Morning talk show hosts Jim Sharpe and Jayme West had some fun with me on the radio last week joking “Greg broke the Internet with his 72 Free House Payments commercials during the Super Bowl.”
Well, I didn’t break the Internet, but when three commercials ran and over 150,000 homeowners tried to sign up, our server crashed (the same one that hosts Amazon).
We got the servers back up and extended the promotion to March 1st so it all worked out. Anyone can still sign up at 72Sold.com and the winner will be announced on NBC news broadcast locally at 6:30pm on March 8th.
The hiccup in our free house payment promotion got me thinking about companies in the past that ran promotions with BIG hiccups that didn’t work out.
Check out this story of a company that may have run the most disastrous promotion of all time.
It’s June of 1993. Dave Dixon is one furious Englishman.
He’s patiently waiting for the Hoover repairman to arrive and fix his Hoover washing machine. But that’s not the reason Dave is upset.
The only reason he bought the washing machine was to take advantage of Hoover’s “free flights” promotion. It guaranteed everyone who purchased a Hooover product (costing over 100 pounds) two free round trip tickets to the U.S.
Hoover has not yet made good on that promise.
The technician finally arrives, and while he is there, Dave complains that he hasn’t received his flight vouchers after months of waiting.
With a snarky tone the repairman scoffs, “If you think buying a washing machine’s going to get you two free tickets to America, you must be an idiot.”
That was the last straw. The 42 year old horse trainer calmly walks outside, gets into his truck, and maneuvers his 30 foot horse trailer to block the Hoover repairman’s van from leaving.
After an acrimonious verbal altercation, the technician eventually ends up walking several miles back to his shop.
Dave vows that he will not release the van until he gets his two free tickets. The standoff lasts over two weeks, and Dave becomes a local hero in the process.
Hoover’s British division started a “free flights” promotion in 1992 trying to boost sales during the global recession that started in the early 1990s.
For nearly 40 years Hoover was the dominant brand in vacuum cleaners, maintaining a 50% market share. The brand rose to such popularity that the name became synonymous with vacuuming (the British would “Hoover” their carpets clean).
But with the combination of a major recession and intense competition from new British vacuum companies such as Dyson, the company’s profits fell from $147 million to $74 million a year from 1987 to 1992.
Top executives started to panic. They tried to innovate by creating novel products like a talking vacuum cleaner. This failed to stimulate sales.
The company started accumulating gigantic warehouses full of unsold Hoover appliances and they needed to find a way move inventory fast.
Enter Hoover’s marketing division with what may have been the worst promotional campaign in the history of business…the ill fated Free Flights Promotion.
Any customer who purchased at least 100 pounds (British dollars) of Hoover products would receive two complimentary round trip plane tickets to the United States (worth about 600 pounds).
At first glance the math obviously doesn’t work out, but Hoover had partnered with a small, struggling airline company called JSI Travel. The deal was simple…Hoover would unload huge amounts of excess inventory and JSI would unload tons of its excess flights at highly discounted prices and handle the bookings.
Hoover execs were counting on most customers purchasing more than 100 pounds worth of products.
Hoover execs also believed customers would be deterred by the lengthy and arduous application process they purposely created, and therefore many wouldn’t apply.
In addition, Hoover execs thought the majority of customers would be unable to comply with the exact terms of the promotion.
Hoover execs were wrong…very wrong.
The consumer response was through the roof. Many customers only made the minimum purchase to qualify. The public interpreted the promotion as “two free flights to the U.S. for only 100 pounds and a free vacuum cleaner to boot!”
By the time Hoover had the sense to cancel the promotion they were faced with thousands of applications equating to millions of pounds in airline tickets.
The company estimated they would receive 50,000 applications. Instead, they received over 300,000.
When Hoover reneged on the deal, legal actions and protests ensued. It was a financial disaster for the already struggling firm. It even led to the embarrassing revocation of the company’s Royal Warrant (exclusive deal to supply goods to the royal family).
Three top execs were fired. Hoover’s entire European branch was ultimately sold off at a massive loss. JSI Travel went out of business.
As part of settling all the lawsuits, Hoover was required to give free flights to 220,000 customers.
In 2004 the BBC aired a documentary called the “Hoover Flights Fiasco.”
Many consider it the worst promotion in business history, one that almost destroyed a multinational company.
Hoover launched an expensive PR campaign to save face, but the brand never recovered.
As Benjamin Franklin once said:
“It takes many good deeds to build a good reputation, and only one bad deed to ruin it.”
So what’s my point?
The 72SOLD promotion has no strings attached. Nothing to buy. You can’t lose. You can only win.
But Hoover’s promotion had a hidden motive. They wanted to sell more appliances and then make it hard to get the reward.
It wasn’t transparent. It wasn’t honest. It was the perfect way to ruin an 85 year old company…by having hidden strings attached