Mergers, Acquisitions and Customer Experience in the Age of Data
When one company acquires a smaller entity or engages in a merger of equals, it’s important for both sides of the organization to come to the table and outline how said merger will impact everything from people, systems, brand, products, and services all the way down to real-estate.
When companies merge, they can make seemingly minor changes that can make a big difference to customers, causing even the most loyal ones to reevaluate their relationship with the company. A number of studies have found that more than half of all mergers fail to deliver the intended improvement in shareholder value. Customer defections contribute to that high failure rate.
I’ve been part of integration teams for the acquiring company and on the other side where my company was being acquired. But the most eye-opening experience is the impact of an M&A as a consumer.
Years ago, my favorite tea brand was acquired by a larger brand. At first, the packaging changed to reflect a move to the acquiring company’s brand name and color palette. But over time, I noticed the flavor of my daily treat took on a more bitter taste and what was once my favorite tea became a mere souvenir and I gave up buying it soon after.
If you were a loyal customer to let’s say…an airline company, and if that company is going through an M&A with another airline, would you expect your flight routes or booking experience to be affected? How about your mileage program and your hard-earned Elite status? Would you accept losing those privileges?
Customer experience is an often an overlooked aspect of mergers and acquisitions. While every M&A transaction is unique, they all involve rationalizing and integrating IT systems, platforms, and applications that have critical impacts on products, services, and customers. The most commonly discussed M&A issues tend to be operational alignment, consolidation, and economies of scale, but what about the possible effect the transition has on customers? Shrinking customer loyalties may mean the newly merged business is worth less than the sum of its parts.
When a company integrates an acquisition or engages in a merger, the sooner business applications and data integration teams are involved, the smoother the integration is likely to be. Why? Because data is central to pre-merger analysis and efficient post-merger integration. Data helps not only with keeping the business running but also maintaining and improving customer experience post-acquisition. During a merger or acquisition, you combine customer bases with distinct experiences and unique expectations. Data should be used to make some of the key decisions in the M&A process such as whether to keep existing brand names, products, business processes or even pricing and selling channels based upon customer perception of value on each side of the pond.
