Companies frequently combine through merger or acquisition to increase market reach or expand product or service offerings. We find that human resources, engineering, and manufacturing operations tend to handle mergers pretty well. For them, it’s a known process.

However, in mergers and acquisitions, marketing and sales organizations typically do not combine well. And it is the customer-facing activities that derail otherwise promising mergers or acquisitions.

The merger of the two computer vendors AT&T and NCR destroyed the market position of each. While AT&T was not a leading vendor, it did have the reputation of being the keeper of the UNIX operating system. Similarly, while NCR was not a market leader, it was a well established, proud company. Each company did rank in the top ten equipment vendors at the time, and the merger should have moved them up in the rankings. Instead, the merged organization could not agree on a common approach to the market, and they ultimately split. Neither company has any presence in the computer business today.

Compaq’s takeover of Digital Equipment Corporation had much the same effect. Compaq, a leading player in the PC and PC server market, gobbled up Digital in part for its services capabilities. Yet over the years following the acquisition, Compaq spent much of its corporate energies assimilating the vastly different Digital culture and neglected the marketing of both its traditional products and the Digital products and services. As a result, the company presented itself as an attractive takeover target for Hewlett-Packard, which itself is now struggling to assimilate the three vastly different cultures and product and service offerings.

Sometimes the merger of two companies brings rather disparate organizations together. At one large software company, consultants acquired through a merger continue to use their old business cards. They find that the outdated cards get them entry into accounts that would not consider hiring their new company for the same work!

What to Consider

The combining of two companies is typically pretty confusing to the end customer, and if the customer base delays purchases, the merger or acquisition can fail. It’s a snowball effect – companies merge, customers slow their buying, each group blames the other for the problem, the internal finger pointing begins, customers get wind of the internal battle and go elsewhere, and finally the merger fails to deliver on promises.

In less extreme cases, the marketing and sales organizations battle over control of the message and the activities. Prior to the merger, each company worked to develop its brand position in the market place, and naturally a turf war may develop. Egos tend to drive decisions rather than the voice of the market – the customer. Few organizations have the time or inclination to survey the market to understand and develop the compelling message of the combined company.

Similarly, factions within the sales organization will battle for control. In many cases, both companies had called on the same accounts, and sales management must make hard decisions about reallocating territories and accounts. In our experience, this is not done on a timely basis, which simply confuses the customer base further. Who’s their rep? Who’s in charge? What's going on here?

Tips for Success

Egos have to be managed, and the two teams must continue to focus on the goal of creating a combined firm that is stronger than the two individual companies.

Begin the planning of the unified marketing strategy and lay out the first year post merger marketing plan immediately on initiation of the merger process (or earlier if possible, during due diligence.) While you cannot bring customers into the loop at this time, it is possible to get a sense from customers as to how they would react to a merger. And a strong marketing communications program that starts as soon as the merger is announced will make a huge difference in how the market responds.

This program must clearly explain the reason behind the merger or acquisition and how it will affect customers. Some of the details will be communicated quietly to important customers, while most will be broadcast to the wider market. Then customers must see decisive action. The day that the Chipcom/3Com acquisition was finalized, the Chipcom sign on Route 9 in Westborough was replaced with a 3Com sign. Contrast that with the length of time it took for “Verizon” to replace “NYNEX on the company trucks, or the fact that you can still receive email from a variety of “dec.com” domains!

Decisive action helps customers to feel confident about the ongoing viability and direction of the new merged entity. And with that confidence, they may keep purchasing.

Similarly, the sales organization must have a clear transition plan, with well defined ownership of this important function. Many organizations delay identifying the single new leader of sales, instead continuing to appease the two organizations with promises of “nothing’s going to change.” Of course things are going to change! And the sooner that the new organization can be finalized, the better.

Someone must make hard decisions about sales force coverage – who’s going to own an account post merger, who will own which territories, etc. These are not easy decisions to make or enforce, but the manner in which they are made and carried out will absolutely reflect the process at the top. Are the two management teams merging nicely, with one clearly in control? Or is it a fight for power and position within the new organization?

If these issues are worked out prior to the announcement of the merger, then the transition can be managed quickly and efficiently, with little loss of customer or valued employee.

In summary, the process of combining the marketing and sales organizations and activities may be an afterthought in many mergers or acquisitions. However, for the merger or acquisition to be effective – to build a stronger company overall – this combination of organizations and activities must be carefully planned and orchestrated.

Lee Levitt is Managing Director of the Acelera Group, a consulting firm that works with client companies to build robust and profitable revenue streams.  Lee can be contacted at lee@aceleragroup.com.