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ActiveEdge

Athletic Apparel • $15M ARR

How a PE-backed brand avoided a $2.1M valuation adjustment by identifying $183K in hidden policy drift before acquisition.

$183K

Annual impact

8mo

Undetected drift

$2.1M

Valuation saved

30d

Time to fix

The Problem

ActiveEdge was a PE-backed athletic apparel brand preparing for acquisition. Due diligence required a CX quality audit to validate their operations.

Their internal QA team reported “excellent” performance across all metrics. But the buyer's diligence firm flagged potential margin issues they couldn't explain. They needed independent third-party validation.

CSAT Score

92% (up)

Return Rate

Normal (misleading)

What Merro Found

“Fit issues” were being resolved with full refunds + keep the item, instead of the policy-mandated exchange-only resolution.

The pattern began 8 months prior when the lead agent started doing this to boost CSAT scores. The rest of the team followed suit. No one flagged it because CSAT was up and return volume looked normal—items weren't being returned, so the return rate stayed low.

The Hidden Cost

Duration of undetected drift8 months
Annual revenue impact$183,000
Valuation adjustment avoided$2,100,000
Why it went undetectedCSAT up, returns down

The Fix

1

Immediate Policy Enforcement

Reset all agents on fit issue resolution: exchange-only unless item is defective.

2

Refund Reason Tracking

Implemented mandatory reason codes with manager oversight for “keep item” exceptions.

3

Due Diligence Documentation

Provided buyer with Merro audit report showing identified issue + implemented fix.

Results

$2.1M

Valuation adjustment avoided

30 days

From audit to complete fix

“Our investors asked for CX quality metrics before our Series A. Merro's report gave us exactly what we needed—verified data, not opinions.”
RL

Ryan Lewis

Co-Founder & COO

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