Ouch! How to Avoid a Costly Lesson with Over Redemption Insurance


Every marketer is looking to create the next great promotion that generates a response among consumers that wildly exceeds all expectations. Such success, however, may also come with a downside.

If the original promotion budget was based on the cost of fulfilling a 2.5% response rate, and the actual response rate hits 6% or 8% or even 10%, the fulfillment costs could put the brand in a deep hole.

The good news is that Over Redemption Insurance from Prize and Promotion Insurance (PPI) provides exactly the protection the brand needs. PPI can structure an insurance policy that keeps a super successful promotion offer from becoming a super costly “lesson.”

Famous for the Wrong Reason

The most famous example of a brand learning a costly lesson goes back to 1992 when Hoover vacuums in the UK offered consumers an airline ticket worth around $900 for a vacuum purchase of only about $150.

So many consumers responded that the Hoover factory had to institute a seven-day work schedule and hire additional workers to meet the demand for their least expensive vacuum.

Some consumers were only interested in the airline ticket and did not even bother to pick up the vacuum they had purchased.

In the end, Hoover did generate $45 million in additional sales, but spent approximately $75 million in airline tickets and legal settlements related to the promotion. Ouch.

If Hoover had opted to pursue Over Redemption Insurance, the brand would have been able to avoid that financial hardship. The easiest way to avoid a similar situation the next time you’re creating a killer consumer offer is to include Over Redemption Insurance from PPI in your planning.

How Do I Figure Out What Coverage I Need?

PPI can help you with that. The primary questions we need answered in order to write your Over Redemption Insurance policy include:

  • How long will the offer be available to consumers and how long to consumers have to redeem?
  • How many offers will be distributed to the public?
  • What does the consumer need to do to complete his/her redemption?
  • What is the actual cost to the brand of each redemption (not the retail cost)?
  • What is the marketing plan? How the offer will be communicated?
  • What level of redemption is expected?
  • What was the redemption level on similar offers made in the past?

Over Redemption Insurance is easy and inexpensive way to make sure the redemption costs of a successful promotion do not break the promotion budget.

Contact PPI at 888-407-5841, email us, or fill out our quick quote request to let us know what you’re interested in doing.  We can help you make it happen.

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