When Amazon announced that it would acquire Whole Foods, I thought it was a smart logistics move. Amazon could increase its business by offering fresh food from a significant network of stores that already exist. I don’t doubt the company’s ability to deliver kale, eggs, and crackers along with books and electronics. It takes more than a good product and willing buyers to ensure that mergers and acquisitions work.
Customers who feel disrupted by a deal will look for alternatives. Click To TweetYour competitors will be on the lookout for your missteps and try to swoop in. Millionaire Insight Programs estimated that about 25% of people with investable assets of $1 million or more will move their accounts following their bank’s merger.
You may know exactly how many customers you lose, even if you don’t correctly identify why. What you won’t know is how many customers you could have attracted, but didn’t. There are three causes for this:
- The integration has drawn attention inward
- Your unhappy customers are talking
- You have not made your value clear, relevant, and credible
What would your customers tell you, if only you had asked? My research, done on behalf of clients who grow through mergers and acquisitions, as well as divestitures, reveals what it takes.
Show Me the Value
Amazon recently announced that their Prime members are able to purchase turkeys at Whole Foods for a lower price per pound than non-members. Amazon, Whole Foods, and a product on millions of shopping lists at this time of year form a trifecta, all nicely associated with one another. That’s a smart move.
If you take a stroll through a Whole Foods store, you’ll notice some items that are being sold for a lower price than previously. The signs near the product indicate not only that the price is lower (avocados, for example) but also have the Amazon name on them, in Whole Foods green – you can’t miss the message.
Look Me in the Eye
“You can talk a lot about new technology, but keeping customers is about service,” said Paul Lacouture, now retired from Verizon and a director at NeuStar.
Lacouture is absolutely right. Your customers want to hear how they will be better off and experience the value you tout. Your expanded capacity, technology, reduced costs, and broader footprint are irrelevant to them. These facts are important to analysts who need to understand how you intend to deliver on the investment thesis and assign credibility to your plans. Their opinion matters, greatly, in the short run. They aren’t looking your customers in the eye but if you do, you’ll understand what matters in the long run.
Tell Me the Truth
Mergers and acquisitions are meant to fuel growth but before they do, some things need to break. Adding capacity, expanding and even consolidating, means change and that means gains as well as loss. No one wants to lose value but each constituent group has their own scorecard. Investors, analysts, regulators, employees, suppliers, and a host of others have expectations. Leaders who succeed in high-stakes situations like mergers, acquisitions, and divestitures do not allow the demands of these constituents to obscure the needs of customers.
Meet customer needs reasonably well and surprise them with good news. A favorable price on turkey just before Thanksgiving is a nice surprise.
