There are good ways to get people talking about your business. And then there are not-so-good ways. The story of a unique Hoover vacuum cleaner promotion gives us one of those not-so-good ways: create an outrageously generous offer . . . that you can’t afford.
Buy a vacuum, get free flights
Tracing its origins to 1908, Hoover is a household name for its vacuum cleaners. In 1991 Hoover’s division in the United Kingdom was looking for a way to rejuvenate its sales and shore up its 50% market share.
Hoover came up with a very generous promotion that got people talking (and spending): customers who spent more than £100 could get two free roundtrip tickets to a destination in Europe. As Hoover ads proclaimed, it was “Unbelievable!”
However, to make sure not too many people claimed their free tickets, Hoover created a complicated and slow process for claiming the tickets. The promotion seemed to be working well—vacuum sales took off—so Hoover made the promotion even better. After all, why not lean into a successful strategy?
Instead of offering free flights to other places in Europe, Hoover’s new-and-improved offer was free flights to New York or Orlando in the United States. The qualifying purchase was still the same: £100 (around $250 in U.S. dollars today).
This incredible offer was simply too generous. Yes, it got attention—too much attention. Hoover hoped that not too many people would be willing to go through the complicated process of claiming their tickets, but a lot of them did. Hoover also hoped that customers would spend a lot more than the minimum amount required. (They didn’t.)
The offer created a huge demand for Hoover vacuum cleaners—an estimated 300,000 purchases generated around £30 million in sales. However, if all of those customers would claim their free tickets, it would cost Hoover well over £100 million. People were buying vacuum cleaners not because they needed one, but because they wanted free flights to the United States.
The promotion was a huge success in that it got people talking, but in the end, it was a huge disaster. Customers took Hoover to court for refusing to pay up. Hoover’s parent company had to step in and pay for millions of dollars worth of free flights, and a few years later it sold its European division for a loss.
British newspapers had a field day with headlines about the Hoover marketing mess-up:
- Cleaning Up After Hoover
- Hoover Faces Free-Flight Legal Action
- More Turbulence for Free Flights
- Fresh Outcry on Hoover Flights
- Hoover Warns of Threat to Jobs After Debacle Over Free Flights
- Hoover Executives Sacked Over Free Flights Fiasco
Being remarkable without being gimmicky
Being remarkable has a lot to do with expectations. An unremarkable company meets the customer’s expectations. That’s a place to start. But the way to be remarkable is to do something—in a good way—that customers don’t expect. And one thing that customers often don’t expect is generosity.
Generosity reflects the principle of “giving a good measure that Jesus taught us: “Give, and it shall be given unto you; good measure, pressed down, and shaken together, and running over, shall men give into your bosom” (Luke 6:38).
A lesson we can take from the failure of Hoover’s promotion is not to avoid making generous offers, but to avoid generous offers that amount to a gimmick (“a trick or device used to attract business or attention,” the dictionary says).
“But the way to be remarkable is to do something—in a good way—that customers don’t expect. And one thing that customers often don’t expect is generosity.”
There are many ways to be generous to your customers and prospects: customer appreciation days, gifts and free samples, special promotions, performing some work at no cost for a long-time client, and more.
Have you ever shared an article from Rosewood with a friend or coworker? We share marketing tips with you through this column as a way to generously spread sound marketing experience.
If you’ve read this column over the years, you have learned a lot of free marketing information that you can use in your business. And you get this information without paying Rosewood a penny!
Whatever sorts of generosity you choose, make it something that fits your business. Airline flights have nothing to do with vacuum cleaners. A free iPad is probably unrelated to your business, so offering a free tool with a purchase would be better than a free iPad.
Sparking word-of-mouth conversations
Word-of-mouth marketing occurs when customers organically refer others to a business because of some unique or remarkable feature the business offers. The book Talk Triggers, by Jay Baer and Daniel Lemin, discusses ways that businesses can spark more word-of-mouth marketing. The authors suggest four requirements for a good “talk trigger:”
- It must be remarkable.
- It must be relevant.
- It must be reasonable.
- It must be repeatable.
Hoover’s free flights promotion was certainly remarkable, but it wasn’t relevant to vacuums, it wasn’t reasonable, and it wasn’t repeatable or sustainable.
Five Guys Burgers and Fries is a remarkable fast-food restaurant chain. (By the way, what does remarkable mean? In this case, simply to cause remarks).
Their menu is pretty simple and the only dessert option they offer is milkshakes. If you’ve never eaten at Five Guys before, you will discover what makes them remarkable when you sit down and open the brown bag with your meal in it. (That brown bag is important—Five Guys’ famous “talk trigger” wouldn’t be possible without it.)
At Five Guys, your sandwich is buried under a heap of French fries regardless of what size fries you ordered. At other fast food restaurants, you may have run out of fries before you ran out of appetite, but that is not going to happen here. Five Guys gives you a LOT of extra fries. That’s not a one-time occurrence if you happen to get lucky, but it is an official policy you can count on. Five Guys is generous with fries to differentiate themselves and be remarkable. In fact, you are likely to remark, “That’s a lot of fries!”
Rewarding customers for referrals
In his book The Referral Engine, John Jantsch reports on an informal survey of several thousand small business owners. Sixty-three percent of the business owners reported that over half of their business came through referrals, yet 80% of them had no referral program in place.
Jantsch writes, “This is somewhat puzzling. How can a business owner know that word of mouth is so powerful and then do so little to take advantage of it?”
Given the effectiveness of friend-to-friend recommendations, you may want to consider implementing a referral program. A referral program’s goal is to increase word of mouth by motivating your customers to refer you to a friend. When the customer’s friend makes a purchase, your customer receives a small reward.
“In addition to being a source of new customers, a referral program can solidify your existing customer’s support.”
Some referral programs reward both the customer and the friend. For example, the customer could receive a $20 credit on his account, and the friend could receive a 10% discount on his first purchase.
In addition to being a source of new customers, a referral program can solidify your existing customer’s support. The more a customer promotes your business, the less likely it is that he will leave you for a competitor. After all, it makes no sense for him to refer a friend and then decide to take his own business elsewhere. That would make your customer look inconsistent and maybe even untrustworthy in his friend’s eyes.
Here at Rosewood Marketing, if one of our clients refers a prospect to us, we will send our client a thank-you card when the prospect sets up a sales call. If the prospect becomes a client, we then send the referring client a box of chocolates.
Some businesses have arrangements with other businesses to pay a “referral fee” or a “finder’s fee” if they refer someone who becomes a client. Even without these arrangements, as Christian businesspeople, we should be happy to refer a prospect to someone who can help them better than we can. Helping customers find the best solution for their situation is a reward in itself. In addition, we can feel a sense of satisfaction in helping out a fellow business owner.
If you have thousands of customers, keeping track of referrals manually may not be an option. However, there are software solutions designed specifically to manage referrals.
How much does a referral program cost? It is generally cheaper than advertising because you pay only when you get a new customer. Knowing what your average acquisition cost is per new customer (ad spend divided by number of new customers) helps you decide how much you want to invest in a referral program.
Conclusion
Every person likes to feel appreciated. Giving your customers a small gift when they refer a new customer to you will give them that glow of satisfaction that we all feel when we do someone a favor. Whether your referral program is sophisticated or simple, you will likely find that it is well worth the investment.