Earlier this year while attending Walker Information's B-to-B Customer Experience Summit in Denver, I met an attendee from a financial services company whose role includes evaluating the customer experiences of the company to be acquired. The purpose of these assessments, he explained to me, is to gauge whether the customers in question represent a good cultural fit for his company and to determine how satisfied the acquiree's customers are and whether there's a lot of work that will be required to retain them if and when a deal is consummated.
Adrian Swinscoe, a consultant, Forbes columnist and author of How to Wow: 68 Effortless Ways to Make Every Customer Experience Amazing, recently told me about an interview he conducted with John Timpson, the owner of Timpson, a British retailer which specializes in shoe repair, key cutting and engraving, dry cleaning, and photo processing. Prior to acquiring a chain of 160 dry cleaning businesses, Timpson shared how he personally went out to evaluate 70 of the outlets included in the deal. Timpson not only wanted to get a bearing on the dry cleaner's locations and foot traffic but also to learn about its customers to help determine whether they were a good fit for his company.
Swinscoe views Timpson's customer-focused due diligence efforts as "exceptional" and he expects to see more CEOs to apply this level of rigor to their M&A efforts in the future.
Paying greater attention to the customer component in acquisitions could certainly benefit buyers. According to multiple reports, First Union Bank lost 20 percent of its customer base in the first year after acquiring CoreStates Financial in 1997 following a series of conversion blunders and other missteps that led customers to take $9 billion in deposits with them.
As the First Union example illustrates, acquiring a company doesn't guarantee that customers will follow along. Understanding the needs and interests of an acquiree's customers and the steps that are needed to keep customers in the fold are just a few of the considerations that executives will need to pay greater attention to with M&A activities.