Don’t Get Run Over by Your Customers

L.L.Bean wasn’t so much trapped by its customers as it was cornered. The recent announcement by the Maine-based retailer that it was abandoning its legendary return policy brought me back to my time as a Sagebrush salesman and what it taught me about the ethics of customer service. In any transaction, fairness is always a matter of striking a fine balance between the interests on either side of the counter. It’s a simple lesson, but one that for L.L.Bean proved quite expensive.

Who bears the risk of being taken advantage of in a commercial transaction is a question that defines the ethics of customer service, and in the answer provided at either extreme, we find a familiar orientation toward the practice of business. At one end is Caveat Emptor, or Buyer Beware, a state of affairs in which the buyer accepts full responsibility for any regrets, whether they are a matter of simple indecision or a sincere belief she didn’t get what she paid for. At the other end, The Customer’s Always Right, a seller is willing to accept any amount of nonsense from her customers, regardless of its impact on business.

Rarely do we find epitomes of these two poles of commercial conduct. Extreme cases of Caveat Emptor are somewhat more common—think payday lenders, dodgy used-car dealers, the baggage policies of Spirit Airlines. But attempts to embody a pure expression of The Customer’s Always Right are exceedingly rare, which makes L.L.Bean’s efforts so unusual (and their end result so instructive).

Until quite recently, the 106-year-old retailer of clothing, recreational equipment, and a miscellany of goods for the great outdoors offered a lifetime return policy. Individuals were allowed to return any item from L.L.Bean, any time they wanted, no matter how long they had had it, and regardless of its condition. They didn’t even have to demonstrate that they had actually purchased the item, which effectively extended the guarantee beyond even the life of the buyer to individuals who were never L.L.Bean customers in the first place.

If this sounds like a crazy policy to you, you’re like most people learning of it for the first time. And yet, even as recently as a year and a half ago, L.L.Bean was proudly touting its “100% satisfaction guarantee,” a company commitment with terms customers were allowed to define for themselves. “We simply look at our guarantee as an extension of our customer service philosophy,” an L.L.Bean spokesman said in August 2016. “As a company, we have made a conscious decision to invest in our customers by standing behind our products.”

The occasion for the quote gives an illustration of the risk L.L.Bean was running, as well an indication of where things were heading: it came in the course of a column by Dennis Green, a retail-sales reporter for Business Insider, titled “I tested L.L.Bean’s legendary return policy by returning 4-year-old shoes.” The shoes in question were Green’s pecan-colored moccasins, a staple of the L.L.Bean catalog. Pictures in the article revealed that the shoes were scuffed and faded, and the stitching near the tongue of one had snapped. If the shoes were dissatisfying, they were dissatisfying in the way that all goods we’ve gotten a great deal of use out of are dissatisfying, which is to say, because they are not brand new.

This may not seem like a good reason to return the shoes, or any reason at all for that matter, but rules are rules. When Green presented the moccasins and said he was no longer 100 percent satisfied with them, the salesman merely took some “identifying information” before immediately processing the return. “No other questions about the shoes were asked.”

In the article, Green admitted to a momentary pang of conscience—“I did feel a bit like a jerk at the counter with my clearly very old and used shoes”—and he was quick to affirm that the guarantee had its limits. “Buying an $84 pair of shoes four years ago does not exactly entitle me to new shoes for the rest of my life,” he said, “and that is not the intent of the policy.”

Surely not from L.L.Bean’s perspective, and yet when a company orients its service around an absolute commitment to The Customer’s Always Right, its views on such matters are irrelevant. Just as Green determined that his satisfaction required the replacement of a well-worn pair of shoes, someone else could decide that $84 entitled him to a lifetime rental of pecan-colored moccasins.

It seems like a lot of people made just such a determination, or one like it, because this past February the company announced that it was rolling back its return policy. “Increasingly, a small, but growing number of customers has been interpreting our guarantee well beyond its original intent,” L.L.Bean Executive Chairman Shawn O. Gorman wrote in a letter posted to the company’s Facebook page. “Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”

If the renters were bad enough, that second group—the rummagers—had grown more conspicuous in recent years, inspired by stories such as Green’s and abetted by online flea markets, most notably eBay. L.L.Bean estimated that, in the past five years alone, “abusive” returns had cost it nearly $250 million, and tales of folks walking into its stores with garbage bags full of goods and walking out with hundreds of dollars in gift certificates were proliferating. As a spokeswoman described the company’s predicament (striking a very different note from her colleague just 18 months before), “People are saying, ‘Oh, I lost 20 pounds. I can return everything for a new wardrobe.’ Or, ‘Grandpa died, so I’m going to clean out his attic.’” She continued. “[T]hat’s not reasonable or fair.”

