Retain Customers after an Acquisition

Oct. 17, 2010 - PRLog -- [Edmonton, AB]—When a company is acquired, its loyal customers may feel uncertain about the new owners — uncertain enough to take their business elsewhere. It’s important, therefore, to start making customer-retention plans early in the acquisition process. It will go a long way toward allaying customer fears, thwarting predatory competitors and ensuring the business’s post-deal profitability.

A Proactive Approach

Focusing on customer relationships during and just after an acquisition is critical to successful retention. While it used to be standard to lose a certain percentage of customers, attrition should no longer be considered an inevitable byproduct of an M&A transaction. By recognizing the causes of attrition — such as pricing, product changes, lower service levels and re-branding — and making a plan to address them, you can retain your target’s customer base.

It’s important to be proactive. When, for example, CVS Corp. bought more than 1,200 Eckerd drugstores in 2004, it launched a major marketing and advertising campaign to introduce itself to Eckerd’s customers. It also donated $20 million worth of Eckerd-branded products to a hunger-relief program — a gesture that generated goodwill for the company in its new markets.

Simple Retention Strategies

Even if you don’t have the budget for a large-scale marketing campaign, you can help make a good first impression and build a positive relationship with your acquisition’s customers by implementing some relatively simple strategies:

Do Your Research. Customer relationships sometimes are neglected in the due diligence stage of an M&A deal. But it’s imperative that you know why customers do business with the company you’re buying. Is it price? Quality? Customer service? Relationships with owners or key management? And will your combined organization still be able to meet customers’ needs? Be sure to conduct adequate research into these customers’ needs well in advance of the deal’s close so you can devise a strategy for meeting them.

Keep Key Employees On-board. What would happen to your acquisition’s customer base if a marketing director, key product developer or lead salesperson resigned? It could result in the loss of valuable customers. With the seller’s advice, develop appropriate incentive plans to retain important employees through the transaction and after the deal closes. But be wary of employees who stay on-board physically, but check out mentally. Unmotivated and unproductive employees can undermine your new organization — particularly if they have frequent contact with customers as sales or customer-service staff.

Put the New Sales Team to Work. Make a plan that details how the combined company’s sales force will begin promoting the new organization and selling its products and services. Be sure to implement it as soon as possible after the deal closes — delays can provide a window of opportunity for competitors.

Keep Lines of Communication Open. Ensure that customers are at ease with the transition by, as soon as feasible, explaining to them your merger plans and what they can expect in the near and long term. Customers want to know who will be handling their accounts and what changes will affect them — particularly those relating to pricing. Also, give customers an opportunity to provide feedback and voice concerns, through, for example, regular conference calls or client surveys.

Add Value. One of the best ways to retain customers is to offer them better value. After buying the Eckerd stores, CVS invested an average of $350,000 per store for upgrades, additional customer service staff, increased operating hours and reduced pharmacy wait times. It also earmarked 5,000 items for price cuts. Based on your products and customers, determine ways to add value that will be appreciated. These might be anything from streamlined billing to frequent-customer rewards programs.

Secret to a Successful Acquisition

Effectively retaining your acquisition’s customers can mean the difference between a successful acquisition and one that’s doomed to fail. Determine early on how you’ll meet the needs of these customers, and you’ll be more likely to retain most of them.

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About VR Business Sales located in Edmonton, Alberta

VR Business Sales is the world’s premier business intermediary firm. With a combination of global strength and local experience, VR’s 30 years of successful business sales through Valued Representation, is the reason more and more business buyers and sellers demand our proven skills and resources to help them succeed in an increasingly complex market. The firm specializes in the sale of privately held companies and offers a multi-service approach to matching buyers’ interests, goals and desires with the right businesses. For more information about VR Business Sales, please call 780-469-4769 or visit www.vralta.com.