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P.O. Box 1421 |
Case Study – Reducing Returns (RMAs)
| Issues | A software company was experiencing a
disturbingly high return rate on direct mail sales of its flagship product.
Its direct mail margins were slim, and the returns were eating away at
profits. |
| Background | When CAD (computer-aided drafting) software is sold
by direct mail with a money-back guarantee and the slogan, "The fastest,
easiest way to draw," one expects a fair number of returns. When the
company expanded its mailings, sales increased, but the RMA rate climbed
disproportionately and profits fell. |
| Solutions | The first steps were to quantify the return
rate and determine the primary reasons for the returns. Working with
accounting and IT, we were able to quickly extract the RMA numbers and
chart them. Returns were running double their earlier rate.
In order to determine why people were returning so much more of the product, we designed a questionnaire that was sent out with refund checks. A business reply envelope was included, and 40% of the customers responded. The results were compiled and analyzed. The product had recently been upgraded to a new version with more features and a revised user interface. The responses indicated that speed issues and difficulties in learning the program were the biggest problems. As a result, we made improvements to the software that addressed these issues a top priority. In addition, we simplified and unified the user materials that accompanied the software to help people get started more easily. We designed a new structure and format for the user guide and had it rewritten to improve its usefulness. We developed an action plan to turn more potential returns around. We started requiring customers to get an RMA number before returning an order so they would have to talk to a company telesales person. We developed and ran training sessions for the telesales operators on how to handle RMA calls by creating win-win situations with disgruntled customers. We gave them greater latitude in dealing with those customers and special inducements for turning them around. Finally, we reduced receiving expenses by adding a tear-off RMA label to the invoice so returns would be clearly marked. We also added a permanent questionnaire on the back of the invoice so the company could continue to track the reasons for returns. It was a very successful program. It resulted in,
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