Hoovergate: A Look at One of the Worst Marketing Campaigns Ever
The senseless mistake that nearly destroyed the Hoover Company and cost them millions.
Everyone loves a free gift with purchase. For the Hoover vacuum company, this seemed like a smart promotion idea — and it almost destroyed them.
You need to make sure the “free gift” will not cost you more in the long run — and that’s what Hoover failed to do. They also didn’t bank on their customers turning on them, and the inevitable legal disasters that would take place.
This is a look at the Hoover “free flight” promotion that took place in the UK and nearly sank the 84-year-old company.
How Did the Hoover Promotion Come to Be?
Hoover is an interesting company. They are one of just a handful of brands where the name is synonymous with the product or item. We have learned to associate any vacuum cleaner as a “hoover.”
Just ask Kevin McCallister in Home Alone 2.
It’s the same thing with iconic brands like Kleenex, Band-Aid, Aspirin, Thermos, and if you’re Canadian like me — Zamboni. (Zamboni is just a brand of ice resurfacer named after its creator, Frank Zamboni. That’s not a joke.)
Hoover dominated the vacuum industry for decades. In the UK, they even further dominated vacuum sales. For forty years, they had a 50% market share.
When the 1980s rolled around, Hoover operated under parent company Maytag. The idea was that this could further help growth and they could take over an even larger percentage of the vacuum market.
But things wouldn’t go so well heading into the 1990s. The global recession, and economic downturn, especially in the UK, were leading to dwindling vacuum sales.
There was also new competition. The Dyson company was offering a better version of the vacuum and started to make a dent in the market. From 1987 to 1992, all of these things began to diminish the Hoover brand. Their profits dropped from $147 million to $74 million.
It was even worse in the UK.
The Hoover Free Flight Promotion
The year is 1992, and Hoover’s warehouses were filling with unsold vacuums. Things looked pretty dire until the British arm of the company was approached by a travel company called JSI Travel.
JSI Travel is no longer with us, but at the time, they were also suffering from the recession. They had an idea that could help both companies.
Their idea was to offer customers two free return flights to Europe with every purchase of a Hoover product worth £100 or more. Converted for today, that’s around £190, or $235.
Seems pretty great, and pretty straightforward — but it really wasn’t. The process of getting the tickets was extremely complicated, with many forms to fill out. For those who did jump through the hoops for the free tickets, JSI would cover the costs. Their plan was that they would subsidize the cost of the tickets by upselling things like travel insurance and hotel packages.
This was ideal for JSI Travel. They were a smaller company, and the thought was the promotion with a giant company like Hoover would get their name into the public.
It would — but for all the wrong reasons.
Launching the Free Flight Campaign
Hoover didn’t think twice about the partnership, and they launched the campaign in 1992. They would advertise the promotion throughout the country on TV and in newspapers.
Sales, not surprisingly, exploded. Who would turn down free flights? Those once full warehouses emptied and everything was going great. But Hoover should have stopped while they were ahead.
It turns out all the red tape to get the free flights was working, and only a fraction of people who bought a qualifying item were redeeming their free flight.
The company got greedy. Hoover extended the promotion and then went international in the hopes of further boosting profits. This would be their undoing.
The thing was, Hoover actually approached several marketing firms, and risk management companies to see if their promotion was financially sound. All of these companies crunched the numbers and told them this was financial suicide.
Hoover didn’t listen.
The Free Flight Promotion Continues
Hoover had their sights set on bigger and grander pursuits. They approached the biggest airlines of the day: American Airlines, Virgin Atlantic, and British Airways.
They also approached other travel firms and agencies about getting on board with their promotion. This time, customers in the UK had the chance to get free flights to New York and Florida.
Everything was set and Hoover got even more aggressive with their free flight marketing campaign. The requirements were still the same: buy any qualifying item and get the two free return tickets.
Somehow, Hoover didn’t look at this carefully. The American destinations would have cost you on average £600. (nearly £1200 converted for today or around $1500.)
