I was pleased to see the recent BBC Two documentary 'Trouble at the Top' on May 12 show the full extent of the complexities of the circumstances leading up to the 'Free Flights Fiasco' and how it went so wrong for Hoover.
The Hoover promotion has been described as "Britain's worst marketing disaster" and one that promoters should have learned from. The results of this promotion could have and should have been easily avoided if the risk management industry's advice had been adhered to and the promoter had incorporated necessary risk management steps when the promotion was first put together.
Following on from my comments within the documentary, having been in the industry since 1984 when it was in fact in its infancy, Hoover approached myself along with other risk management companies around at the time. I advised Hoover of the potential pitfalls of the promotion. Having looked at the details of the promotion along with attempting to calculate how it could actually work I declined to even offer risk management coverage based upon the information presented. With such a high value offer for only a relatively small cost to the consumer, to me it made no logical sense.
PIMS-SCA was not the only company to hold this view, nevertheless Hoover chose to completely ignore both mine and the industry's advice and continue on its calamitous crusade without considering the potential cost or consequences and as they say -- "the rest is history".
I still believe that there are lessons to learn from this promotion, despite the passage of time. Amazingly, the problems faced by Hoover can and do happen today, but maybe not quite as dramatically. There are some promoters from time to time who consistently fail to risk-manage promotions adequately, either through the belief that "it couldn't possibly happen to them" or indeed fear of the term "risk management". Many promoters and brands still do not fully understand what it is, how it works and what it can mean to a promotion.
This is why over many years PIMS-SCA has carved out its own niche, having built up a reputation for understanding promotional risk management for the benefit of brands. Marketers ought to be fully aware of promotional risk management as it can be a very useful marketing tool.
Like Hoover, promoters may believe they have the most fantastic promotion, but if they haven't thought it through with all possible outcomes, the promotions success can be the brand's failure.
Relying on language such as "while stocks last" in the terms and conditions, as seen recently in the press, is not a viable alternative to having a properly risk-managed promotion. Promoters looking to hide behind language such as this to avoid liability to customers are often exploited by the press, resulting in the brand receiving adverse publicity.
Risk management ensures promoters maximise their promotional budget, while offering balance sheet protection. If a promotion does better than anticipated, the risk management company is there to pick up the extra costs.
With marketers increasingly more accountable for their own actions, they need to be aware of the risks and various options available to them in order to stretch their promotional budget to the maximum. Embracing the experience and expertise of a risk management company greatly increases promotional opportunities, gaining valuable publicity, without fear of financial risk.
Simply by talking to a risk management company ensures that your promotion does not go down in history as another classic piece of sales promotion that went wrong.
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