How to Create a Seamless Customer Experience after a Merger

Too often customers are overlooked when two companies merge when, in reality, they should be the focal point of any new business strategy moving forward. Instead, companies focus on their balance sheets and bottom lines while customers are rendered interchangeable possessions.

In a recent Forbes article, “Why Mergers Kill Customer Value,” Christine Crandell of New Business Strategies reflected on the importance of customers as the ultimate value proposition in the context of a merger. Yet when mergers occur, Crandell noted, customers are treated as an inanimate asset – whereby companies believe their loyalty will remain unchanged through thick or thin.

Having been involved in several M&A transactions, Crandell wrote that the customer is “rarely the centerpiece of integration work.” While customers are the most valued asset in a transaction, Crandell wrote, “they are treated like their loyalty can be bought and sold. In fact, the disruption and chaos from a merger often drives customers away and is the primary reason acquisitions do not measure up to their projected financial benefits.”

In another article, “How the “Starbucks Effect” Could Lead to 200% Gains,” StreetAuthority co-founder Paul Tracy listed a few of the reasons why companies – especially after a merger – should never lose sight of their customers. Tracy compared loyal customers to long-term stock investments. Companies that retain their customers for 10 or more years are more profitable than others, Tracy wrote. 

What’s more, Tracy said that incorporating customers’ needs and loyalty into a business mix will provide for long-term profitability for companies and their investors. Tracy added that businesses with a loyal customer base have an “easier time raising their prices, which can lead to fat profit margins and strong dividend payments.”

Creating a seamless customer experience tied to loyalty and rewards programs can be a daunting challenge during the best of times. Achieving that same seamless experience following a merger takes on added importance replete with a plethora of brand considerations.

What exactly should rise to the top of a company’s punch list to continue to provide a seamless customer experience after a merger or acquisition occurs?

Don Hughes, Chief Information Officer for Kobie Marketing, told Loyalty 360 that outside of technical infrastructure and delivery, a marketer’s first “massive consideration” is to determine what it stands for and what is the affinity for brands in play during the acquisition.

“How do you bridge the gap between two brand promises and deliver something greater than the sum of its components?” Hughes said. “You have to maintain the brand promise.”

Understanding the concept of brand affinity – a metric that allows marketers to predict how a customer will behave – and the statuses within those relationships is an integral part of ensuring a seamless customer experience after a merger, Hughes said. Focusing on this area has to be a priority.

Brand affinity adds a useful layer of information that helps differentiate among consumers in for market segmentation, Hughes said. Customers who demonstrate brand affinity are more likely to stay with the company, make referrals, and enjoy high levels of satisfaction.

Hughes used the following example to describe how a merger can result in a seamless customer experience.

“A single father with a son marries a single mother with a daughter,” Hughes said. “How are things going to be the same and different? The good news is you’re getting more. Understanding your status every step of the way will make things better after an acquisition or merger. It’s more and it’s better. That’s the customer goal.”

Hughes cited some of the most overlooked components of the customer experience that brands often fail to address or don’t address efficiently after a merger.

“The No. 1 thing outside of brand affinity and status is responsibility for these two entities coming together,” he said. “Keep things that are easy for consumers after integration. Don’t make them jump through hoops and red tape and make something that used to be easy no longer easy. That drives consumer frustration. We have to contain our end customer service-level agreement. They want better prices, better offerings to where they would’ve been before because they felt they had a home. But because of the acquisition, that home has been leveraged. People don’t like having their boats rocked. Acquisitions rock the stability of their comfort level.”

During or after the completion of a merger, Hughes said a marketer’s primary themes are a brand promise, brand affinity, keeping things easy, and maintaining those customer commitments around support, service, and timeliness.

“Those are the large pieces of the puzzle,” he said.

Hughes offered the Southwest Airlines acquisition of AirTran in 2011 as an example of a “bravo moment” that captured a seamless customer experience.

“Those two companies have an incredible support service, timeliness, and brand affinity,” Hughes explained. “For them and their customers it was business as usual. They decided they were going to share Southwest points and AirTran points, and customers could shift points from one account to the other, and its online experience was seamless as well.”

For customers who had affinity with AirTran, the experience of flying didn’t change much after the merger, Hughes said, and vice versa with Southwest.

“Management within Southwest built a brand promise around AirTran and extended the AirTran environment,” he said. “Southwest made an enormous point about embracing both brand promises around comfort and price, flexibility and empowerment of employees, and extended both sides of this brand promise to the customer. That’s more significant for the consumer, regardless of which company you were aligned with.”

Keeping things simple and extending both companies’ brand promises to the customer made that merger a success, Hughes said.

“From a customer experience perspective, it’s one of the strongest examples I’ve seen in the past 10 years,” Hughes said. “High support service in a time-sensitive nature done with relative ease is a herculean task.”

Jonathan Clarkson, director Rapid Rewards, Southwest Airlines, told Loyalty 360 that the first thing an acquiring company must resolve after a merger is reassurance and a regular cadence of communication.

“With the AirTran acquisition, the first thing we did was reassure the AirTran customers because they were undergoing the most change,” Clarkson said. “We heard concerns around the future value of credits AirTran members had earned, so we took it upon ourselves to reassure AirTran members. Ultimately, the AirTran loyalty program would fold into the Southwest program, but their credits were safe and secure.”

Sometimes companies involved in a merger have a tendency to underestimate a resistance to change, Clarkson said.

“Going into that possibility with eyes wide open will behoove anyone,” he said. “People like things a certain way for a reason. With any two organizations getting together, there also has to be a clear planning regarding technology timelines. Mergers and consolidations, in general, have been good for the airline business in recent years.”

Mark Johnson, CEO and Chief Marketing Officer of Loyalty 360, said the challenge is looking at it from a customer perspective because the tendency is for companies to focus on self-preservation instead of “listening to, nurturing, and responding to concerns that the market and individual customer bases may have.”

Another consideration, Johnson cited, is the impact of external influences that may not always be neutral.

“Like it or not we live in an increasingly consumer protected world,” he said. “The impact of media entities that may scour a merger as that of ‘corporate greed, malfeasance, or anti-consumer sentiment’ needs to be thought of. Brands need to be cognizant of these impacts and how a change to a loyalty program that makes rewards less attainable for some groups and more attainable for others (even it if leads to program and marketing efficiencies) can be played within the media. The fervor that can arise needs to be planned for or a proactive communication may turn south.’’’

Recent Content

Membership and Pricing

Videos and podcasts

Membership and Pricing