competition. ... Instead, it led to the destruction of the company — a precipitous downfall that saw multimillion-dollar losses and customer revolts.
....
“UNBELIEVABLE!”
In the early months of 1991, Hoover’s UK branch was approached by a tiny (now-defunct) travel agency called JSI Travel. Like Hoover, JSI was feeling the squeeze of the recession and was looking for a way to offload cheap flights. ... So, they pitched the company a novel idea: A sales promotion where anyone who spent more than £100 (~$250 USD today) on a Hoover product at a qualifying department store would get two free round-trip tickets to a destination in Europe. ... On paper, it seemed like a win-win: Hoover would sell its excess inventory and boost sales; JSI would sell flights in bulk to Hoover and handle the bookings.
....
The trans-Atlantic disaster
On November 1, 1992, Hoover expanded its free ticket offer to include flights to America. ... Under a new promotion, that same £100 Hoover purchase could net a UK-based customer two free round-trip flights to New York or Orlando — a package worth £600+ (£1200, or $1,460 USD, today). ... When Hoover ran this plan by risk management professionals, the company was warned that it would be an absolute disaster.
“To me it made no logical sense,” recalled Mark Kimber, one of the consultants. “Having looked at the details of the promotion [and] attempting to calculate how it would actually work I declined to even offer risk management coverage,” recalled Mark Kimber.
Unfortunately, Hoover chose to ignore this advice. They decided to proceed, mainly based on two fatal assumptions:
1. Only a small fraction of purchasers would actually jump through the hoops necessary to redeem the flights.
2. Customers would spend far more than the £100 minimum, offsetting the cost.
Initially, things went according to plan. Department stores all over the UK became an “uncivilized scene” as thousands of people clammored to buy the cheapest Hoover products they could find.
....
But as paying customers would soon find out, this “deal” was something of an illusion.
“We don’t want blood. We want tickets.”
{snip}
1 replies
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