Anyone who has been involved in a merger or acquisition at management level will know just how many aspects of the business require your attention all at once. Prioritising, in terms of both time and money, becomes increasingly difficult as the merger proceeds and there is a serious risk that a vital area of the business can be forgotten during the handover.
One crucial issue that surprisingly gets overlooked time and time again in mergers, is the small matter of looking after the business' customers; the very people that allow it to exist as a (hopefully) profitable entity in the first place.
Keeping customers happy post-merger is no easy task, but as with the vast majority of M&A matters, the risk of losing customers can be mitigated with a bit of forward planning and a proactive management team.
The first step to maintaining loyalty is understanding the customer mindset. In most cases, the issue is simply an extension of a natural human fear of change. Unfortunately, a substantial number of businesses underestimate the power of 'habit' when it comes to managing customers during a merger, and end up failing to pre-empt their customers' swift reassessment of services and subsequent departure.
To combat this, the team leading the merger need to remain one step ahead of the customer at all times. It's essential to acknowledge that a takeover is going to jog some customers into reconsidering a company's services and to spend the necessary time and money addressing this.
The important matter here, however, is that these things need to be seamless. It simply isn't enough to put plans in place to improve services six months down the line because by this time customers have had months to observe changes in service and get out of the 'habit' of relying on a company.
Commerzbank's takeover of Dresdner Bank in 2008-09 offers a particularly good example of how to maintain customers' habits in using a company's services and even improve on customer loyalty following a merger. The €9.8 billion merger was announced on 31 August 2008, and by 11 May 2009 the two companies had legally merged.
With less than a year to organise the companies' affairs, the merger team set to work. They were adamant that they wanted customers from both banks to be able to walk into a Commerzbank or a Dresdner Bank branch and access their financial services. However, with legacy IT systems in place that would take time and money to integrate, this was a simple idea that would require some careful planning to implement.
The solution was a central hotline number that staff at bank branches could call to access customers' account details. It wasn't perfect, but it meant that convenience for customers was improved from the moment the banks merged, allowing them to access more branches. People who might otherwise have considered switching banks were given instant and tangible reassurance that their existing services would not only be as good as they had been in previous years, but that they would actually improve.
After setting up the temporary solution, the banks went to work on integrating the IT systems in the year or so following the merger to ensure a long-term solution was in place as quickly as possible.
The Commerzbank and Dresden Bank example is a relatively simple one, but something that took place on a massive scale and involved time and money to put in place. The key for the management teams involved was their recognition that spending money early on in the merger would ensure that they didn't lose customers and stood a chance of making more money in the future.
Pre-empting problems in this way is certainly the first step to improving post-merger loyalty, especially when the purchasing company is in a position to add to the original service. But once the team are aware of the broader issues between the businesses, it's time to get down to specifics and isolate the exact areas to address.
Company Culture
One of the most common areas that require attention is company culture, a somewhat less tangible area of business that is at risk of going unacknowledged. However, experienced business people will know that culture goes a long way to encouraging clients to join in the first place and is crucial in ensuring they stay on board.
When you're looking at a merger, it's an obvious area to focus on from both a staff and client perspective. For client loyalty, the main issue is to provide reassurance that the amalgamated businesses will continue to demonstrate the same values as the individual companies had shown in the past.
Respect previous relationships
Part of addressing company culture issues is looking at the work that was done within the business before a takeover was proposed. This means carefully researching what did and didn't work, and where relationships were formed that delivered well for the business seek to replicate and continue these.
If you get this right, not only will you ensure clients experience high levels of service, you should also give staff a boost by acknowledging their hard work and success; something that should make them more likely to stay and grow with you.
Don't underestimate the power of communication
There will be a lot going on during the merger process, but if client retention is a key goal then it's vital to maintain good channels of communication between management, staff and clients.
Management need to keep staff up to date to ensure they can keep clients informed. The main things clients are likely to want to know are: who they can talk to; what they will be paying, and whether or not anything in the service will change as the merger goes through and post-completion.
When it comes to maintaining customer loyalty post-merger, the principles are similar from multinational businesses through to SMEs: spot the potential weaknesses as soon as possible and divert funds and time towards fixing them before your customers have a chance to worry.
Ultimately, the earlier a merger team can prioritise customer experience the better. To stand the best chance of success, it really needs to be embedded as a crucial and integral part of merger planning from the very start. Leaving customers feeling overlooked gives them time and space to consider alternative service providers, whereas if you can stay one step ahead and maintain retention, the company is more likely to grow with a reliable and stable customer base.
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