The Idea of Change
Embrace Change. That Scary Thought
Embrace Change it is the Brands Advantage
Our world is increasingly becoming smaller by the minute. It’s not just the speed by which we communicate (instantly) that makes it smaller or even how we’ve all recently learned how much smaller our world is economically.
Our world is becoming smaller in other ways as well, especially as companies continue to merge and we see the players within industries consolidate. Mergers seem to be happening at an increasing rate, especially as a result of the current financial crisis.
But mergers aren’t just a recent development, and neither are the merged company’s dreary attempts to capitalize on them. The cold fact is that merged companies are afraid of change and that’s why they miss their infrequent opportunity to make two companies better than one.
Over the last eight years, we’ve seen AT&T merge with BellSouth and AOL with Time Warner. (Read a market study on Telecom here) And going back even further, we’ve Exxon & Mobil and BP & Amoco in the petroleum industry, or even Citicorp and Travelers. The list continues and companies understand that mergers have become accepted.
Unfortunately, what has also become accepted is that the merged companies miss the brand opportunities that have risen on the horizon right in front of them. They simply ride on by.
The Internal Problem and Branding Mistakes
A merger is rarely a compelling reason for a customer to embrace change using a specific product, service or brand. The worry concerning the effects from a merger is mostly internal. We as customers seem to understand that companies mainly merge to match synergies (and, in some cases, brand promises), cross sell (AOL/Time Warner is a good example), expand territory or to simply lessen their tax burden.
There’s a simple reason for that branding mistake: Most products are commodities, especially from the prospective of the consumer. If your bank has recently been part of merger, for example, it would take a great deal to get you to switch in a marketplace where the players in the category market say the same things. Even if you complain and worry, ultimately, you’d simply think little will change, even in this financial climate, and it wouldn’t be any different somewhere else.
Banking isn’t the only industry like that. So is the airline industry (in which convenience, price and loyalty programs are essentially what drives choice right now), as well as several other industries.
Oh, some will tell you consumers get upset when their brands merge. Business Week once stated: “Mergers often make customers dissatisfied. And once that happens, it can take managers years to regain lost ground” (Dec. 6, 2004).
Customers Won’t Usually Embrace Change. You Need to Change
But while consumers complain, they don’t often switch because of a merger. Nor do consumers switch to the merged company because of the “greater strength” or any of the other usual messages. That’s because few merged companies actually take advantage of how they can make their new brand more meaningful to the marketplace, an opportunity to embrace change doesn’t exist very often. Your brand needs to be an agent of change.
In fact, what companies often tell customers after a merger is that the company will be stronger and you, the customer, will have more options. While those may be true – and maybe they must be said – they are not reasons to switch. They are only reasons to keep customers loyal, which is a misnomer anyway. They will generally remain loyal unless you have disappointed them on some level.
Change agents are rare. Many merged companies fail to recognize the opportunity to brand the merged company in such a way that it becomes more meaningful to the marketplace than ever before. The announcement of the merger is a shout that change is taking place. Why are companies so afraid to embrace change? Are they on such shaky ground that they believe they would collapse if change were whispered? Merged companies should not be afraid of claiming a “change” position because they fear it will drive off their current customers. They should embrace it, for there’s where true opportunity exists.
Merged companies should remember they are often merging because there is so little differentiation in the market. It’s how they got to that spot in the first place.
And yet, your ability to embrace change is often what consumers in those markets want most. It gives them choice and a new opportunity to see themselves in a brand they haven’t seen before.
The key, and what is often ignored, is that the new brand (if there is one) should be about who the customer is when they use that brand. Instead, they are often about who the new company is and how “we haven’t changed.” Yet, seeing ourselves in a brand is what drives preference. Most merged companies, in their mistaken approach to be conservative and cut costs when opportunities appear the most, try to rally the troops and live in fear that customer complaints will lead to desertion. They are last to embrace change.
What happened when Wells Fargo bought Wachovia? You did not see Wells Fargo take advantage of the opportunity of change, but rather the opposite. The same approach will happened when the Northwest-Delta merger began. You’ll see the same messages we’ve seen over time: The “We’re more able to serve you” approach. (Read a market study on banking here).
They will simply run in place out of fear instead of realizing that now is the best time to re-think their stance, pass the competition and cross the finish line. As Price Pritchett, a re-known expert on mergers, has said, “Change always comes bearing gifts.” (Read how companies change from sales driven to marketing driven here)