L.L. Bean has long had a legendary return policy: Return any product, any time, for any reason, no questions asked.
The policy gave the company an almost mythical reputation for quality. When L.L. Bean comes up in conversation, people swap stories. Just a few weeks ago, I heard about a guy who wore his 30-year-old L.L. Bean boots into the store. The boots, well-worn but still functional, had been passed down from his father. The sales clerk offered to give him new boots for free — but he said no.
Alas, such stories are now consigned to history. While the policy drove fanatic customer loyalty, it was also abused. Some people even bought old Bean boots at yard sales and returned them for refunds. Last week, L.L. Bean Executive Chairman Shawn Gorman announced that the company will now accept returns within one year, with proof of purchase. After one year, if a product is defective, it will work with the customer “to reach a fair solution.”
This change won’t just impact L.L. Bean’s brand. It’s also a massive operational challenge. “No questions asked” is an easy policy for every employee to follow. Now, the company is empowering its store staff and customer service agents to exercise their own judgment. What one person sees as wear and tear, another might see as a manufacturers’ defect. L.L. Bean has to give them good guidance — or risk offering wildly different levels of service to different customers.
What can other brands learn from this? My company recently undertook a top-to-bottom return policy review with one of our clients, Public Rec, the men’s apparel brand. They were kind enough to let me share the data from that review here.
This is important for any company considering a significant change to the way it interacts with its customers — even if you don’t sell a physical product. If you sell products, you have return and exchange policies. If you sell services, you have payment terms, cancellation fees, and contract length.
Changing any of these policies can have a significant impact on your customers, your reputation, and your bottom line. Here are the three lessons I learned:
1. Research the competition.
We researched nine competitors. We looked at the length of their return window; exceptions they made for damaged goods; whether they charged for return shipping or restocking; and how much leeway they gave agents to make exceptions.
We learned that Public Rec’s 60-day return policy was more generous than many competitors. While some offered 60, 90, or 365-day return policies, many offered 30 days or even less.
As a result, we decided we could shrink our window to 45 days. If you can save money — critical for a small, growing brand — while still offering customers a significant amount of time to make up their minds, you should.
2. Empower your employees.
We also learned that many competitors gave customer service agents significant discretion to offer refunds for damaged products. By contrast, our agents were only empowered to enforce the 60-day return window.
Any exceptions were escalated to Zach Goldstein, Public Rec’s founder and CEO. That took up a lot of Goldstein’s time, and also made it harder for the agents to do their jobs.
In our revised policy, we empowered agents to offer refunds or replacements if a product is damaged for a reason that is clearly Public Rec’s fault. If damage is the customer’s fault, we outlined specific guidelines on how best to respond.
Enable your agents to use discretion — but give them enough guidance to make consistent decisions.
3. Assess the impact to your bottom line.
Return policies impact your bottom line — but it’s not always clear how. On one hand, every return costs money. On the other hand, a 2016 study in the Journal of Retailing shows that lenient return policies actually increase sales.
We realized we just didn’t have enough data to understand the impact of our decisions on Public Rec’s profits. As a result, we started tracking and regularly assessing returns. This has already yielded results, and we’ve made additional tweaks to our policies based on the data we’ve collected and assessed.
Review your return policy regularly to make sure it’s in line with the market — and your customers’ expectations. Of course, now is also a good time to maintain your existing policy. After all, with L.L. Bean’s move, other policies all look a little more generous than they did last week.
Hey, your policy just got better without doing anything! Bask in the additional shine — your policy is now more marketable, and more of a differentiator.
This article originally appeared on Inc.com.