Lessons from the pudding guy

True story : In 1999, David Phillips was grocery shopping when he noticed that Healthy Choice Foods was offering frequent-flyer miles to customers who bought its products. A 25-cent pudding would bring 100 miles. Phillips bought 12,150 servings of pudding for $3,140 and then enlisted the Salvation Army to help him peel off the UPC codes, in exchange for donating the pudding.

He mailed his submission to Healthy Choice, and they honoured the terms of the promotion and awarded him 1.25 million frequent-flyer miles, enough for 31 return trips from California to Europe. Phillips also got Advantage Gold status for life with American Airlines, which brings a special reservations number, priority boarding, upgrades, and bonus miles and he got an $815 tax writeoff for donating the pudding!

He is currently earning new miles five times faster than he can spend them, so essentially he has free air travel for life for the net cost of $2,325.

Morals of the story :

1. Always do a full commercial review of any agreement / contract / business decision - check your modelling and assumptions.
2. Make sure that your selling price on a product is greater than the cost to make / buy it.
3. Honour your contractual commitments to increase the value of the trust in your brand.
4. Donate to charity!

Luckily, there are no losers in this story. Phillips bought all his future air travel for $2,325. The airlines sold the miles to Healthy Choice foods so it was a standard arms length transaction and Healthy Choice foods got more publicity from Phillips’ pudding plan than they could ever have hoped to achieve through the promotion alone.

Originally saw this on www.futilitycloset.com