Some customers disagreed, including Slate’s Justin Peters. As if to indict the scruples of journalists everywhere (or the stinginess of their employers), Peters, as Green did before him, acknowledged visiting L.L.Bean in order to exchange a well-worn pair of shoes, but he admitted to doing so every year for seven years in a row, the first time even receiving a $10 promotional gift certificate for his troubles. (“Not only did I get free shoes, I also got free money.”)

Despite the fact that his own mother had labeled the annual shoe swap a scam, Peters still protested the suggestion in Gorman’s announcement “that it was somehow dishonest for me and other customers to take L.L.Bean up on its policy.” Observing that the company had “made much of its lifetime guarantee” in online advertisements and on its website, Peters took something of a legalistic approach to the policy. Customers shouldn’t be “expected to be strict Constitutional originalists,” he said. “If the intent behind a given policy varies from the text of the policy, then it’s incumbent on the company to change the text of the policy to better reflect its intent.”

In other words, rules were rules. “If they didn’t want people to take the swap,” Peters declared, “they shouldn’t have offered it!”

Now, it’s one thing to observe that when a company maintains an absolute commitment to The Customer’s Always Right, it’s accepting the risk of being taken advantage of. But it’s another thing to contend that, by embracing such an approach, the same company is inviting bad behavior or even sanctioning it. I suspect that Peters (whose rant carries a tone of faux indignation) would not suggest to a young mother who complains about asbestos in the nursery walls and rats in the cupboard that when she decided to rent from a slumlord, she was more or less asking for it, but that’s essentially the logic he applies to L.L.Bean.

Rather than open season on the good will of buyers or sellers, another way of regarding business conducted under the express terms of Caveat Emptor or the Customer’s Always Right is as a commercial exercise in abject trust: either by buyers in sellers or by sellers in buyers. L.L.Bean often framed its “100% satisfaction guarantee” in just such terms. “Our guarantee is not a liability, but rather a customer service asset,” the company spokesman told Green, “an unacknowledged agreement between us and the customer, that always puts the customer first and relies on the goodwill of our customers to honor the original intent of the guarantee.”

If such a commitment seems foolish, it speaks to a general cynicism about the nature of human relationships of which, we sometimes forget, the hurly-burly of business is no small part. The gloomy view was not shared by Leon Leonwood Bean. “I do not consider a sale complete until goods are worn out and the customer still satisfied,” he said in 1916, four years after he founded the company that still bears his name. The absolute commitment to customer service was purchased at a high price almost immediately after he launched. In a three-page flyer he sent to nonresident hunting-license holders in Maine, Bean touted a waterproof boot that he guaranteed “to give perfect satisfaction in every way.” Of the first 100 pairs he sold, 90 failed this test when the rubber bottoms of the boots separated from the leather tops. The mistake nearly put Bean out of business, but he kept his word and refunded the purchase price for every disappointed customer.

Offering refunds for faulty stitching is a far cry from affording customers the opportunity to rent penny loafers for life, but one must willfully misread the company’s “100% satisfaction guarantee” to discover the second interpretation. This is the danger of putting Bean’s personal commitment to customer satisfaction into official company bylaws: it transforms an attitude of good will and close attention into a shield for shifty shoppers. Armed with an explicit and unbounded guarantee, they have a ready defense for dubious returns.

Rules are rules, but rules also change. In the case of L.L.Bean, the new set allows refunds for any reason within a year of purchase, and allowances are made for defects in “materials or craftsmanship” thereafter. (In a nod to rummagers, proof of purchase is now required.)

The new policy is not only more reasonable than the one before it; it attempts to be fair rather than hopeful. Buyers aren’t always right, just as sellers aren’t always wrong. To assume the former is to make an angel of the customer, and to assume the latter is to suppose a devil. We are all better off engaging each other with good faith and good sense, allowing for honest mistakes on either side of a bargain, not rip-offs and weekend rentals.

John Paul Rollert is adjunct assistant professor of behavioral science at Chicago Booth.