The forgotten stakeholder in mergers and acquisitions

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.

TUBA YILMAZ Associate Professor Department of Marketing

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 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 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.

• Prioritize loyal customers

Customers with a higher level of loyalty will be more strongly affected by an M&A announcement. They have a more deeply rooted sense of ownership and identification with the firm.

These customers require particular interest and priority during the integration process. Consider having dedicated employees or operations aimed at helping these customers transition to the new ownership.

• Use your salespeople

Consumers often develop perception of a firm through their interaction with salespeople. If one company has a poorer image than the other, a merger can dilute salespeople’s organizational identification, changing the way your customers perceive your firm and employees, which subsequently impairs selling performance. Managers can avoid this by emphasizing the perceived necessity of the M&A and building camaraderie by socially including salespeople in the M&A process.

• Corporate branding is a touchy subject

The choice of new corporate branding is a major strategic decision influencing your customers’ behavior. Do you eliminate one firms’ brand in favor of another (assimilation)? Continue to operate using each brand separately (business-as-usual)? Or create a new brand using elements from both firms (fusion)?

Managers need to be especially careful when implementing assimilation branding since this might communicate the dominance of one entity over the other, erasing the past history and relationship with its customers. No matter what you do, post-M&A corporate branding should always be handled sensitively and proactively.

REFERENCES:

Bommaraju, Raghu, Michael Ahearne, Zachary R. Hall, Seshadri Tirunillai, and Son K. Lam (2018), “The Impact of Mergers and Acquisitions on the Sales Force,” Journal of Marketing Research, 55 (2), 254-264.

Dinner, Isaac M., Jonathan Knowles, Natalie Mizik, and Eugene Pavlov (2019), ”Branding a Merger: Implications for Merger Valuation and Future Performance,” Available at SSRN 1756368.

Homburg, Christian, and Matthias Bucerius (2005), “A Marketing Perspective on Mergers and Acquisitions: How Marketing Integration Affects Postmerger Performance,” Journal of Marketing, 69 (1), 95-113.

Thorbjornsen, Helge and Micael Dahlen (2011), “Customer Reactions to Acquirer-Dominant Mergers and Acquisitions,” International Journal of Research in Marketing 28 (4), 332-341.

Tok bærekraftarbeidet til norske bedrifter en pandemi-pause?

Stadig flere kunder klarer ikke å vurdere bedrifter i forhold til den sosiale, økonomiske eller miljømessige dimensjonen av bærekraft.

PÅL RASMUS SILSETH Høyskolelektor Institutt for markedsføring BENGT GUNNAR LORENTZEN Høyskolelektor Institutt for markedsføring

Tidligere i år kom resultatene fra Norsk Bærekraftbarometer, der 150 bedrifter er målt på hvor bærekraftige de er sett fra egne kunders ståsted. Den største endringen fra resultatene i fjor er en kraftig økning i andel kunder som ikke er i stand til å vurdere sin leverandør innen noen av de tre bærekraftdimensjonene.

Dette er kundene som svarer «vet ikke» på spørsmål om bærekraft, den såkalte missing-andelen. Ser vi på bransjenivå var gjennomsnittlig missing-andel i 2020 på 14,5%. I 2021 har tilsvarende andel økt til 24,5%.

Går vi ned på enkeltbedriftsnivå er variasjonen enorm: I årets måling har den «verste» bedriften en missing-andel på 48%! I snitt betyr dette at omtrent hver fjerde aktive kunde hos virksomheten ikke klarer å vurdere bedriften på bærekraft. I motsatt ende har den «beste» bedriften en missingandel på kun 1%.

MINDRE FOKUS UNDER COVID-19

Frem til mars 2020 var det stort fokus på bærekraft blant medier, bedrifter og forbrukere. Dette endret seg naturlig nok radikalt da pandemien traff oss. Det siste halvannet året har det meste dreid seg om Covid-19, og dette er sannsynligvis årsaken til at færre klarer å uttale seg om hvor bærekraftig bedriftene er.

Analysene våre viser også en negativ sammenheng mellom andel ubesvart og total bærekraftscore: desto flere som ikke er i stand til å vurdere bedriften på bærekraft, desto lavere blir bærekraftscoren.

Dette vil i sin tur også påvirke kjøpsprosessen: kunder som ønsker å velge bærekraftige alternativer vil ha færre valgmuligheter fordi de ikke har innsikt eller kunnskap om hva enkelte bedrifter gjør innen bærekraft. Det betyr at virksomheter med høy «vet ikke»-andel blant egne kunder risikerer å bli valgt bort av bærekraftorienterte kunder.

KOMMUNISERER DERE EGET BÆREKRAFTARBEID?

Spørsmålet vi må stille oss er hvordan fremtiden vil se ut når vi vender tilbake til en normalisert hverdag. Det er god grunn til å tro at fokuset på miljøutfordringer og bærekraft vil øke sammenlignet med fjoråret, og desto mer i årene fremover.

