{"id":5800,"date":"2015-12-09T20:17:04","date_gmt":"2015-12-10T01:17:04","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/l-l-bean-100-satisfaction-guaranteed\/"},"modified":"2015-12-09T20:17:04","modified_gmt":"2015-12-10T01:17:04","slug":"l-l-bean-100-satisfaction-guaranteed","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/l-l-bean-100-satisfaction-guaranteed\/","title":{"rendered":"L.L.Bean: 100% Satisfaction Guaranteed"},"content":{"rendered":"<p><span style=\"text-decoration: underline\"><strong>Company History<\/strong><\/span><\/p>\n<p style=\"text-align: justify\">In 1911, Leon Leonwood (&#8220;L.L.&#8221;) Bean returned from a hunting trip with cold, wet feet. So, Bean decided to make a better hunting boot. With the help of a local cobbler, he attached the bottom part of rubber boots to leather uppers.<\/p>\n<p style=\"text-align: center\"><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Hunting-SHoe1.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-5630 aligncenter\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Hunting-SHoe1-300x169.png\" alt=\"Hunting SHoe\" width=\"325\" height=\"183\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Hunting-SHoe1-300x169.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Hunting-SHoe1.png 478w\" sizes=\"auto, (max-width: 325px) 100vw, 325px\" \/><\/a>\u00a0L.L. Bean\u2019s Creation: Leather + Rubber = Better Boot.<\/p>\n<p style=\"text-align: justify\">Bean then decided to start a business. He touted the benefits of the boots and included a promise that forever shaped the company:<\/p>\n<p style=\"text-align: center\"><strong>\u201cWe guarantee them to give perfect satisfaction in every way.&#8221; <\/strong><\/p>\n<p style=\"text-align: justify\">At first, people weren\u2019t satisfied with the product. The rubber bottoms separated from the leather uppers and over 90 out of the first 100 pairs were returned. Bean, however, was committed to his promise and refunded every unhappy customer.<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Values<\/strong><\/span><\/p>\n<p style=\"text-align: justify\">This experience almost ruined L.L.Bean, but there was upside. It cemented two values that have shaped the company\u2019s business and operating models since 1912:<\/p>\n<ol>\n<li style=\"text-align: justify\"><strong>The Golden Rule:<\/strong> \u201cSell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more.\u201d<\/li>\n<li style=\"text-align: justify\"><strong>100% Satisfaction Guarantee:<\/strong> \u201cOur products are guaranteed to give 100% satisfaction in every way. Return anything purchased from us at any time if it proves otherwise. We do not want you to have anything from L.L.Bean that is not completely satisfactory.\u201d [1]<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/140724_GuaranteeLander_boots.png\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5652 aligncenter\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/140724_GuaranteeLander_boots-300x120.png\" alt=\"140724_GuaranteeLander_boots\" width=\"450\" height=\"180\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/140724_GuaranteeLander_boots-300x120.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/140724_GuaranteeLander_boots-600x240.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/140724_GuaranteeLander_boots.png 736w\" sizes=\"auto, (max-width: 450px) 100vw, 450px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Business Model<\/strong><\/span><\/p>\n<p style=\"text-align: justify\">L.L.Bean\u2019s business model is straightforward. It <em>creates value<\/em> by providing high quality merchandise and exceptional customer service. It <em>captures value<\/em> by pricing at a \u201creasonable\u201d profit.<\/p>\n<p style=\"text-align: justify\">Customer service is the cornerstone of L.L.Bean\u2019s business model. The company is ranked #1 in customer service among online retailers by Stella Service \u2013\u00a0 the \u201cNielsen for Customer Service\u201d \u2013 beating other customer service titans such as Nordstrom and Zappos [2][3].