A big pitfall in mergers — one that is frequently overlooked — is putting too much focus on the mechanics of the conversion, and not enough on customer communications.
It’s hard to deny the importance of “systems conversion” to a successful merger or acquisition. Transferring customer account data from one financial institution’s core system to another’s, usually over a weekend, is a tricky business.
The process usually includes completely shutting down the acquired financial institution’s branches, ATMs, online and mobile systems, and sometimes even debit or credit card transactions, for several days. Even when everything goes smoothly, the acquired bank’s customers have no access to their bank information or funds during that time, and then need to reset passwords, or sometimes re-enroll in online and mobile services, to get up and running again. That’s a communication and customer experience challenge — and opportunity.
So while extreme focus on the mechanics behind a system conversion is completely understandable and justifiable, an equal focus should be directed towards development of a communications plan. Often that is not the case, however, and typically the budget to do so is paper thin.
The Real Costs of Poor Merger Communication
Lack of a robust communication plan can be very costly. According to a 2015 Gallup study, the risk of customer attrition due to a merger jumps to 8% compared with the average annual attrition rate of rate of 5%.
It can get worse if the level of customer engagement at the acquiring institution is inferior to the institution being acquired. “When an acquiring bank has lower customer engagement than its target bank,” says Gallup, “customer attrition at the target bank rises to 10%. This is twice the average rate of attrition for the industry and represents a significant risk for lost value for the acquiring bank. On the other hand, when an acquiring bank has higher customer engagement than its target bank, the attrition rate at the target falls to 6% — much closer to the industry average.”
The Message is Clear: Communicate Early And Often
Most merger communication programs involve an initial welcome letter (which nails the “early” part), followed by a huge gap until the voluminous “conversion packet” arrives in the mail just before the switchover. The consequences of such a stripped down program are usually evident on Day One following the conversion. Phone calls and email communications come pouring in from consumers looking for help. These range from basic questions, to needing password help, to irate customers berating your staff for “not being informed that all access to my accounts would be cut off for three days and now nothing works!”
An article by a merger communications professional outlining important steps to consider when building out a plan, listed as one of the final steps to “ramp up phone coverage for the first two weeks following a conversion to handle the inevitable increase in customer calls.” Perhaps if the communications program was better designed in the first place, the number of people needing assistance would be minimal?
However, the article does at least point to an important communication component: the need for well-trained and rehearsed staff, including those at the acquired institution. Too often the latter are overlooked.
While migration to digital channels continues to increase, studies show that people still tend to visit branches for advice and help. So post-conversion weekend and beyond, plan on an increase in visits. This is an opportune time to deepen relationships if done correctly. Properly trained staff can advise and reassure customers, but these employees need to be empowered to resolve issues on the spot.
So what does a good merger communications plan look like? Each financial institution’s situation is unique but the following five tips provide a good foundation for designing a plan. Build your strategy around the following five points.
1. Design merger conversion communications as if you were onboarding a new customer.
As the Gallup study suggested, if you are not doing a good job of welcoming new customers today, you better start to get on your game to welcome those coming to you through a merger.
But unlike someone who walked into a branch to open an account, these new customers may know very little about your institution and what you offer. So you need to start at the beginning. Tell them all about your financial institution. What do you stand for? What makes you different? Highlight any existing ties to their communities. Then you can introduce important products and services that they will soon be able to take advantage of — including instructional materials (video tutorials are great!).
Just don’t wait until the week before conversion to do all this.
2. Greet the new arrivals by name.
Personalized communications — using the new customer’s name — goes a long way to making these people feel welcomed. It takes a little more effort, but is well worth it. No one likes to be addressed “Dear Valued Customer.”
3. Multi-channel delivery is essential, and it must include mobile.
Price Pritchett gives solid advice for preparing any type of communication. “Communication is most effective when it shows up where people want it. And when they want it. Today we carry our #1 communication tool in our pocket or purse. We’re on the go, and we want our messaging to travel with us.”
But the rub here is that most banks are “light” on customers’ email and mobile numbers and do not actively seek to update that information. Start early enough, however, and you can significantly change that. Pre-conversion communication plans should include the ability to have about-to-be-new customers provide updated contact information including email and mobile numbers. A dedicated micro-site or landing page works well to begin to inform customers and capture that important contact information.
4. Remind custmers of what will happen and when, and what they need to do. Rinse and repeat.
Essential to any merger communication plan is a detailed outline of exactly what will happen during conversion weekend, providing the necessary disclosures and notices, and guiding new customers through any actions they will have to take to complete the transition.
Equally important are frequent reminders about the steps and reminders in this outline. The more channels used for this the better, with email and text messages the most timely. Imagine consumers getting a text at 9 a.m. reminding them that beginning at 5 p.m. that day they won’t be able to use an ATM for the entire weekend. While not having access might feel like a big inconvenience, they may at least be placated by getting the reminder in time plan accordingly. That certainly is a far better experience than having consumers declined ATM access when they actually need cash.
5. Keep it up post-conversion.
Once the conversion weekend is over, banks’ and credit unions’ work is far from done. Reminding their newly acquired customers of actions that remain to be taken and introducing new services helps communicate that their new banking provider genuinely cares about their business. That can help offset the fact that these consumers weren’t necessarily looking to change providers.
Taken together, these communications steps will help form the basis of a positive relationship that will hopefully gain consumers’ trust, long-term loyalty and repeat business.