The power of trust in building a brand

A guarantee to boot

Outdoorsman Leon Bean was very familiar with the backwoods of Maine. Years of roaming the wilderness had given him ample experience with fishing and hunting and the gear needed for these activities. One item that left him wanting were his boots, which failed to keep his feet dry in the wet terrain. He decided to create an improved version that mated a leather upper to a rubber sole and would hold up better in the conditions.

Bean set up a company bearing his name to manufacture and sell this new shoe. He signaled trustworthiness by guaranteeing the product unconditionally. L.L.Bean was an early pioneer of a radical policy in retail: anything it sold could be returned, at any time, if it didn’t perform to the customer’s satisfaction. The definition of “satisfaction” was left to the buyer’s discretion, and proof of purchase was not required. This was in keeping with the sturdy ethos of the rural New England towns that shaped Bean’s upbringing, where reputations were built and maintained for the long term.

This approach initially turned out to be very costly. 90 of the first 100 pairs of boots he sold were sent back, revealing unexpected issues with the design that needed to be sorted out. Instead of abandoning the idea he absorbed the financial hit and learned from these mistakes, sending a redesigned version back into the market.

The foundation laid by this boot and the ironclad commitment to satisfaction helped L.L.Bean grow over the next decades into one of the most prominent American brands in outdoor equipment.1 Customers knew that a manufacturer willing to stand behind its products forever must have paid attention to quality. They reciprocated with loyal patronage that helped the company grow from its modest mail-order beginnings in 1912 to an international brand that today has over $1.5 billion in annual sales, with thousands of employees.2

Bean was a pioneer in extending trust to his customer base. The founder took the genuine risk that the goodwill he offered wouldn’t be justified by greater sales. His fledgling business could have been swamped with returns from those with unreasonable expectations or just acting in bad faith. But for over a century, L.L.Bean’s guarantee helped it stand out as the marketplace grew more crowded.

Now it’s personal

Extending trust brings an element of risk, but it can lead to deeper engagement with the right kinds of customers or other groups that matter to an organization. It can be a mechanism for identifying and attracting a specific demographic. It relies on the principle of reciprocity, as most do not want to take without giving something commensurate in return.

Unfortunately for L.L.Bean, the story doesn’t end there. As the company’s footprint expanded so did the number of people who exploited the guarantee to circumvent the basic economic requirement of paying for things. Some would find L.L.Bean-branded items in garage sales and thrift stores and return them—eliding the fact that they had never used the products. Others had no compunction in returning goods that had performed admirably but reached the end of their useful years, as if indefinite use was a reasonable expectation.

The original guarantee was based on a spirit of mutual trust. On the company’s side, it would do its best to offer goods that functioned as expected when used for their intended purposes. Purchasers would in turn pay a fair price, and in case of defects expect only to be made whole, providing valuable product feedback in the process.

The anonymity of modern society seems to have made this implicit deal untenable. In recent years the guarantee was increasingly abused, costing the business tens of millions of dollars without a corresponding strengthening of in customer loyalty.3 In 2018, 106 years after Bean first implemented the promise, the accumulating weight of bad behavior brought it to an end. Management revised the return period to one year, now requiring proof of purchase, to the dismay of longtime fans who noted the end of an era.4

L.L.Bean isn’t alone in benefiting from and learning the limits of trust. Men’s clothing startup Bonobos adopted a similar posture towards its young, digital-first clientele when it first burst onto the scene. Eschewing physical outlets and investing heavily in personalized service, the founders also chose a lifetime, permanent return policy.5

In the early years the business grew by enthusiastic word-of-mouth, and these early evangelists spread the virtues of the product and the service levels of the company that made them. But slowly and without fanfare these policies eroded: from lifetime to a year, then to 90 days, and most recently to 45 days—reasonable by retail standards, but not exceptional.

Those first, passionate consumers may have justified the trust Bonobos extended to them, but as the market grew it seems like many others did not. While still in the startup phase the co-founder likened it to handing over a loaded weapon to a counterparty: “if you extend trust to someone, if you put the gun in their hand, they won’t shoot you, and we’ve found that that’s true.” It seems like this worked, up to a point.6

Virtuous cycles

Organizations operate in a web of social relationships, and the more time customers and employees spend gaming the system and finding ways to hustle value from another, the less investment they make in the things that really matter. Perhaps society is sliding away from the more trusting conditions that Leon Bean relied on when he developed his philosophy, and that Bonobos quickly realized no longer held. Yet there still may room for a countercultural return to trust, and it could be better for everyone. Trust is riskier, but far more efficient when it works:

• Some companies have implemented trust in their employee policies, with leave or expense policies based solely on discretion, instead of going into pseudo-judicial frameworks that attempt to codify every conceivable scenario. This helps reduce the costs of protecting against downsides and bad behavior, which otherwise color every interaction with employees.7
• As innovative ways of cheating proliferate, schools can work to ferret out the latest tactics or rather seek to instill a sense of honor in their students, so that exams can be given within proctors, and academic collaboration can bloom without fear of violating rules.8
• Organizations that deal with sensitive market-moving information can either invest heavily in hiring and reward trustworthy people, or else engage in a spiraling cat-and-mouse game of monitoring and rules to ensure that no one uses their insider status to gain an unfair edge.9
• One apparel brand focused on basics has experimented with providing full transparency into its supply chain costs, revealing profit per item. For some products the buyer can even determine a fair markup with pay-what-you-want pricing. The model has yet to revolutionize the industry, but is gaining traction among those dissatisfied with the gamesmanship of traditional retailers.

For smaller and less established organizations, trust is sometimes a necessary starting point. Leon Bean recognized that defining the boundaries of legitimate customer grievances upfront was impossible for an unproven product. Perhaps your organization will eventually succumb to unpleasant realities, as L.L.Bean and Bonobos both did, but using suspicion as a starting point is an impoverished way of operating. Treat your stakeholders warily, and they will respond in kind.

On the flip side, trust can be extremely powerful as a mechanism for building long-term relationships. However you can, begin with it. How do you extend trust to those you serve, hire, and do business with?

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References

L.L.Bean’s website has highlights of its corporate history, but understandably no mention of the change in guarantee.

Adweek covered the new guarantee policy.

The Portland, Maine Press-Herald explains how the company got so popular in Japan, which is the only other country with physical locations.

Business Insider describes the shrinking of Bonobos’ return window.