A traditional way to show customers that an organization values them and appreciates
their loyalty is through a loud and clear money-back guarantee policy – “If you don’t love a product you
buy from us, simply return it and we’ll give you your money back.” Some companies have endeavored to
be even more customer-committed by promising to allow for the return of any product, any time, for any reason.
That’s certainly the kind of policy that has been employed by two companies
that have enjoyed great business success and high levels of customer loyalty: LL Bean and Costco.
No Good Deed Goes Unpunished!
But unfortunately, in today’s less-principled
world, some unethical consumers see such policies as opportunities to take advantage of the sponsoring companies.
They test the commitment and fraudulently abuse the implied promise by asking for money back on items that have been worn
well beyond normal ‘try-in periods’, items damaged by abuse, even items purchased at yard sales! For LL
Bean the breaking point is said to have come last year when a senior executive with the company found among the company’s
returned items (for which LL Bean had returned money) his own old monogrammed shirt that he had given away in a clothing
For Costco the essence of the company has always been to “strive to ensure members have an
easy, efficient and pleasant shopping experience… [with a] generous return policy and 100% satisfaction guarantee [allowing us]
to provide excellent member service”. But again, immoral customers have been known to abuse the policy asking
for (and receiving) money back for items such as soiled mattresses, decade-old boomboxes, empty bottles of wine (the customer
returning the bottle, apparently complaining that the wine had given him/her a headache), half-eaten cake, a bare Christmas
tree in mid-January, and a ten-year-old pair of Kirkland (Costco’s house brand) sneakers. And, in each case store
personnel stood behind the policy,
Is it a necessary ‘cost of doing business’ to tolerate such
abuses by fraudulent customers to try to do right by one’s honest and reasonable customers?
Customers Are Simply Not Some Are Not Worth
We strongly advocate treating good customers properly, not only because it’s the right thing to do,
but because retaining high-value customers is profitable and makes good business sense. But we also advise clients
that while valuable customers should be recognized and given the highest level of care and service, those customers who
offer little potential, should be treated much differently. Sometimes the best thing to do with low-potential/unprofitable
customers is to find a way to “escort” them to a competitor. (We are reluctant to advise “firing”
customers. Sometimes customers can change significantly, becoming much more profitable. Rude treatment will
prevent them from ever returning. And, “firing” can create a bad confrontation, generating plenty of
negative word of mouth).
So, What to Do?
as it must have pained senior management to walk away from the return policy that played an important role in its company
growth since it was initiated by its founder back in 1912, L.L. Bean announced earlier this year that it has changed its
famous return policy. From now on, items will only be guaranteed for one-year, unless proven defective. (Items
that were bought before the change-over will still be able to be returned after one-year, as long as customers can produce
a proof of purchase.)
An Even Better Option from Costco
When a Costco customer recently tried returning
a printer purchased in 2010, the return was declined. The customer objected, but the store manager took the position that
this return was an abuse and that it wasn’t the first time this particular customer had taken advantage of the return
policy. After a bit of back and forth between this customer and Costco’s corporate offices, the company did return
the customer’s money.
But Costco has an advantage that LL Bean doesn’t. Yes, Costco did
return the customer’s money but at the same time they also applied another part of their policy which states that
“memberships may be canceled due to abuse of the Member Privileges and Conditions.” The individual’s
Costco membership was revoked so the company is rid of that costly customer.
Good return policies and good
customer care are critically important to a business, but the belief that a company must strive to retain every customer
is both misguided and wrong. Businesses are not democracies. Low-value and abusive customers damage employee morale, lower
the bar on treatment of high-value customers, and cost a company on the bottom line.