Surrendering to the bottom line, L.L. Bean waved the flannel shirt on its lifetime return policy, trading its timeless customer service perk for a one-year version.
The decision was greeted with dismay, curiosity, and — perhaps most importantly — understanding, a reaction that’s vital for a successful strategic shift, said MIT Sloan senior marketing lecturer Sharmila Chatterjee.
“Any time there is a strategic change being done by a company, communication is key,” Chatterjee said. “That is critical regardless of the situation.”
In this situation, some customers were using L.L. Bean’s lifetime return policy as a “lifetime product replacement program, expecting refunds for heavily worn products used over many years,” L.L. Bean executive chairman Shawn Gorman said in a statement. “Others seek refunds for products that have been purchased through third parties, such as at yard sales.” As a result, the company was losing millions of dollars from people returning unsalvageable clothing and other items under the retailer’s return policy. Gorman told the Associated Press this was neither sustainable for the company, nor fair to customers.
Not everyone agrees with the change, with some people already taking to social media to declare their severed ties with the century-old company.
That’s why communication is so important, Chatterjee said. A well-communicated message explains to the customer that a company trusts its external stakeholders, but wants to balance the system so that the company is not being taken advantage of, and “so that [they] can be fair to all the stakeholders.”
Without the right communication, however, the change could seem more self-serving for the company — rather than an attempt to strike a balance among stakeholders.
“You have to be very, very careful in communicating what is this underlying decision,” Chatterjee said. “If I were L.L. Bean, I’d spend significant resources in reaching out to customers,” explaining the what, the why, and assuring customers they don’t mistrust them.
Any company should assume in its approach that their customer is a logical consumer. Explain the rationale behind the decision, she said.
“People are fair minded,” Chatterjee said. “They don’t want the company to go out of business. L.L. Bean has a responsibility to its employees. These businesses provide much-needed jobs. But they also want to treat customers fairly. It’s a balancing act.”
According to Gorman’s statement, customers will still be able to return items within a year — with proof of purchase — and the company is willing to work with customers “to reach a fair solution” if it's after the one-year mark and the product is defective.
He also told the AP that L.L. Bean conducted internal surveys and found that 85 percent of customers were OK with the change.
The original policy was very generous, Chatterjee said, “but it feels like they’ve been taken advantage of.”
Sometimes a few bad apples can cause trouble for the larger population, Chatterjee said, but given the numbers from L.L. Bean, it seemed like it was more than just a few apples.
Ultimately for L.L. Bean, Chatterjee said, “as long as the policy is positioned properly, it’s communicated accurately in a convincing matter to show why it’s being done, and retailers sense it’s going to be fair, consumers are going to be trusted and the quality is going to be retained, they should come out OK.”