How to Nail Your M&A External Marcomm Strategy (Part 2)
Mergers and acquisitions in the banking industry have picked up steam after a brief pause at the start of the pandemic, due to persistently low interest rates and institutions’ strong desire to gain economies of scale in an increasingly digital landscape. Mergers of equals can provide the joined organizations with economies of scale and a protective bulwark against rising competition, while the benefits of acquiring smaller institutions include a streamlined path for growing market share and entering new, desirable markets.
Yet mergers remain a very challenging proposition and are hard to do right. Numerous pitfalls await the acquiring institution, from declining customer satisfaction scores, the integration of incompatible legacy technology and branding misalignment.
In fact, according to a 2015 Gallup study, customers of acquired banks closed their accounts at a much higher rate (8%) than the industry average annual attrition rate (5%). As a marketer, how can you reduce this potential runoff and help preserve the value of your next acquisition?
To find out how bank marketers can successfully serve the many needs of diverse stakeholders and constituencies during the process of joining two organizations, we spoke with several banking M&A veterans for their perspectives. In our second of two articles, we continue our discussion of M&A marketing and communications best practices through an exploration of how to develop an effective external marketing strategy.
In the earliest days following an acquisition, marketers need to communicate with a wide range of external stakeholders. Our experts offered three tips for navigating these pressure-filled months.
The first priority for marketers once the transaction is consummated is to set your newly acquired customers at ease. Take the time to listen and learn, with a goal of understanding your newest clients’ fears and anxieties.
“Come at it from the customer’s perspective,” says Joe Teller, former Managing Director of Marketing Planning & Operations at BMO Financial Group. “Focus on what the customer’s fears are, and then those things you can communicate that will help alleviate those fears.”
During the initial three or four months following the closing of the deal, attention will naturally be centered on transitioning the acquired bank’s customers into your institution. Take this time to let them know what to expect and how things will work post-conversion, while helping them through the tedious but critical tasks of converting over their deposit accounts, online banking credentials, credit cards and existing loans.
“What we found really worked was when we would stop and look at the impact to the end customer, from the customer’s point of view,” Teller says. “If I’m a bank customer and my bank has just been acquired, what are the questions that I have? We had probably the greatest success with a conversion when we came at it from that perspective.”
Being honest and upfront with your newly acquired customers is essential. This means educating them on the benefits of sticking with your institution, whether they include a deeper product suite, access to a broad range of experts or the ability to keep their legacy banker. But it also means keeping it real about the less-positive aspects of the change.
“Early on, do some product mapping so you can let people know what will and won’t change,” Joe Teller says. “There are always things that people will have to give up. Be honest and let the customers know there will be a period of time where they will lose some functionality, but at the same time, explain your long-term strategy and where you’re going to go.”
When entering a new market through an acquisition, be sensitive to those unique and subtle regional characteristics that could brand your bank as an “outsider,” if missed. It’s important to establish credibility within the market right out of the gate.
When one regional bank acquired an institution in a neighboring city in early 2020, the marketing team recognized they would need to preserve the local flavor of their branches.
A senior marketing manager at the regional bank says the marketing team had to be careful with messaging to ensure they kept a localized relationship approach.
For the acquiring bank, this meant using authentic, locally resonant images and colloquialisms in its advertising, while also emphasizing the advantages the acquiring bank brings to the table, such as “bigger and better capabilities.”
A marketing director at the same regional bank says the marketing team worked closely with their ad agency on messaging, making sure to use local imagery. The goal was to remind the new customers that the acquiring bank was still a part of the community and able to contribute and serve their needs.
Lastly, external communication goes beyond your customers. The acquiring bank must develop carefully crafted messages for each of the key stakeholder groups, including not only customers and employees, but also community organizations, political institutions and the media outlets within your newly acquired market.
All external communication needs to consider the emotions and anxieties that key stakeholder groups – but especially existing customers – may be feeling about the merger. Address any potential issues early on to minimize the opportunity for negative press that could accelerate customer attrition.
“A merger is newsworthy from a media perspective,” says Francesco Lagutaine, Chief Marketing and Communications Officer at M&T Bank. “Think about the net effect of your news on all of these populations and ask yourself: ‘What are their anxieties? What motivates them? What would they like to hear? And at what point?’ Then start thinking about the things you need to do to have these conversations and make them successful, because anxious customers will potentially jump ship before something bad happens.”
Establishing strong connections with the community from day one is critical. According to Joe Teller, U.S. Bank is an example of an institution that has historically done an exceptional job in this regard.
“U.S. Bank would always do a brand campaign through TV and radio that really talked about who they were as a brand,” Teller says. “They did a really good job of creating a message that said, ‘We support education, we’ve been around for 100 and some-odd years and we invest in communities.’ That’s really important.”
Marketers should also take advantage of media’s expanding sphere of influence to address a much larger potential target audience than they could ever reach in the past.
“Today, you can cover a lot more people in much less time,” Lagutaine says. “This virtual world has actually helped us because impressions are created with very little information and people fill in the gaps. This more virtual way of communicating has given us the opportunity to have meaningful conversations with more people and share more information.”
Perhaps the best measure of a successful merger parallels the physician’s Hippocratic Oath, which is commonly summarized as, “First do no harm.” Similarly, if you can retain most of your current customers and open the doors to growth within your new market, the acquisition can be deemed a success.
“The measure of an exceptional job is nothing,” says Lagutaine. “You have to be prepared for that mindset, especially in marketing where we actually have to do an exceptional job in order for nothing to happen and for things to go flawlessly and naturally fall into place. It’s a slightly different approach from what we normally see in our work.”
