CEO Lessons Learned from LuLaRoe’s Leggings Row

There are few harder decisions for a CEO to make than accepting that there may be a problem with their own product—and making that decision public. Mass refund policies not only can be expensive, they are likely to dent a company’s reputation, no matter how well things are handled.

Sometimes, though, it’s imperative that bad news gets out, honestly and directly. Leaders that procrastinate for too long, or, even worse, point fingers at dissatisfied customers, could be doing even more damage to their brand.

The recent travails of LuLaRoe CEO Mark Stidham are a case in point. And although the jury’s still out (literally) on how well the company handled customer complaints about the quality of its leggings, a few lessons can be learned about how leaders should deal with dissatisfaction.

Last week, LuLaRoe launched a massive refund program after hundreds of customers claimed the leggings were too prone to tears. Two have filed a class action lawsuit against the company, claiming it made it difficult for them to claim refunds for allegedly faulty products.

“Some people continue to have questions specifically about the quality of LuLaRoe leggings. We are sorry if we haven’t adequately addressed their concerns. We hope these policies will,” Stidham said in a statement.

He continued: “We want everyone to be happy and believe they received a fair value from their LuLaRoe clothing purchase. We take pride in the quality of our clothing and value the happiness of everyone who interacts with LuLaRoe.”

Whether the complaints have much merit or not, critics may argue that details of the returns policy came too late. Customers had started speaking about holes appearing in leggings months ago, demonstrating the importance to CEOs of keeping a watchful eye on social media chatter about their merchandise.

Back in February, a Facebook page detailing customer complaints about the leggings had more than 1,000 members, growing to around 28,000 today. If the company had engaged with them more directly up front, it could have avoided the issue gaining so much publicity down the track.

LuLaRoe sold millions of garments last year, presumably to scores of happy customers, too. It also has an unusual marketing system, where ordinary people retail its products after buying them wholesale from the company. Even so, being seen to establish and clearly communicate a definitive returns policy from the outset may also have helped Stidham’s cause.

So would consistently delivering a message that balanced the need to respect some customer grievances, without talking down the product more than necessary. Not long after issuing its returns policy, Stidham told Business Insider that the company doesn’t “have much to apologize for”, potentially undermining the authenticity of its returns pledge.

And during a conference call this month with thousands of its sales consultants, Stidham could have chosen better words when advising them on customer complaints. “You go down there and go head-to-head with the negativity. You cannot wrestle with the pig without getting a little mud on ya. Don’t wrestle with the pigs, ignore them,” he reportedly said.

The company later told Yahoo the message needed to be taken in the context of a motivational talk to sellers that intentionally included colorful language. That’s perhaps fair enough, but it wasn’t long before snippets of the speech had appeared on YouTube.

In today’s hyper-connected world, CEOs must assume that whenever they speak, they’re always on air and think carefully about what they’re saying before they say it.