At The North Face, a customer who can afford $599 for a ski jacket tends to regard the brand’s satisfaction guarantee as a given, not an extra. “We have an expensive line,” notes vp of global product Joe Vernachio. “People perceive us as a quality brand, and we know inherently that the warranty goes into that perception.”
As chief marketing officer for the 102-year-old Freeport, Maine-based retailer L.L. Bean, Steve Fuller has had the opportunity to watch how the brand’s legendary guarantee (Bean will take back any item, for any reason, anytime after purchase) has operated over his 20-year tenure. Echoing Vernachio, Fuller explains that “the satisfaction guarantee is the very foundation of this brand.”
He recounts the company’s founding legend of how 90 of the first 100 hunting boots that Leon Leonwood Bean made in 1911 were returned after their rubber soles fell off. On the verge of bankruptcy, Mr. Bean took them all back, refunded customers’ money and went back to market with a better boot. To this day, the company continues to use returned products as a kind of R&D lab.
“We go through returns with a fine-tooth comb,” Fuller says. “It’s common for us to take a bundle of returned jackets and look to see if there’s a common failure point”—one that can then be corrected on the production line.
Of course, the idea is to avoid the pile of returns in the first place, and here’s where the challenges of the satisfaction guarantee enter the picture. “If you have that guarantee and you stand behind it,” Fuller concedes, “it puts tremendous pressure on your product development.”
Not everybody wants that kind of pressure. While companies like Lands’ End make it clear they’ll exchange or refund any item at any time for any reason (“Whatever. Whenever. Always.”), reading the fine print of other retailers’ return policies reveals varying efforts to hedge the bet a little.
For example, Briggs & Riley luggage will repair any broken or damaged luggage free of charge, even if an airline was at fault, but “naturally, our warranty does not cover cosmetic wear or cleaning,” its website stresses. If a customer doesn’t happen to like his Acuvue contact lenses, Johnson & Johnson will refund his money—so long as at least 75 percent of a packet of lenses hasn’t been used. And while The Snugg, a popular brand of smartphone and tablet cases, promises a lifetime guarantee, it only applies after the product has been registered, does not include clips or swivels, and is voided if the damage was caused by a force majeure, such as a flood or an earthquake.
Small loopholes, granted, but the disqualifiers of other retailers are so big they beg the question of why they even bother to pledge anything.
Take, for example, the lifetime guarantee on Rainbow brand leather sandals, which does not include wear to the sole, torn straps, damage from dog chewing, “skateboard abuse” or, of all things, “any damage as a result of the sandal coming into contact with moisture.”
There’s a reason for such disclaimers: those consumers who would seek to take advantage of such a policy.
“There are people in Eastern Europe—or maybe Eastern Ohio—who are crooks, who’ll exploit the system,” Solomon points out. He cites the textbook example of the shopper who buys a gently used shirt on eBay for a few bucks, then returns it to a store for an $80 credit. The ethically challenged consumer (“Those people,” as L.L. Bean’s Fuller calls them) remains the No. 1 risk of the unconditional guarantee—and everyone interviewed for this story admitted to having to deal with them. “We’ll always get those people returning the boots after having them 10 years or buying them secondhand,” Bogs’ Cook says. “It’s an obvious abuse of the policy.”
Diane Beecher, CEO of The Brand Consultancy, observes that while upscale brands tend to have customers less likely to abuse guarantees, mass retailers—Kohl’s, for example—slap conditions on their policies to keep too many people from returning lightly worn goods. “Liberal return policies are a great traffic generator,” Beecher says, “but make for some interesting return scenarios with recently used socks and jeans with scuffed knees but no flaws.”
But perhaps surprisingly, those who would seek to exploit satisfaction guarantees are comparatively rare. In the two years Vernachio personally oversaw the warranty department of The North Face, he can recall but one case in which someone was clearly “trying to get a free garment out of us”—and Vernachio went ahead and let him have it. He explains, “I’d rather be taken advantage of than take the risk of accusing a customer, which doesn’t get us anywhere.”
Naturally, eating a loss is part of the satisfaction-guaranteed game. And it may not even turn out to be a loss.
“It’s OK to let a customer slightly take advantage of you from time to time,” Solomon says. “It’s OK because you’re talking with them, and anytime you’re talking with them, you could sell them something else.”
Fuller agrees. “The small minority of people who abuse [the guarantee] ignores the vast majority of people who get it, and the benefit of treating customers the right way is that they’ll reward you—they’ll always come back,” he says.
It is safe to say that Roy Pearson won’t be going back to Custom Cleaners—and not just because he never got his pants back. The judge ruled that a “reasonable consumer” would not consider $54 million to be fair compensation for a bungled alteration job—even with satisfaction guaranteed.