With Mergers And Acquisitions, Customer Experience Is The Key To Success
Mergers and acquisitions abound in almost every industry. Between 2000 and 2018, nearly 800,000 transactions were announced worldwide, with nearly 52,000 in 2018 alone, according to the Thomson Financial Institute for Mergers, Acquisitions and Alliances. (IMAA).
When two companies come together, it means two sets of customer experiences – and employee experiences – having to co-exist, often with both sides needing to adapt in some way. Stuck in the middle is the customer or client which, in the case of the acquired company, may have to learn new systems or engage with new people.
Darren Hakeman is the head of strategy, analytics and corporate development at 8×8, a cloud communications company. He has led eight acquisitions in the past few years and took time out of his busy schedule to discuss customer experience learnings from those transactions.
Dan Gingiss: What are some of the things that companies should be aware of as they’re looking at a potential transaction?
Darren Hakeman: I think one of the really important things is that a company understands why they’re making the acquisition. And especially in the tech space, there’s a variety of reasons for pursuing different types of acquisitions. It could be specifically about acquiring talent or a team; it can be about acquiring a product or technology; or in the best case, it’s about acquiring all those things plus a really solid and growing customer base. And so depending on the exact reasons for the acquisition that often determines the right path.
Gingiss: As you think about integration priorities and where the team is focused to bring in the new business effectively, which do you think plays a bigger role in terms of the effect on the experience — the technology or the people?
Hakeman: Definitely the people have an outweighed impact. As I think about our most recent acquisition, it was a situation where we were acquiring a company that had a great team, had great technology, we really loved the customer base and it was in a new geographical region for us. We had to make it really clear across the team that priority number one was about taking care of the existing customers and growing the existing business. Very often everyone gets excited about a new acquisition and all the possibilities. We wanted to make sure everyone stayed very focused on all the great stuff that was already in hand and this amazing customer base and continuing to take care of those customers as the team had been doing up to this point.
Gingiss: How do you introduce your customers to your acquired company and their customers to you?
Hakeman: Customers tend to be uncomfortable with change, so you need to be careful in how you approach it. For us it’s been very important to communicate to customers on both sides very quickly; in particular, the customers of the acquired company – let them know what’s happening, let them know that things aren’t going to be changing dramatically on day one. And that we’re going to see a lot of positive things coming along the way as we look to further invest in the business and continue growing. Then is there is there a concerted effort to keep clients with the same account manager, so that the human relationship stays intact.
Gingiss: How often are you able to do that versus maybe that person didn’t come along in the acquisition?
Hakeman: That’s a great point. In our most recent situation, we kept full continuity of all the existing sales relationships. We recognized before we acquired the company that the key part of the value that they brought was their local presence there on the ground, the deep relationships that they had built with many of the customers. So we absolutely wanted to retain that, and as we go, if anything, it’s about increasing the capacity around those existing sales teams so that they can start to do more.
Gingiss: Can you give any examples of where an integration has gone right and maybe where an integration has had some holes or issues?
Hakeman: Sure. I think in terms of where it’s gone, right, like I said, we retained the existing sales structure, reached out to customers immediately, conveyed our overall vision to them as to where we’re heading and that a lot of the great things are in store for the customers. And through that we’ve had a very seamless transition where we haven’t seen any impact to customers and we’ve actually seen new opportunities coming in. In terms of some challenging situations, several years back there were some customers that [felt] forced into a new solution and it wasn’t quite the right time. So there’s certainly been learnings that we’ve incorporated into how we approach acquisitions.
Gingiss: As you said, customers often don’t like change, so it’s probably inevitable at some point that even when you change your logo, people get upset, right?
Hakeman: That’s right. The branding has to be carefully thought through and at what point do you shift to one brand over the other? We’ve been very careful about that and recognize the value of, for example, the acquired brand and in particular with existing customers and in specific regions where they’re operating today. So we’re maintaining that, but as we think about new markets, we can make different decisions around the branding.
Gingiss: Where does customer experience fit in the list of important to issues when you’re considering an acquisition or a merger? Is it one of the core items that affect the decision, or is it more like something we deal with once we’ve decided to make an acquisition?
Hakeman: Before an acquisition, it’s certainly an important consideration as you’re assessing a potential target company and understanding the fit with your overall strategy and where your business is heading. Certainly, in those cases where you may be bringing on a new business line and a set of new customers, there’s going to be more emphasis around customer experiences and maintaining that continuity. After the acquisition, then, it needs to be a very deliberate part of how you think about integration. Unless you’re very deliberate and intentional about it, the customer and the customer experience can get get lost. That’s why we’ve made it a point to really emphasize repeatedly with all the team members involved around the integration that priority number one is to take care of our existing customers, treat them the way we’ve been treating them, make sure there’s continuity in their experience and focus on growing the current business. We need to be very thoughtful about how we approach integration, how we place demands on the new team coming in and ensure that we’re not doing anything that pulls them away from the essentials of taking care of the customers.
Gingiss: As you’re looking at potential companies to acquire, is it the case where you identify a company in part because they offer such great experience or do you identify a company where you think the product is really good but the experience is less than desired and you think you can improve that piece?
Hakeman: Very rarely the latter. We’ve done many different types of acquisitions; we’ve done acquisitions that have been almost entirely technology-based and team-based with very few existing customers. And we see that as a starting point for building out and launching a much more comprehensive solution, using all the resources across our larger company. But where there is a solution that’s out in the market for us, it’s very important that that solution has the right proof points with the right number of happy customers and the right growth project trajectory. So we often see those coming together – a good solution plus good customer experience.
Gingiss: Is there anything else that you wanted to cover that I didn’t ask you?
Hakeman: Surrounding all this is the cultural element. Did you think about two organizations coming together and being able to really help instill the right culture from day one? As we make these acquisitions, we really make an effort to get our executive team in front of the new employees immediately. On day one of the acquisition, we have our CEO and several executives meeting together with the acquired company, with the new employees, and then we run all those employees through our two-day new hire program. We have a full series of activities that we do with our new hires that we’re sending out now to the acquired company. Obviously, they’re not new employees to that company, but new employees to the overall organization. And so it’s a great opportunity to help establish the overall culture, introduce them to the full organization, and give everyone a common experience.
The conversation has been edited and condensed for clarity.