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Why B2B Customers Are the Most Important Part of M&A
Business Journal

Why B2B Customers Are the Most Important Part of M&A

by Jeff Durr
Chart: data points are described in article

Story Highlights

  • The integration process can distract B2B organizations from customers
  • Customer insights increase the probability of revenue growth during M&A
  • The new company often fails to communicate its new value proposition to customers

B2B mergers and acquisitions (M&A) are unlikely to slow down in 2018.

Deloitte estimates that M&A activity will accelerate in 2018, in part driven by new M&A technology and tools.

Low economic growth also pushes B2B leaders to rely on M&A as a central part of their growth strategies.

But it remains to be seen whether these deals will be as successful as leaders hope.

Many factors can improve M&A performance, but one critical factor is often overlooked: customers.

The harsh reality is that leaders who are caught up in the integration process can unintentionally neglect their customers.

Doing so can lead B2B customers -- who are already at risk with only 29% fully engaged -- to wonder if it's time to seek out new partnerships.

In fact, Gallup studies on the banking industry reveal that the average annual customer attrition rate is significantly higher among customers of banks that were acquired.

B2B leaders need to make customers the centerpiece of M&A integration decisions, strategies and goals.

Cost cutting, overhead reduction and other traditional approaches are simply not enough to capture the full value of M&A for shareholders.

Gallup's experience working with organizations in a range of industries reveals three strategies that can help B2B firms put customers first throughout the M&A journey.

1. Customer insights increase the probability of revenue growth during M&A.

Forward-thinking B2B leaders establish M&A goals beyond cost savings -- aiming to realize a competitive edge by embracing customer insights.

B2B leaders can use customer insights to play offense with their growth strategies -- driving revenue, growth and customer engagement.

Advanced customer insights can inform decision-making, reduce uncertainty, and help B2B leaders understand and prioritize M&A targets.


They can also boost revenue by generating ideas for improving strategic partnerships to benefit both B2B organizations and their customers.

With customer insights on their side, B2B companies can see huge improvements in client relationships -- even in the midst of change.

2. Voice of the Customer programs should be deployed during M&A integration.

Hindsight is 20/20, and some B2B leaders find that if they had understood customer perspectives better throughout the M&A journey, overall M&A outcomes might have been better.

Listening to customers during integration can inform business decisions, help leaders keep customers' needs top-of-mind, and provide opportunities to adjust integration plans as needed to prioritize customer relationships.

To collect meaningful feedback, leaders should partner with an impartial third party and adopt a holistic approach to understanding their customers by seeking both quantitative and qualitative customer feedback.

Importantly, ignoring the voice of the customer can be exponentially more harmful than not asking for feedback at all. B2B firms must listen to -- and act on -- their customers' needs and wants.

3. Customer value propositions should fully capture what customers are gaining.

Gallup recommends communicating with customers about M&A plans early and often.

A strong communication strategy and a compelling customer value proposition can establish clear expectations, build and strengthen relationships, and increase confidence and loyalty during times of uncertainty.

However, some M&A customer value propositions communicate only marginal benefits, such as having access to additional products.

To fortify customer relationships and deepen customer trust, messages should emphasize how M&A will positively affect B2B customers' preferences, needs and business goals.

The best B2B customer value propositions communicate that the combined company has increased capabilities and knowledge and -- because of the transaction -- can better solve customers' problems, deliver leading-edge solutions and bring innovation to the relationship.

With the pace of M&A accelerating in 2018, B2B leaders, their organizations and their customers would be well-served by learning from past M&A mistakes to inform their future decision-making.

Learn more about how Gallup can help your organization navigate M&As equipped with proven best practices from successful leaders:

Bailey Nelson contributed to the writing of this article.

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