In the week that the ASA ruled a Nespresso promotion was not run fairly, we take a look at why it is so important to always send out prizes or redeem rewards.
Nespresso has been given a stern telling off by the Advertising Standards Authority because of a promotion that went wrong. Last year they offered a free milk frother to customers who ordered over 400 of their coffee capsules. Three people complained to the ASA that they never received their Aeroccino4Milk because Nespresso had run out of stock.
The coffee company responded that based on their previous 5 promotions they had carefully estimated the likely response. However, even though this promotion required double the number of item purchases than the previous ones (400 rather than 200 pods), it did in fact receive twice the number of redemptions which was never anticipated. Nespresso also stated that in response to the blunder they set up a 24 hour helpline to handle customer queries promptly and provide refunds to those who did not receive their free gift. Some received an older model of the frother or a £60 account credit which Nespresso felt was a reasonable equivalent. They also went on to point out that the promotional Terms & Conditions included a disclaimer that the gift was “Subject to Availability” and that once the stock had run out, they ended the promotion and made it clear on the website that the promotion was no longer available.
Despite these protestations, the ASA felt that Nespresso had not made a reasonable estimate of the likely response to the promotion and had failed to consider that the value of the reward was higher than in previous promotions, and the timing was close to Christmas so there were likely to be more orders than usual. Thus Nespresso were in breach of the CAP Code.
The wording of the ruling is clear evidence of the tough approach that the authorities take to disappointing consumers: “The CAP Code stated that promoters must be able to demonstrate that they had made a reasonable estimate of the likely response to a promotion and either that they were capable of meeting it, or that they clearly presented sufficient information to consumers to make an informed decision on whether to participate, for example any limitation on availability and the likely demand. Phrases such as “subject to availability” did not relieve promoters of their obligation to do everything reasonable to avoid disappointing participants”.
Other famous examples
Marmite and Iceland
A Daily Mail promotion offered a free jar of Marmite to shoppers at Iceland stores. Even though over 10,000 jars were in stock and only 6,500 coupons were redeemed many shoppers missed out because the jars were unevenly stocked.
Build a Bear
In their disastrous Pay Your Age Day promotion, customers could pay the age of their child for bears that cost over $50. The response was overwhelming, and families were subjected to 5 hour queues, stores closing early and police intervention to calm the crowds. Build a Bear then made things worse by offering $15 vouchers to all loyalty customers – an offer that was taken up by people not even involved in the initial promotion!
Sunny Co. Clothing
To win an iconic $64 red swimsuit followers simply had to repost an image of it on Instagram. The small company never anticipated that it would go viral and receive almost 350k entries resulting in Instagram. The result was Instragram shutting down their page and $73,000 in refunds to customers who were supposed to have only been charged for postage.
Our Expert Advice?
PromoVeritas run hundreds of promotions every month and have genuine knowledge and passion gained from years of experience. So, what would we have done differently to ensure that this promotion would have been run properly and avoided a ruling?
- Quantify the amount: Claiming “Subject to Availability” does not actually protect you! Your T&Cs should state the total number of items being offered.
- Create a Forecast Document: To be based on previous experience and similar promotions. Ensure it is distributed to all stores so they know they need to be well stocked, and it could be used to as proof of planning.
- Overestimate: To avoid any disappointments it is always best to have extra products available.
- Make sure the stores are well resourced: It would be wise to have stores check their stock levels before launching the campaign.
- Have a Plan B: Avoid disappointing customers by offering them an alternative way to redeem the voucher at another local store or issuing them with an IOU for use at a future date or transferring stock between local stores. Anything that avoids disappointment.
So before committing yourself to another risky promotion, do talk to the experts at PromoVeritas.