Merger Effects on Customer Loyalty

It makes perfect sense that the very act of merging two companies or brands affects the image and customer loyalty of both in the customer's eyes. What is not clear is the size of that impact and whether it is positive or negative.

Merger effects on customer loyalty have two impacts on business outcomes.

1. Firstly, as customer loyalty is affected so will be the number of customers that the final, combined, entity will retain. If the two companies are synergistic in the customer's mind then the classic 1+ 1 = 3 scenario occurs where the merged company's customer loyalty is stronger than either stand alone company.

   On the other hand if there is no or negative synergy then the merged entity is weaker than the individual companies.

2. Secondly, as company valuations are partially based on the number and type of customers of each entity, if customer loyalty is reduced and customer attrition increases after the merger, the valuation will be incorrect.

   There is the distinct chance that one of the companies will pay too much.

The biggest problem here is knowing the impact of your merger on customer loyalty before you commit.

Genroe's Merger Customer Loyalty Impact service is designed to answer this problem and quantify merger impact on customer loyalty before the merger.

With this service you can accurately quantify the customer loyalty impact on each of the merged brands and identify the change in company value that will result. This reduces merger risk and improves outcomes for all concerned.