<\/p>\n<p style=\"text-align: justify\">Four things separate L.L.Bean from the pack:<\/p>\n<ul>\n<li style=\"text-align: justify\"><strong>A Legendary return policy<\/strong> \u2013 There are virtually no restrictions. Customers can return almost anything, at any time, for any reason. Customers have even used the policy to return a \u201clive Christmas wreath that had turned brown and a shirt ripped by a rescue crew after a car accident.\u201d [4]<\/li>\n<li style=\"text-align: justify\"><strong>Free shipping<\/strong> \u2013 Bean \u201cdidn&#8217;t want anybody to have to pay extra to do business with him. So he charged a fair price, guaranteed what he sold and shipped it at no charge.\u201d This still holds true. The company provides free shipping and handling in the US and Canada, with no minimums [5].<\/li>\n<li style=\"text-align: justify\"><strong>Fast responses <\/strong>\u2013 A live customer service representative can be reached quickly and easily at all times. The company\u2019s responses are among the fastest in the industry across all channels: phone (20 seconds), email (&lt;3 hours), and chat (7 seconds) [2].<\/li>\n<li style=\"text-align: justify\"><strong>Expert advice<\/strong> \u2013 L.L.Bean\u2019s employees are extremely knowledgeable and go out of their way to help customers\u00a0make informed purchases. Every retail store also runs Outdoor Discovery Schools to educate customers about the outdoors and L.L.Bean products [6].<\/li>\n<\/ul>\n<p style=\"text-align: justify\">The approach is working: 2014 sales were over <strong>$1.6 billion<\/strong> [6].<\/p>\n<p style=\"text-align: justify\">Revenues in 2015 will likely be even higher due to <strong>skyrocketing demand<\/strong> for the the classic (now extremely popular) <strong><a href=\"http:\/\/www.theatlantic.com\/business\/archive\/2015\/10\/llbean-duck-boot-labor-shoes-maine\/410863\/\">L.L.Bean Boot<\/a> <\/strong>and <strong><a href=\"http:\/\/www.boston.com\/2015\/12\/04\/consumers-japan-are-obsessed-with-bean-tote-bags\/gX3jEsOpMHIjDQ6waQt7TI\/story.html\">Boat and Tote Bag<\/a> <\/strong>[7][8][9].<\/p>\n<p style=\"text-align: justify\"><span style=\"text-decoration: underline\"><strong>Operating Model<\/strong><\/span><\/p>\n<p style=\"text-align: justify\">So, how does L.L.Bean do it?<\/p>\n<p style=\"text-align: justify\"><em>Multiple Channels<br \/>\n<\/em>The company has been a multichannel retailer since its earliest days running a retail catalog and a single store in Freeport, Maine (which has been open every day since 1951 to ensure excellent customer service). Since then, the company has maintained this approach by expanding to online and mobile, and opening dozens of stores in the US and Japan [6]. The company now has plans to triple its brick-and-mortar footprint to 100 stores, which will provide more customer touch points and even better service [10][11].<\/p>\n<p style=\"text-align: justify\"><em>Work Environment<br \/>\n<\/em>Great staff are the key to L.L.Bean\u2019s customer service. So, the company has created an environment where they can flourish. In 2015, Forbes ranked L.L.Bean #5 on its list of America\u2019s Best Employers and #1 in the Clothing, Shoes, Sports Equipment category [12]. This people-focused approach has paid off in low employee turnover. Twenty percent of employees have been at L.L.Bean for over two decades. Dana Connors, president of Maine\u2019s Chamber of Commerce, puts it simply: \u201cIf you\u2019re fortunate enough to get a job at Bean, you stay there.\u201d [9]<em>\u00a0<\/em><\/p>\n<p style=\"text-align: justify\"><em>Customer Service Centers<br \/>\n<\/em>L.L.Bean runs three customer service centers in Maine, which operate 24-7-365. During the busy holiday season the staff swells to nearly 2,500 representatives. This enables L.L.Bean to respond quickly to calls, emails, and text, despite high inbound volumes (over 130,000 contacts on the busiest day) [6].<\/p>\n<p style=\"text-align: justify\"><em>Logistics<br \/>\n<\/em>To support its customer-friendly shipping policy, the company built considerable warehouse space and distribution infrastructure in Maine. The order fulfillment centers include a 1M sqft distribution site and employ as many as 2,500 people during the peak holiday season [6]. To support its 100% satisfaction guarantee, the company has also established a separate 135K sqft reverse logistics facility that specifically processes returns and exchanges [13].