Mergers, Acquisitions, and the Customer

We're going to spend today's Muse discussing a company’s most valuable asset—its people—through the lens of mergers, acquisitions, and the customer. First, I’m going to tell a customer service story and then I'm going to tie that story into a question that leaders should be asking themselves whenever a merger or acquisition is contemplated.

But first, the story. We are all consumers of the internet, and most of us have troubled relationships with internet service providers around the country, especially as it relates to customer service. Last year, a longtime internet service provider here in the La Crosse, Wisconsin area was acquired by another company. I'm not going to name any names, but if you do a little research and put two and two together, you'll figure out the business I'm talking about.

Anyway, the provider that was acquired had pledged to its customers that they would enjoy a fixed rate for as long as they were customers of the company. This was a promise that wouldn’t last long. Not long after the acquisition was complete, the acquiring company required that we switch to their billing system, their way of working. When I got on the phone with a customer service rep to ask about the promise the previous firm had made, the rep said, “yeah, no, we're not honoring that.”

We proceeded to go around and around as I was not going to let a broken promise go unchallenged. I got passed from one customer service rep to another—each time having to restate the issue, along with my account information. As an aside, it’s 2023, shouldn’t we be at a point where I shouldn’t have to repeat myself after being passed between reps? My experience is just another poignant reminder that internal customer service software is one of the last things companies invest in modernizing. You’d think that management within an oft-maligned industry like internet service providers would get the message that investing in tech stack modernization to help smooth out customer interactions would be good for business and their reputation.

But alas, I won’t hold my breath for this message to be received and understood. It must keep getting stuck in management’s spam folder. Oh, and don't worry, I wasn't a jerk. I'm never—I shouldn't say never—I am very seldom a jerk to a customer service rep because I know it's not their problem. They didn’t make terrible business decisions. It’s almost always somebody way up the food chain that made a decision that gets customers riled up, creating the conditions for challenging conversations that are left with customer service reps to navigate.

Anyway, back to the story. Multiple calls went nowhere because the reps I talked to were not properly trained to deal with the question that that I was asking. Promises that I would receive a call back from a leader of the company to explain why the pricing promise wasn’t being honored went unfulfilled—cowards. I was getting frustrated and the reps I spoke to were getting frustrated—in the end, nobody's happy and a terrible customer service experience ensues. The company’s reputation is damaged, sometimes irretrievably.

We resolved the situation to the extent that it could be resolved. While I am not getting that flat rate for life any longer, I did get a discount that will last for a five year period. The point is that it should not have taken that much time and energy on both of our parts to reach an amicable solution. Customer service reps should be empowered to make decisions on behalf of the customer. This is a lesson I learned the hard way during my career. I didn’t always value the expertise of front-line personnel and didn’t always listen to their concerns and feedback as closely as I should have.

Lesson 1: If you’re a leader, listen to what your front-line personnel are telling you about what your customers are saying. Actively listen. Meet them on their turf. Tune in directly to customer conversations. Show you care by taking action to improve the experience of your customers. Taking action will result in improved working conditions for your front-line colleagues.

Now it's time for the question that I alluded to at the top of the show. Do leaders and executives who plan for and initiate mergers or acquisitions think about the customer first and foremost? As a leader who has made acquisition decisions in the past, I can attest to the fact that the customer is usually one of the last things that people are thinking about when we're trying to knit together two different companies.

When contemplating a merger or acquisition, leaders do consider improved profitability and growth, but seldom fully take into account the integration challenges that ensue once you begin to put two businesses together. Rose-colored glasses are used in financial projections, and integration challenges are downplayed in pre-acquisition memos and documentation. The reality is that business integrations are hard and that the customer typically suffers—as do the people of both the acquirer and the acquired.

Case in point from our example at the top of the muse is the pricing commitment that was made by the previous company. Some team sitting in a fancy office—light years away from the customer—made the decision that they weren't going to live up to that commitment. All of a sudden everybody else has to pick up the slack to accommodate for that decision. Employees aren’t happy, customers aren’t happy, and a significant portion of the prospective value of the merger evaporates and/or becomes much harder to realize. The executives who led the transaction scratch their head and say, “why aren't the economics of this transaction working the way that we expected them to?” The answer is that the customer was not first and foremost in pre-acquisition decision-making.

Lesson 2: If you’re a leader and have any influence over a merger or acquisition that's happening at your company, make sure that the customer is at or near the top of the decision matrix. Who else should be near the top of the list when making decisions about mergers and acquisitions? Your people resources.

Any company's most valuable asset is their people—customers and employees. However, your people and the customer are usually not top of mind when we contemplate mergers and acquisitions. I've seen a lot of value destroyed over my career when those two things, the customer and the employees, are not put top of mind.

Thanks for joining me today. I hope you have a wonderful rest of your weekend.