MARKETING MAGAZINE 2021
The forgotten stakeholder in mergers and acquisitions Customers play a critical role in their success, but most mergers and acquisitions still fail to include the all-important customer-based perspective.
Norway’s largest bank DNB’s controversial plans to acquire Sbanken proves that companies should never forget to ask themselves: “What is in it for the customers?” Everything did not go smooth when DNB first announced their desire to buy the smaller bank, known for their stellar customer satisfaction record. Thousands of angry Sbanken customers let their frustration be heard on social media. Rival banks suddenly gained new business, after customers from both banks decided to jump ship. So where did DNB and Sbanken go wrong?
CUSTOMERS ARE NOT BUSINESS ASSETS Mergers and acquisitions (M&A) are a common way for
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firms to increase their market share, strengthen their position by getting access to new technology or talent, or enter new geographical markets. At the same time, they are also disruptive events that cause customers to reassess their relationship with the newly merged entity. When acquisitions are made, the hope is that customers will come along too. However, this should not be taken for granted. After all, more than half of M&As fail.
WHY? Because managers often focus on operations and finance at the expense of focusing on their customers. Given the prevalence of M&As and a growing familiarity with the merger process among consumers, it is essential to understand how
TUBA YILMAZ Associate Professor Department of Marketing
firms should manage customers during the M&A process.
FOUR WAYS TO KEEP CUSTOMERS HAPPY No matter what reason lies behind it, an M&A boils down to keeping current customers happy and/or acquiring new ones. How customers react to acquisitions depends on their prior attitudes toward each of the firms involved, the extent to which they see the firms as fitting, and personal attribution. Here are four things DNB, and any managers out there, need to keep in mind when approaching customers who are uncomfortable with the disruptive nature of M&As: • Communication, communication, communication Make sure you communicate to customers on both sides
– very quickly – to reduce uncertainty and lower customer defection. Let them know what is happening, how fast things will change, and what the M&A means for them. Highlight the potential improvements the M&A will result in and pledge your continued commitment to the customers. When customers perceive that your acquisition is made with the customer in mind, their trust in the merged entity will increase, and their uncertainty about the merger will decrease. Customers also feel that M&As restrict their freedom of choice. Communication lets them regain control by making them feel part of the process.