Det innebærer at mange bedrifter bør kjappe seg for å få på plass en bærekraftstrategi som på en troverdig måte redegjør for hvordan akkurat deres bedrift skal bidra til en mer bærekraftig fremtid, innenfor både den sosiale, økonomiske og/ eller miljømessige dimensjonen.

Det som likevel er mest prekært nå er å få kommunisert denne strategien ut til markedet. Hvis du mangler en god kommunikasjonsstrategi vil heller ikke kundene få med seg alt det gode arbeidet man gjør, og dermed risikerer man å bli valgt bort av egne kunder ved neste korsvei!

NOEN RASKE TIPS OG RÅD PÅ VEIEN

• Sørg for at «alle» vet hva dere gjør. Da reduserer du også andelen kunder som ikke har en mening om din bedrifts bærekraftarbeid. • Vær åpen og ærlig! Dette er en viktig del av bærekraftbegrepet og påvirker tilliten kundene har til dere. • Ha som utgangspunkt at greenwashing og tvilsomme handlinger vil bli avslørt. Dersom kundene ikke har tillit til dere, så vil de heller ikke tro på budskapene om bærekraft dere presenterer. • Å bli oppfattet som flinke på bærekraft handler om bedriftskultur. En god bærekraftstrategi må derfor kommuniseres godt internt og gjennomsyre alle ledd i organisasjonen.

REFERANSE:

Denne artikkelen er skrevet til 2021-utgaven av BI Marketing Magazine.

For mer informasjon om resultatene fra Norsk Bærekraftbarometer 2021, se bi.no/NBB.

We are all vulnerable consumers

Feeling uncertain or unsafe changes consumer behavior, regardless of background or age.

EMANUELA STAGNO PhD Candidate Department of Marketing

We often think of vulnerable consumers as disadvantaged people who are particularly sensitive to marketing influences. Companies commonly identify consumers as vulnerable because they are poor, they are old, or they are part of a minority group.

Nevertheless, have you ever experienced that you could not afford something that you really wanted and felt bad about it? If so, you have also been a vulnerable consumer.

IDENTIFYING VULNERABLE CONSUMERS

Quite often, companies and institutions use objective indicators (e.g., age, income) to segment the market, target vulnerable consumers, and develop strategies to address their needs.

However, research has shown that consumers are vulnerable not only because they belong to a specific socioeconomic group (e.g., elderly, children, lower income, and minorities), but also because they lack a combination of resources-control that makes them susceptible to harm in the marketplace.

An old person might be independent and able to provide for themselves, but be easily manipulated by information in a promotion because of poor eyesight. Meanwhile, in contrast, a young person might be able to read all the information about a promotion, but feel they lack financial resources because of not having a job.

HOW DO CONSUMERS REACT WHEN THEY FEEL VULNERABLE?

Think about the beginning of Covid-19 pandemic. Many consumers felt they did not have control over what was happening. What did people do? They stocked up on hand sanitizer, disinfectant wipes, and toilet paper.

When consumers feel vulnerable, they act differently depending on the extent to which they want to compensate for the lack of resources or try to regain control.

In the case of Covid-19, people compensated for the lack of control by acquiring products that could give them a feeling of security. However, consumers can engage in many different behaviors when they feel vulnerable.

In my dissertation, we propose that when consumers feel vulnerable, they might rely more on other consumers to substitute resources and regain control. For example, people who are in physical pain look at others to feel protected and try to regain control by becoming part of a group.

Some strategies might help vulnerable consumers feel better about themselves, but the same strategies may also be counterproductive for their long-term wellbeing. If people in pain are more likely to conform to others, they might also become more sensitive to social influence and be exploited.

WHAT CAN MANAGERS DO?

Companies and policymakers can implement several strategies to improve consumers’ marketplace interactions and overall well-being.

1. Acknowledge and map consumers’ vulnerabilities.

Managers should recognize that consumers could experience vulnerability for different reasons than the ones associated with socioeconomic indicators. Companies should develop new indicators to assess when and why consumers feel vulnerable. 2. Help consumers face vulnerability. Once identified the reasons behind consumers’ vulnerability, companies and institutions should help consumers in fighting vulnerability. For example, they could empower consumers when they feel a lack of control or provide alternative resources when some resources are lacking. 3. Do not exploit vulnerability. Sometimes consumers might compensate for the feeling of vulnerability by buying products that they do not need. Companies might think that it is beneficial for them because they will sell products. However, companies should think at how to provide benefits for the consumers not only in the shortrun but also in the long-run, and how to contribute to consumers’ overall wellbeing.

REFERENCES:

Hill, R. P., & Sharma, E. (2020). Consumer vulnerability. Journal of Consumer Psychology, 30(3), 551-570.

Stagno, E. (2021). Some consequences of vulnerability in consumers’ life. Unpublished doctoral dissertation.