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Welcome to the best internet video ever.
It has everything: planes, vacuum cleaners, marketing blunders, the British Royal Family,
corporate humiliation, Italian appliance companies, and, most importantly, planes.
Now, if you’re one of those fussy crumpet-munchers that we call the Brits, you’ll know that
Hoover is a company that makes vacuums—in the UK, you don’t even call it vacuuming,
you call it hoovering.
Like how Brits call cookies, biscuits, or call fries, chips, or call six raccoons in
an unconvincing human suit, Prince Philip.
Now, back in 1992, amidst Bill Clinton getting elected, Batman Returning, and Macaulay Culkin
being lost in New York, Hoover discovered that they had a surplus of vacuum cleaners
and washing machines, and so they decided to hold a promotion to get rid of them: a
promotion so insane that it makes Moviepass look like Microsoft—any customer that spent
£100 or more on a vacuum cleaner or washing machine would get two round-trip tickets to
select European destinations.
Of course, round-trip international flights were generally worth much more than vacuum
cleaners, so to keep things profitable, Hoover had a plan: first, they would try to upsell
anyone who tried to spend just the minimum £100 requirement, convincing them to buy
pricey accessories or a more expensive model; and second, they would reduce the number of
tickets they actually had to hand out by making the process of getting the tickets more confusing
and convoluted than YouTube’s content ID appeal system.
First, after spending at least £100 on their product, customers had to mail a receipt and
application to Hoover within 14 days.
Then Hoover would mail them a registration form, which they also had to mail back in
14 days.
Then Hoover would mail a travel voucher, and customers had to choose a date, point of departure,
and destination, and mail that back to Hoover; but Hoover could reject those choices.
If that happened customers could mail in a new selection, but Hoover could also reject
that, and then Hoover had the right to select the flights themselves, which the customers
could either take or leave.
It was a brilliant business strategy—for each person, they’d either lose hundreds
of pounds, or infuriate customers through intentional inconveniences.
If there’s one thing I know about business, it’s that you should lose lots of money
and make all your customers hate you.
I mean hey, it worked for Uber.
At first, the plan worked—the surplus was getting bought up, and because of the bureaucracy,
only about 10% of customers actually redeemed their flights.
But then, Hoover made what many consider to be one of the worst business decisions in
the history of business, right up there with New Coke and the DC extended universe: they
doubled down, and expanded the offer to include round-trip flights from the UK to America.
That, on its face, sounds totally insane—but when you actually dig into the numbers, it
turns out, it was totally insane.
Apparently, the people at Hoover didn’t only suck dust off carpets, they also sucked
at math.
You see, the most popular vacuum model to meet the £100 minimum was this, the Turbopower
Total System, which sold for £119.99.
For each Turbopower sold, Hoover made about £30, but two round-trip tickets from the
UK to America cost about £600.
That means for every person redeeming tickets, Hoover lost… okay subtract, carry the one,
square root, math words… for every ticket redeemed, Hoover lost £570.
They advertised their offer in print ads that read: “Two Return Tickets.
Unbelievable.”
But people did believe it, so much so that Hoover saw a surge in sales more than 10 times
what they had expected—they not only blew through their surplus, they had to nearly
double the staff in their flagship plant just to keep up with demand, but even though they
were selling more vacuums than ever, they were losing millions.
Soon, 300,000 people bought Turbopowers in order to get their two tickets, which meant
that if Hoover honored all those requests, they’d be looking at a loss of £171,000,000.
Which is… you know… bad.
And so, Hoover desperately tried to do everything they could to deny people flights: they said
that thousands had filled the forms out wrong, they assigned customers to flights that departed
hundreds of miles away—they even got into the holiday spirit by sending their request
forms out on Christmas, in the hopes that a combination of mail closures and holiday
distractions would keep people from responding within the 14-day window.
Soon, customers discovered what Hoover was up to, and an entire interest group, the Hoover
Holiday Pressure Group, formed and demanded that Hoover clean up their mess, and eventually,
the courts got involved, and Hoover was put under legal order to fork over the tickets.
In the end, Hoover sold about £30 million more in vacuums and washing machines, but
had to pay out about £72 million in flights for 220,000 customers—still less than half
of what they owed, which meant that they both lost millions and made millions furious.
The PR fallout was so bad that the British Royal Family even revoked Hoover’s Royal
Warrant, which is a weird kind of endorsement the royals give to certain British companies
because the Royal Family is weird and makes no sense and is partially headed up by several
raccoons in a human suit.
But the PR wasn’t even the worst part, because to get their flights, people had bought a
ton of vacuums they didn’t need, which for years and years would be handed off as gifts
or sold on the secondary market—in other words, now Hoover wasn’t able to sell any
vacuums because everyone already had one, or more likely, three of them.
In the end, several executives were fired, the company was nearly bankrupted, and Hoover
Europe was sold off to an Italian appliance company called Candy, giving a sweet end to
a salty story.
Now, time for an epilogue: there’s another epic business blunder going on right now.
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