2015 is set to be a record-breaking year in mergers and acquisitions (M&A). But how many of those deals will actually be successful?
Depending on the research you choose to believe, between 50 percent and 90 percent of mergers result in failure.
Although this could be attributed to any number of factors, Paul Hagen, senior principal of customer experience at business and technology consulting firm West Monroe Partners, said success lies with the customer.
“Most of the time, when people are looking at M&A’s, they’re doing a lot of internal navel-gazing, looking at finances, internal systems, synergies, and cost savings,” said Hagen.
“None of this has anything to do with the customers. The customers are certainly part of the equation – there is some disruption in these areas – but no one’s really looking at the perceptions of the customers, nor how the affinity for the brand changes when companies come together.”
The Value of Customers
Marketers, he revealed, are not only key to helping other company leaders realize the value of the customer in these situations, but they can also help reduce customer churn and uncover a bigger value proposition.
Read on to find out what role marketers can play during M&A’s in order to keep the customer experience front and center.
According to customer intelligence firm Walker, up to 80 percent of the value of an acquisition is the acquired customer base. Hagen said that figure sounds about right.
“The primary value of an acquisition is all about the customer,” he said. “When one company is particularly acquiring a company for its customers, the customer value of the deal is about those customers spending money on products.”
Hagen added that, despite this financial significance, customers are rarely brought into the equation.
Marketers in M&A’s
Because marketers continuously keep the pulse of their customers, Hagen says they are critical to ensuring the customer experience doesn’t suffer during a merger or acquisition. Here, he outlines important steps marketers can take during the planning, implementation and post-implementation phases.
- Understand who the target customers are: How many customers are truly loyal? What is the customer perception of the company?
- Redefine the value proposition: Ask customers what they need, and how the solutions can come together to create a bigger value proposition.
“Think about what value the two companies coming together can bring customers,” said Hagen. “Companies should use this as an opportunity to redefine the ecosystem [cross-sell, upsell] and the value proposition.”
- Target customer-centric companies: Marketers should encourage executives to acquire companies with a customer-centric culture, said Hagen.
“Look for companies that have a Chief Customer Officer, are measuring customer experience, and are putting customers at the center of attention.”
- Rethink the customer experience: When two companies come together, they typically focus on mapping out internal systems and processes in order to determine which company’s processes to use moving forward, said Hagen.
Instead, he advised mapping customer processes using journey maps in order to determine how technology systems and other processes should work.
“Use this as an opportunity to rethink with the two companies how to intentionally design the customer experience.”
- Plan customer communications: Hagen said it’s critical that companies have a communications plan in place that addresses pain points of the customer, including their anxieties and frustrations.
- Collect real-time customer feedback: “Many times companies are surveying and getting a gauge of sentiment, but it’s infrequent, and by the time results come back 30 days later, the customers have already left,” said Hagen.
“You need real-time data, so you can address issues right away through communications, or say, ‘We messed something up as we were integrating – let’s go fix it.’”
- Demand accountability: Hagen reiterated that companies should look beyond just the financial outcomes of M&A’s.
“Marketers should advocate for customer experience metrics sitting alongside of financial metrics,” he said. “Above financial measures, companies should stay focused on making customers happy and growing their net promoter score (NPS) over time. If you’re growing top-line customer experience metrics, that has financial implications.”
- Provide closed-loop feedback: Hagen advised communicating with customers about what they really care about, while keeping the integration team informed of how customers are feeling.
- Set expectations: Customers understand that M&A’s are complex, said Hagen, but keeping them informed about progress and milestones will help ease the transition.
Don’t Do It Alone
Hagen left one last piece of advice for marketers.
“Find allies,” he said. “Find the customer experience person or team, and work with them. If there’s not an experience team, be the customer champion – take on that role.”