Evan Schuman's StorefrontBacktalk

The collision between in-store, mobile and social is generating some wild and bizarre promotional ideas that go way beyond sales, coupons and loyalty programs. And those experiments risk lackluster results. (How many sales are rung up because of those Shopkick scavenger hunts, anyway?) But Microsoft’s ill-fated foray into unusual in-store marketing this week demonstrated that if a promotion is badly enough conceived, it can actually generate negative results.

In fact, Microsoft’s effort produced a bad-results hat trick: It didn’t drive more store (or mobile or online) traffic, it wasted time for both store associates and customers, and it made the retailer look bad.

The latest round of Microsoft’s “Windows Phone Challenge,” which was launched on March 22, invited anyone with a non-Windows smartphone to come to a Microsoft Store and compete in one of five challenges—all of which were designed to be won by Windows phones. The goal: Beat the associate with the Windows phone at an associate-selected challenge—say, uploading a picture to Facebook or checking the weather in two cities—and the customer wins a $1,000 laptop. The losing customers got the chance to trade in their old phones for new Windows phones.

The highest profile problem arose on March 25, when a customer at the Santa Clara, Calif., store won his check-the-weather challenge mostly by luck—he happened to have weather apps for two cities already running on his phone’s screen—but was then told by first the associate and then the store manager that he hadn’t really won. It took a blogosphere-wide stink and some intervention from a manager in Redmond to get the winning customer his laptop prize.

That’s what got all the negative attention, but it wasn’t the only problem with the promotion. Some customers who showed up didn’t care about the challenge—they only wanted to trade in their aging iPhones, BlackBerries or Android phones. But they still had to wait in line, in some cases for an hour or more, to take a challenge they knew they wouldn’t win, just so they could swap for a new Windows phone. That wasted their time, and it wasted associates’ time managing the line and running the challenges.

Worse still, while those people were in line, they couldn’t look at products or buy anything in the store. Those would-be customers may have been brought in by the promotion, but after an hour in line how likely were they to spend more time in the store? And how much new traffic does that count as?

Then there was the traffic that did want to play to win—but only wanted to play, not to buy. It shouldn’t be a big surprise that the challenges were designed so no one would win the laptop, and the associates working the challenges were reportedly briefed so they’d pick a challenge that the customer’s phone would lose. (For example, iPhones have fast cameras, so no take-a-picture-and-upload-it for them.) This was a marketing stunt; of course the odds were in the store’s favor.

But how smart was it to ask for a photo of losing contestants next to a “Windows Phone smoked my Android” sign? Yep, that’ll sure encourage those contestants to return as regular customers.

And how smart was it to hold a contest in which the only way for customers to win was to make Microsoft’s products look inferior?