The Biggest Casualty of M&A: Your Customers

[image error]Every now and then, we hear of a merger or acquisition gone horribly wrong, taking with it two otherwise profitable companies into oblivion. This, despite the endless hours of due diligence by management teams to ensure synergy and value creation when operating as a single new business entity. 

Nowhere is the effect of M&A felt more strongly than the sales organization. Indeed, with revenue growth cited as the most common reason for M&A, sales leaders are often tasked with lofty targets to demonstrate success. But, while sales leaders should be focused on the effective management of customer relationships during this time, they instead get pulled into the nitty-gritty of the integration itself. 

The result: Nervous customers start taking their business elsewhere.

So, how does a sales organization maintain customer focus during and following M&A activity? SEC research has shown that the best companies direct their energies to:

1) Communicate Change to Customers During M&A: Maintaining customer communication enables companies to update customers on the progress of the M&A, any changes in services or new product offerings, and how these changes will affect customers. Periodic communication helps prevent customers from becoming skeptical of the motives of the M&A, as well as the changes associated with the process. Typically, companies can adopt a two-phased communication strategy:

Pre-Merger Communication: Reassure customers of your continued commitment to their company and industry and the seamless transition of services during the M&A.
Post-Merger Communication: Provide any information on changes in services and ensure that customers do not have any problems or concerns regarding the integration process.

Importantly, messages should describe M&A benefits to the customer—placing importance on customer preferences throughout the integration process—instead of benefits solely to the company.

2) Maintain Service Levels for Customers: To avoid disruptions in service levels, sales organizations must move quickly to assign reps to ensure that customers do not experience any drop-off or interruptions in services. Specifically, companies should have reps in place who will be the main points of contact for customers, as well as verified product lines and services. Typically, the most common approaches to aligning sales forces to best meet customer needs include:

Acquiring Similar Customers that Require Similar Services: Merge sales forces quickly as the sales team is fully equipped to serve customers and requires little transition time.
Acquiring New Customers that Require Different Services: Allow merging sales forces to operate independently and build customer relationships to avoid drop-offs in service levels.
Acquiring Similar Customers that Require Different Services: Allow merging sales forces to work independently until sales reps learn how to deliver specific products and services.

Has your sales organization recently been through an M&A exercise? How did you maintain customer focus throughout the integration process? Share your experiences below.

SEC Members, learn more on how to organize for seamless sales force integration and manage the sales organization during mergers and acquisitions.