Published on: February 9, 2018
The iconic outdoors retail LL Bean today is announcing a change to its longtime - and to some, equally iconic - satisfaction guarantee, making a necessary charge in order to address a situation that its CEO says “has become unsustainable … and unfair to our customers.”
The move reflects a shift away from what long has been perceived as a core company value proposition, though the company would argue that it has long been misinterpreted and abused. Nevertheless, it creates a marketing challenge with which LL Bean will have to deal in coming months and possibly even years.
LL Bean traditionally has offered a satisfaction guarantee that lasted virtually forever, pretty much without conditions - at almost anytime, a customer could return an item and ask for a replacement. Now, CEO Stephen Smith tells MNB in an interview conducted in advance of the official announcement, it is shifting to a one-year satisfaction guarantee, and will begin enforcing what it calls ‘special conditions’ that always have existed but were not always enforced. Customers will have to have proof of transaction, and the company will not accept products that have been, as Smith says, “misused, abused, neglected, or that show excessive wear and tear.”
A growing number of returns, Smith says, have been products that are vin such terrible shape that not only can they not be resold, but they cannot even be donated to charity; in many cases, the products have been bought cheaply at yard sales or from charities, with the person then bringing them back to LL Bean for a full-priced replacement.
Smith says that the number of items returned in such horrible shape was approximate to the company’s total boot sales in a year; it has doubled in the last five years, and has grown recently at seven times the company’s rate of sales.
The notion of “lifetime” returns at LL Bean always has been more perception than fact, Smith says. The actual guarantee was customer satisfaction, and the company did was Smith calls “a ton of archaeological work” to determine what shapes it had taken and how it evolved. During the 1950s, he says, it was a two-month return policy, and products had to be in new condition.
Smith says that the way the guarantee was written was for a “more innocent time,” and abuse of its terms - by just 15 percent of customers - was making it unsustainable for the company and hurt shoppers by taking away money that the privately held retailer could have otherwise invested in products and services that would make it more relevant to consumers’ needs. Social media, he says, has exacerbated the problem by amplifying the ways in which people could take advantage of the company.
Smith also makes the point that product defects - even after a year of ownership - will still qualify for an exchange.
In addition, LL Bean is changing its free shipping policy. From now on, free shipping will only apply to transactions of $50 or more. Lower transactions will carry a flat $6 shipping fee. All customers using an LL Bean credit card will get free shipping.
Smith says that it is roughly a 50/50 split between returns sent back through various shippers and those brought back to its retail stores. Over the past two weeks, he says, more than 4,000 employees have been trained in the new rules and the process of developing it, which has taken 18 months.
Note: In an email to customers this morning informing them of the change, company chairman Shawn O. Gorman says that “L.L.Bean has stood for quality, service, trust, and getting people outdoors ever since my great-grandfather founded our company over 100 years ago - and that will never change.”
In other LL Bean news…
CBS News had a story about how LL Bean “has started an employee buyout plan and other belt-tightening measures after a couple years of flat sales. The measures, announced last February, started Jan. 1, with the aim of reducing its workforce by 500 full-time people, or 10 percent of its 5,000 employees. The company also has “stopped contributing to its pension plan,” but “is boosting company contributions to 401(k) plans from 4 percent to as much as 8 percent of annual income.” The
Associated Press notes that this is an approach being adopted by many US corporations.
