Laura Miles is a vice president in the Atlanta office. She joined Bain in 1998. Laura is the leader of the Americas region M&A and MI practices. Laura focuses on consumer products and retail and has particular expertise in hospitality and travel.
M&A viewpoint
Customers often expect the worst whenever mergers are announced. When companies merge, seemingly small changes can make a big difference to customers, causing even the most loyal customers to reevaluate their relationship with the company. Customer defections are often a contributing factor to failed merger integration (MI).
The companies that do the best job of retaining customers in MI situations are those that take a customer-oriented view of the process. They establish customer experience teams, whose role is to evaluate every step of the MI from a customer's point of view. This doesn't change the fundamental activities required in an integration. But it allows managers to sequence and coordinate activities in a way that enhances, rather than detracts from, customer experience.
There are five key customer experience initiatives successful companies employ when merging:
- Set ambitious goals for customer retention and adopt specific customer metrics to track performance. Put customer retention in the deal model. In most mergers, integration focuses on reducing costs or achieving revenue synergies and all metrics and incentives are linked to delivering those synergies. Additionally, align incentives with customer retention metrics.
- Embed the customer experience as an integral part of merger planning. As with any major change effort, the approach needs to start at the top, with executive sponsorship of the customer perspective and regular review and communication by the steering committee. A cross-functional customer experience integration team can assess the impact of all integration activities on customers—with emphasis on the most important interactions affecting the most valuable customers—and provides constructive suggestions for embedding that customer perspective in each integration task force.
- Identify and accelerate actions to improve the customer experience or increase the value of your offering from the customer's perspective. The customer experience team maps out the customer experience from end to end, identifying how customers will be affected at each point and looking for the opportunities to delight or the risks of disappointing them.
- Communicate and listen. Customers left in the dark will assume the worst. Give them a vision for the integration and expected timelines even before you make any decisions. Once you've made a decision, be thoughtful about how and when you communicate. Consider how you bundle messages to optimize the impact on your most valuable customers.
- Empower employees. Provide employees with the tools and information they need to respond to customers caught up in the change. Mergers invariably create stress for employees, who naturally worry about the fate of their jobs. But companies also rely on them—particularly front-line employees—to deliver an exceptional experience during a time of change. This may require a new level of front-line empowerment, which can be uncomfortable for some companies accustomed to more command-and-control management. Merging companies may have different approaches to empowering employees, but satisfied employees make for satisfied customers.