<\/p>\n<p style=\"text-align: justify\"><em>Product Development and Manufacturing<br \/>\n<\/em>To keep its offerings fresh, L.L.Bean operates a lab for analyzing new product materials, construction and design [6]. For products that are core to the brand (e.g., L.L.Bean Boots), the company has decided to keep manufacturing activities in Maine and sources materials in the US. Although this has caused a backorder for L.L. Bean Boots in recent years, the company is devoted to maintaining high quality standards and cautious not to overbuild capacity [7][9]. <a href=\"http:\/\/www.forbes.com\/sites\/clareoconnor\/2015\/03\/25\/how-maine-bootmaker-l-l-bean-became-fashions-hottest-company\/\">It also provides great publicity.<\/a><\/p>\n<p style=\"text-align: justify\"><span style=\"text-decoration: underline\"><strong>Conclusion<\/strong><\/span><\/p>\n<p style=\"text-align: justify\">L.L.Bean\u2019s recent jump in popularity\u00a0might not last, but the company will make sure that its products, service, and reputation will. The company\u2019s core values and strong alignment between business and operating models have made it successful for more than a century. If this continues, L.L.Bean could be successfully for a century more.<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Sources<\/strong><\/span><\/p>\n<p>[1] <a href=\"https:\/\/www.llbean.com\/customerService\/aboutLLBean\/images\/110408_About-LLB.pdf\">L.L.Bean Wesbite: Our Story<br \/>\n<\/a>[2] <a href=\"http:\/\/go.stellaservice.com\/rs\/359-NUD-293\/images\/Stella%20Benchmarks%20FQ3%202015%20Exec%20Summ%20%281%29.pdf\">\u201cSTELLA BENCHMARKS FQ3 \u2013 2015\u201d (Stella Service)<br \/>\n<\/a>[3] <a href=\"http:\/\/recode.net\/2015\/07\/15\/stella-service-the-nielsen-for-customer-service-raises-another-15-million\/\">\u201cStellaService, the Nielsen for Customer Service, Raises Another $15 Million\u201d (Re\/code)<br \/>\n<\/a>[4] <a href=\"http:\/\/www.npr.org\/sections\/money\/2013\/09\/25\/223787129\/what-happens-when-a-store-lets-customers-return-whatever-they-want\">\u201cWhat Happens When Stores Let Customers Return Whatever They Want?\u201d (NPR)<br \/>\n<\/a>[5] <a href=\"http:\/\/www.llbean.com\/llb\/shop\/514129?page=free-shipping\">L.L.Bean Website: Free Shipping<br \/>\n<\/a>[6] <a href=\"https:\/\/www.llbean.com\/customerService\/aboutLLBean\/images\/FactSheet_2015.pdf\">L.L.Bean Website: 2015 Company Fact Sheet<br \/>\n<\/a>[7] <a href=\"http:\/\/www.theatlantic.com\/business\/archive\/2015\/10\/llbean-duck-boot-labor-shoes-maine\/410863\/\">\u201cWhy L.L. Bean&#8217;s Boots Keep Selling Out\u201d (The Atlantic)<br \/>\n<\/a>[8] <a href=\"Consumers%20in%20Japan%20can%25E2%2580%2599t%20get%20enough%20L.L.%20Bean%20tote%20bags\">\u201cConsumers in Japan can\u2019t get enough L.L. Bean tote bags\u201d (Boston.com)<br \/>\n<\/a>[9] <a href=\"http:\/\/www.forbes.com\/sites\/clareoconnor\/2015\/03\/25\/how-maine-bootmaker-l-l-bean-became-fashions-hottest-company\/\">\u201cHow Maine Bootmaker L.L. Bean Became Fashion&#8217;s Hottest Company\u201d (Forbes)<br \/>\n<\/a>[10] <a href=\"Maine%20retailer%20L.L.%20Bean%20plans%20to%20triple%20its%20stores\">\u201cMaine retailer L.L. Bean plans to triple its stores\u201d (Boston Globe)<br \/>\n<\/a>[11] <a href=\"http:\/\/urbanland.uli.org\/economy-markets-trends\/clicks-bricks-l-l-beans-embrace-omnichannel-retail\/\">\u201cFrom Clicks to Bricks: L.L.Bean\u2019s Embrace of Omnichannel Retail\u201d (Urban Land)<br \/>\n<\/a>[12] <a href=\"http:\/\/www.forbes.com\/best-employers\/\">\u201cAmerica\u2019s Best Employers\u201d (Forbes)<br \/>\n<\/a>[13] <a href=\"http:\/\/www.inboundlogistics.com\/cms\/article\/bean-there-returned-that\/\">\u201cBean There, Returned That\u201d (Inbound Logistics)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>L.L.Bean has thrived for over 100 years thanks to two core values that have effectively aligned the company\u2019s business and operating models.<\/p>\n","protected":false},"author":414,"featured_media":5801,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-5800","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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