When 90 of your company’s first 100 hunting shoes are returned, you have two options. Give customers a refund and stop selling the shoes or give customers a refund and go back to the drawing board and make a better hunting shoe.
Leon Leonwood Bean founder of the family-owned, Maine-based outdoor specialty retail store LL Bean went with the latter. His customers rewarded him with their loyalty and bought the new an improved hunting shoe and he rewarded them in turn with an extremely generous return policy.
Bean created a lifetime customer satisfaction return guarantee. The return policy was “if something’s not working or fitting or standing up to its task or lasting as long as you think it should, we’ll take it back.”
To qualify for this guarantee, customers did not need a receipt nor did they need to provide proof of purchase. The item that was being returned did not have to be new or in good condition either. Customers had to simply state they were unhappy with the item and L.L. Bean would offer them an exchange or a replacement.
“We stand behind everything we sell.” This is what Shawn Gorman, L.L.’s great-grandson and, the company’s chairman says was the meaning behind the generous return policy.
So successful was this return policy that it moved from just being a customer service feature to a marking strategy.
In a tale straight from the chronicles on “why we can’t have nice things,” this return policy has had to be modified on account of “customer misuse.”
The new return policy places a one-year limit on returns. In addition, customers will also have to provide proof of purchase for a refund or an exchange. The reason for the amendment was abuse and fraud.
In a statement released on Friday, the company said, “For over 100 years, our guarantee has worked just fine, but in the past five years in particular, our guarantee has been misinterpreted as a lifetime product replacement program and we have seen a large influx of returns that have nothing to do with product quality or satisfaction.”
The “large influx of returns” has come at an extremely steep price to the company. “Over the past five years, the company has lost $250 million on returned items that are classified by the company as ‘destroy quality’,” said Carolyn Beem, an L.L. Bean spokeswoman.
There are three classifications for returns. “First quality”, “second quality” and “destroy quality.” Returns tagged as “first quality” are put back on store shelves whereas “second quality” are sold at outlets or donated to charity. Items tagged as “destroy quality” are disposed and most likely end up in landfills.
L.L. Bean said its focus on quality wouldn’t change. The company said the new policy will only affect a small percentage of returns and that it will still work to “reach a fair solution,” even after one year, if a product is defective.
Other cost-cutting measures the company has implemented are a minimum amount restriction on free shipping. Customers wishing to save on shipping costs will now have to spend at least $50. The company is also planning to reduce its workforce through early retirement incentives and modifications to the workers’ pension plans.
How are customers reacting? LL Bean says the response is positively positive. They conducted an internal survey which found that 85 percent of customers have no bones to pick with the new return policy.
Logically speaking we all know that things don’t last forever. However LL Bean built their whole customer service experience around the lifetime guarantee that only time will tel whether their customers are trully at peace with with this change.