Hoover was still confident that customers wouldn’t jump through all the hoops to get their tickets. But this time, the free gift was an incredible value and head and shoulders above the cheaper flights to nearby European destinations. This was a hoop worth jumping through.
Here’s the next ludicrous mistake made by Hoover. They believed that the increased value of the American flights would encourage customers to spend even more on their products. Has that ever worked?
Not surprisingly, customers swarmed stores and bought the absolute cheapest vacuum they could that met the requirements. Consumers now waded through all the paperwork to receive their free tickets.
The Backlash Begins
The response was massive. Hoover only expected around 1/10th of the submission they received, and it led to a massive backlog in their offices.
At first, the delays didn’t dismay the public. Hoover was a well-known — and well-respected brand — and it was thought that they would eventually catch up with all the demand.
Then a news report came out.
The Daily Record published a story that said that not one airline had received any bookings from Hoover for the trips to the States. Whether or not this story was true, there was clearly an issue going on with the promotion.
The news reports got the attention of the public. Most people had been waiting patiently, but now there was the thought Hoover might not be coming through. These were the days when people still read newspapers, so millions of people were now aware of the story.
The problem was, this got even more eyes on the promotion. The story led to tens of thousands of more sales from people hoping to get the free flights.
To borrow a British expression, Hoover was in real Barney.
Local travel agencies involved in the promotion started to back away from the deal. They used small print to try to prevent customers from cashing in on the tickets by only offering flights out of airports across the country from the ticket holder.
According to the BBC, other travel agents wouldn’t release tickets until the customer had bought another $300 in upgrades.
How Did Hoover Respond to All This?
Hoover finally realized they had a PR nightmare on their hands. They tried to blame the delays on the travel agencies and airlines.
It didn’t matter what they said, customers were livid. Some of them took things into their own hands by pursuing their tickets in court. These groups refused to allow Hoover to weasel their way out of what they promised.
It’s not that Hoover didn’t give away any free flights — it was just nowhere near what they promised. It was estimated that they only awarded 220,000 free flights to the over half million that applied.
Those who didn’t get their free flights would sue in small claims court. This sounds bad enough, but it was the vocal trashing of the company that would hurt Hoover in the long run. People who didn’t get their flights made it their mission to disparage the name of the once-great vacuum maker.
Maytag was still in charge of Hoover and proceeded to fire the top people in the UK. The company had to end up spending nearly $100 million ($125 million converted for today) to cover the free flights.
This was against the £30 million made from the promotion. I would have to say that *pulls out calculator* this is not the ideal equation for profit.
The Aftermath to Hoovergate
The payout Hoover had to make was nothing compared to the negative damage the promotion had done to the brand.
The first problem was that tens of thousands of people had Hoover products they never wanted. The second-hand market would be flooded with unused vacuums.
There was no reason for anyone to buy a brand new vacuum as you could get them for next to nothing second hand. Hoover also made quality items that lasted a long time, so it’s not like you needed to get a new vacuum every year.
No one was buying new vacuums, and the Hoover reputation was in the gutter. People who may have needed a vacuum knew to steer clear of the former vacuum giant.
Hoover tried to improve their reputation with another marketing campaign, but few people were listening. By 1995, their market share had dropped to just 20%. Maytag had enough and sold the entire European arm of Hoover to an Italian company called Candy.
I don’t need to tell you that Maytag took a loss on that sale.
There have been many disastrous marketing campaigns over the years, but the Hoover free flight promotion may take the cake.
Marketing campaigns that are financial failures are one thing, but that’s nothing compared to nearly destroying your entire brand.
In one last kick in the teeth, the campaign would lead to the loss of Hoover’s Royal Warrant. This is a coveted recognition as Royal Warrants of Appointment have been issued since the 15th century and are given to companies that supply goods and services to royalty. The warrant allows you to advertise the fact that you supply to the Royal Family.
This is a great marketing history lesson to not over-promise and to listen to the experts when they tell you your campaign is not a good idea.
Hoover was the industry leader for four decades, and that was undone in one campaign. And I’m sure Dyson started hanging around Buckingham Palace after that one…