Two of your competitors are merging. You have two choices – wait and see what happens or aggressively try to grab as much market share as you can. What would you do?
Psychology studies tell us that people are twice as risk adverse as growth oriented. However, the psychology tests are run using a scenario that has a 50% chance of a good outcome and a 50% chance of a bad one. With competitors merging, I would suggest the odds are at least a little more than 50/50 in your favor.
Almost regardless of the industry, there are a few attributes of mergers that will work to your advantage:
– The employees of the two merging companies will be distracted. The combined entity will likely only need one set of operations, one call center, etc. At the very least, one culture and one set of procedures will eventually take over. This uncertainty will be felt by their customers.
o HP Inc. CEO, Dion Weisler agrees. When Dell acquired EMC, Weisler sent an email to his employees saying, “Dell will be distracted and their customers and partners will be agitated. Seize the opportunity by reaching out to our current customers and partners, as well as aggressively pursue Dell accounts.”
– Similar to the above, but even more critical, the sales teams of the two companies will be distracted. How many regional VPs do you think the combined company needs in a particular region? One. How many sales reps do you think they need in a particular territory? One. The infighting will be felt by their customers. At the same time, the top sales people within the merging companies will be courted by competitors. Focusing on a new opportunity makes them less focused on their clients.
o McKinsey reported on a CEO who just acquired a new company. He did visit its field offices, but not quickly enough: when he arrived at one office 2 weeks after the announcement of the deal, he found that 9 of the 12 salespeople there had already accepted offers from competitors. If they’re looking for jobs, they’re not taking care of their customers.
– In the B2B space, clients will reallocate share. There are risks associated with having all your services/products come from one or a small number of vendors (Resilinc Supplier Diversity Study). Once two vendors merge, customers often find a new vendor so they can continue to diversify their sourcing risk. That means market share is up for grabs.
Depending on the size of the merger and the industry, there will come a time when the dust settles. Employees will start to get comfortable with their new job descriptions. “Surplus” employees will be laid off so there will be a level of security associated with those that remain. And, clients will have reallocated their market share to the new normal.
Looking back, you’ll likely be kicking yourself if you didn’t pick up some of the available market share.
Here are some ways to take advantage of your competitor’s merger and seize the opportunity for additional market share:
1. Re-evaluate your clients’ wants and needs. Unless you surveyed them very recently, this market shake up has changed their perspective.
a. Consider starting with a qualitative assessment of what they appreciate, where they have challenges and ultimately, what matters to them.
b. Let that qualitative information feed a quantitative survey. Why quant? Because you can reach a lot more customers in a short period of time and it will enable you to have data you can prioritize.
c. Statistically prioritize your findings. There will be a few important nuggets in your customers’ feedback to fuel your salesforce – use the data to find them.
2. Redesign your experience. The “quantified qualitative” you collected in Step 1 will feed your design efforts. If you ask the right questions, you won’t only identify the touch points where you and your competition do well/poorly, you’ll also find areas where you can provide value that you and your competitors haven’t even considered yet. That’s where you’ll differentiate yourself and earn the available market share.
3. Engage your employees. Make them feel secure. Get their input and buy in on changes. Check out my previous blog on getting buy-in for some tips on how to get even the most set-in-their-ways employees to embrace change. At the very least, though, try the following:
a. Use cross functional re-design teams. You’ll get better ideas and if your employees are part of the process, they’ll be more bought-in and will defend your choices with their co-workers.
b. Frequently communicate about the market, the competition and internal changes with employees. “Distance makes the heart grow fonder” may work with romance, but it doesn’t in business. If you don’t communicate, human nature dictates that negativity will seep into the minds of your employees.
Mergers create a lot of turbulence. The market is uncertain, companies are uncertain and employees are uncertain. As leaders, we have a choice to either get out of the way and wait for the turbulence to pass or to jump into the middle of it and seize the opportunity to capture market share. The first choice may seem easier at first, but for those willing to put in the effort, the second choice can set up a successful business for years to come.
Photo Credits:
Merger: http://accountlearning.com/merger-definition-importance-reason-compatibility-problems/
50/50: https://fanart.tv/movie/40807/5050/
Dion Weisler: http://www.3ders.org/articles/20160518-hp-inc-shifts-focus-to-3d-printing-ceo-dion-weisler-reveals.html
Design Quote: http://www.inspireux.com/2010/03/26/design-is-not-added-value-design-is-value/
