We are moving deeper into an era when consumers have unprecedented visibility into shop floors and board rooms, and that gives new relevance to a time-honored truth: Trust is not transactional.
Because stakeholders can experience and judge goods and services as never before—and then instantly share those judgments with others with a Tweet or click—companies must now make plain their reason for being, their emotional resonance, and the credibility of their culture.
Employees “shop” for employers in a similar fashion. More than two-thirds (69 percent) of the 1,000-plus working-aged U.S. citizens polled by Corporate Responsibility Magazineand Allegis Group Services indicated that they would not take a job with a company that had a bad reputation—even if they were unemployed. Additionally, 84 percent of these survey respondents said they would consider leaving their current jobs if offered another role with a company that possessed an excellent corporate reputation.
It’s always been true that unhealthy corporate reputations repel, while stellar reputations attract. But consumers now respond to corporate reputations with a new urgency.
More enterprises are becoming what I call “committal companies”—organizations that want to attract “their type” of customers, people who believe in the company’s character, its purpose and values-based mission. But attracting and serving these customers is difficult. Just ask REI, an outdoor retailer that has operated as a cooperative for 75 years. The company halted its longstanding “no-questions-asked, no time limit” return policy and replaced it by limiting the return window for most products to one year from the date of purchase.
REI’s decision was greeted with pointed criticism, but this response really isn’t about return policies. Instead, it’s about a deeper issue: how a company can deliver meaningful customer experiences in ways that are consonant with corporate character. It’s about building communities where both company and customer can trust each other.
Why did REI reboot its policy? It turns out that some customers betrayed the company’s trust—big time.
Too many customers, it appears, were returning too many items, including decades-old items and products that REI never even sold in the first place. One REI “member” (it’s a cooperative, remember) even bragged to Outside magazine about returning loads of non-REI gear to help fund his adventure travels and activities.
More than 150 passionate commenters weighed in online in response to a Wall Street Journal article reporting on REI’s policy shift. They were by turns critical of the previous policy (“Now I know why REI’s prices are so high” … “About time REI woke up to the abuse of the return policy”), morally normative (“bring back shame”), consultative (“customer service should not include fraudulent and abusive merchandise returns, which raises prices for the rest of REI’s customers”), and philosophical (“…lack of personal character and integrity from the minority creates a direct economic cost upon the majority who do maintain a minimal standard of integrity”).
Here’s what many critics and supporters of this policy change get wrong: the premise that REI could turn its trusting culture on or off with the flip of a policy switch, even if it wanted to do so. Developing and sustaining corporate character is complex and nuanced. It takes long, hard work on essential strategic questions. It also requires an ongoing conversation among all stakeholders and, more broadly, continual vigilance.
That’s why REI’s returns decision is relevant and instructive to so many organizations. In March, former Nordstrom sales person Jessica Swenke wrote a tell-all about how the department stores’ “no-questions-asked” returns policy slashed her sales commissions. Her pay, which was based entirely on commissions, would take a hit, she wrote, when “[w]e salespeople have to just stand there and allow people to come up with the strangest lies so they can get money back for something they either regret buying or stole.”
Developing habitually healthy customer and employee experiences requires uncomfortable two-way conversations—sometimes involving passionate, unnamed counterparts—with many different stakeholders and communities.
Sustaining a trusted and trusting culture also requires tough decisions –including the decision that some customers are not a good fit for the company. REI competitor LL Bean has had a similarly trusting returns policy in place since its founding in the early 1900s. The company founder guaranteed 100 percent customer satisfaction—a policy that sometimes requires the proclamation of a principled, resolute “No.” LL Bean said “No” a few years ago to serial returners who were scouring garage sales for old items to return for cash. The company also told those serial returners that they were no longer welcome as customers, allowing 99.9 percent of LL Bean’s customers to continue to enjoy the benefits of a trusting returns policy.
Think about this approach as an inversion of the traditional supply-and-demand equation. In our transparent, hyperconnected world, sellers can be—and should be—much more intentional about the behaviors they seek from buyers. The LL Bean decision was, in essence, no different from banning a shoplifter from a store.
My sense is that REI’s leaders also have their eye on the long term. And it’s plain to see that their complicated efforts to sustain their character continue. With more clarity about what can and cannot be returned, REI employees will no longer have to roll their eyes when they are required to accept returned products for bogus reasons (e.g., an item being “too fuzzy”) from customers who do not behave cooperatively. But is a year-long expiration date on returns enough to preserve a trusting relationship between a store and its customers? Hardly. That relationship, and the construction of corporate character, is far more nuanced.
Our debates and discussions about what it takes to develop and sustain corporate character likewise have been too fuzzy and limited. They are not just about zero-questions-asked return policies. They are really about what is necessary to create and sustain unique customer experiences with customers who share the company’s values.
Corporate character is not determined by how many questions we ask our customers, but by how we question our customers, how we answer to them, and how we collaborate with them.
Originally published on Forbes.com.