Last June, outdoor retailer Recreational Equipment, Inc. (REI) tightened up its return policy that allowed customers to return an item at any time for any reason. Customers now have up to a year to return most merchandise for a replacement or refund. The Seattle Times published a good overview of the changes.
REI implemented their new policy to address a reported spike in older items being returned at a time when corporate profits are shrinking. Outside magazine even reported a story of a customer who funded his outdoor adventures by profiting from fraudulent returns.
To their credit, REI's stricter policy remains customer-friendly. You can still return most items for any reason within the one-year period. And, REI still offers a lifetime warranty on any item that is defective. The full text of the new policy is on the REI website.
REI’s generous return policy recently gave my wife and me the confidence to make a purchase we otherwise might not have made.
We were thinking about buying a special cover that would allow our dog to ride in the back seat of our car. Its sturdy material protected the car’s interior while creating a hammock that was supposed to be comfortable for the dog. Our only reservation was we weren’t sure if our dog would actually like it.
The helpful REI salesperson told us to go for it. If our dog didn’t like it, he explained, we had one year to return the cover for a full refund. It didn’t matter if it was covered with dog hair and drool. We could still get our money back.
The return policy sold us. And, it turned out that our dog loves the new cover.
REI did a great job tweaking their policy. They prevented a small percentage of customers from hurting their business while making sure they didn’t punish the rest of their loyal fans.
Here are a few lessons that can be applied to other businesses worried about dishonest customers:
- Don’t punish the majority of customers who are honest because a few customers aren’t.
- Most customers will understand a policy that sets reasonable limits.
- A generous policy can be an effective sales tool.