When a business is acquired, its customers don’t necessarily transfer their loyalty to the buyer. Customers may worry about future pricing, service, product quality and whether the business’s new owner understands what they value. If their concerns go unanswered, competitors may see and exploit an opening. If you’re anticipating making an acquisition, plan how you’ll protect new customer relationships.
Why they may leave
Some customers have strong ties to a former owner, salesperson or service representative and may not immediately trust your team. The acquisition process can also strain relationships. Employees may leave, systems may change, and ordering, billing or fulfillment processes may temporarily struggle.
Silence and conflicting messages only create more uncertainty. In fact, customers generally handle M&A-related change better when you clearly tell them what to expect. As soon as feasible, communicate information about new customer contacts, contract terms, products or services, technology, and prices.
Make retention a central goal
You probably won’t retain every customer, but a plan that identifies integration retention risks and assigns specific individuals to address them is critical. Prioritize customers based on revenue, profitability, growth potential, strategic importance and likelihood of departure. When appropriate, ask your acquisition’s owner or the business’s account representatives to introduce customers to your team.
Once you can publicly disclose your pending transaction, communicate with customers. They’re likely to care less about the deal’s financial rationale than about how it affects them. Be ready to address questions such as:
- What’s going to change?
- How will it benefit us?
- Do we need to transfer our current account or establish a new one?
- Who’s our service contact during and after the acquisition?
Avoid making promises you aren’t sure you can deliver. After your transaction closes, monitor complaints, declining orders, slower renewals and other signs that relationships may be at risk. Early intervention can help prevent customers from leaving.
Retaining trust
Customer and employee retention go hand in hand. If key salespeople, account managers or service employees leave after an acquisition, customer relationships and institutional knowledge may go with them. Identify your acquisition’s essential employees before the deal closes and offer incentives for them to remain. Compensation and retention bonuses can help, but employees also typically value career opportunities and stability. Explain as early — and clearly — as possible how the transaction could affect their jobs, supervisors, benefits and workplaces.
You may also want to use confidentiality, nonsolicitation and noncompete agreements to preserve employee relationships and proprietary information. Note, however, that enforceability of such contracts varies significantly by state, so you’ll need to work with your legal counsel.
Protect what you paid for
To keep customers on board, plan acquisition integration as early as possible. Assess your acquisition’s customer concentration, retention risks and any potential financial impact of customer losses. We can help crunch the numbers and isolate threats so you’re better equipped to preserve transaction synergies and realize your return on investment.
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