Mergers and Acquisitions (M&As) are fundamental catalysts for companies’ growth. They allow companies to expand into new product and solution categories, capture new customers and win against competitors. But they are also the stuff of executives’ nightmares. For every merger praised by Wall Street for brilliance in strategy and execution, eight others fail miserably and make fallen heroes out of once promising CEOs.
What is involved in a merger or acquisition? Well, there is the pre-close due-diligence process, the negotiation, the legal requirements, approval of the companies’ board and share holders. Then there is the acquisition strategy: two products or one? Two companies or one? Which R&D VP gets to stay? Who leaves? What is the product portfolio? Support model? Sales model? Compensation, contracts, terms and conditions….and the list goes on- the larger and more complex the companies, the longer the list.
But as long as this list may be, and as complex as the companies may be, most acquisitions fail for simple, correctable reason: they shift focus away from the customer.
Think of it this way: imagine you drive a really nice car. It works for you. It gets you where you need to go. You chose custom features like navigation and an enhanced sound system. You two are doing well. One day, you come back from work and find a notice from your car manufacturer. It has identified a problem with your car’s engine. Not all customers are impacted. You are invited to come to the dealership to check how that might affect your car. You are told that regardless of the impact, the dealer is going to ensure your car rides better than new. You go in. There is a long line of customers waiting ahead of you. Everyone at the dealership is running around with their hair on fire trying to manage the line, keep track of inventory, answer phones, take care of standard business like sales and repair. You stand there and wait. And wait. And wait. You keep hearing “we’ll be right with you” but nothing happens. "That is no way to treat a customer of a nice car!" You say to yourself. Now imagine another car manufacturer—one with just as nice of a car—is sending its people in to this dealership. They offer to give you a brand new car—just as nice—right there and then for the selling price of your car. You will be getting all the features you wanted AND getting them in a new car. What would you do? Stick around or go with a brand new car?
This is not dissimilar to what customers experience in most M&As. And just like people have +/- 30 seconds to make an impression (and a lifetime to try and correct it), M&As also have a well-defined, and limited, window of opportunity to capture customers’ loyalty and trust and to develop a positive customer experience during and after the merger or acquisition. Failing to do so results in the innumerable tombstones littering the Acquisition-Hero graveyard and MBA textbooks.
In the coming installments I will discuss the value of customer-experience programs during acquisitions and share critical keys to creating a positive customer experience that directly translate to loyalty, trust, and conversion rate.
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