The Value of Communication When Faced with a Merger or Acquisition

Last year was a big year for mergers and acquisitions (M&A) and according to Deloitte, the value of these deals is expected to increase from 38% in 2018 to 51% by the close of 2019. Why? Tax reforms that provide corporations and private equity firms with additional funding are a driving factor behind this flurry of M&A activity. While companies merge for many reasons, the need to expand the customer base in existing geographic markets remains a consistent top reason to merge with or acquire another company. Why, then, do so many companies lose track of the customer experience during the transition?

The telecom industry experiences an extraordinary amount of merger activity, so Escalent took a look at the experience and the impact on customers. Our study uncovered a gap between customer expectations and company communication during the merger process. This lack of communication often generates anxiety among the customer base. However, if a company can bridge customer expectations and communication, there are opportunities to engage a new set of customers while reinvigorating loyal customers.

Executing a successful merger is a Herculean task. (Escalent understands this firsthand, having just gone through one.) It is easy to lose focus on the customer experience when you are juggling legal issues and myriad internal deadlines. However, setting aside resources to prioritize a consistent and transparent customer communication plan before, during and after the merger can help prevent churn and, in some cases, strengthen customer relationships.

Findings outlined within the study include:

• Two-thirds (66%) of respondents have strong feelings of curiosity or caution regarding mergers, while just one-quarter feel indifferent toward the process.
• The top customer concerns for the result of mergers are service offerings and cost.
• Most importantly, consumers indicate their desire for open, honest communication from the merging company regarding the process and outcomes. A communication strategy for customers should:
  • Explain the benefits of the merger
  • Describe how the merger will affect products, services and pricing
  • Educate customer service staff to quickly address customer concerns
  • Use preferred communication channels

The Bottom Line

When a company announces a merger, customers feel a range of emotions from nervous, apathetic, or indifferent to helpless. Empathizing with your customers’ feelings can actually foster greater loyalty. To craft an impactful, targeted message around your company’s merger, you need to first understand how your customers are different. Whether you are a car manufacturer, an energy company, a major retailer, a health supplier or a tech firm, if you are embarking on a merger or considering an acquisition you’ll benefit from reading What Customers Expect from a Merger or Acquisition.