December 2, 2004 09:41 AM
Why Consumers Hate Mergers
Excerpt: Mergers often make customers dissatisfied. And once that happens, it can take managers years to regain lost ground. That's the conclusion of an exclusive analysis done for BusinessWeek. The data, which was collected over five years as part of the widely respected American Customer Satisfaction Index, reports on customers' perceptions of 28 big companies that were involved in major mergers between 1997 and 2002. It showed that customers were significantly less satisfied on average even two years after the deals closed than they were before.
Renee Roberts of Antelope, Calif., still gets steamed when she thinks about what happened to her after Comcast bought AT&T Broadband for more than $50 billion two years ago. She says the company lost her $155 payment in its newly integrated automated system -- and then brushed her off. "No one cared," Roberts complains. "The attitude was 'we're big, so you have to deal with us."' Comcast concedes that it made some billing mistakes after the merger. Last year, to put matters right and fend off competition from satellite-TV operators, it instituted a program to train employees to "Think Customer First." Now, it says, customer satisfaction scores are back to where they were before the merger. But Roberts is long gone. She gets satellite service with a dish instead.
Mergers often make customers dissatisfied. And once that happens, it can take managers years to regain lost ground. That's the conclusion of an exclusive analysis done for BusinessWeek. The data, which was collected over five years as part of the widely respected American Customer Satisfaction Index, reports on customers' perceptions of 28 big companies that were involved in major mergers between 1997 and 2002. It showed that customers were significantly less satisfied on average even two years after the deals closed than they were before.
Customers' satisfaction scores were based on their perceptions of companies' prices, quality, and ability to meet expectations. In an eye-opening 50% of the deals, consumers gave the company lower marks in at least one of the three categories. Customers thought they got better service or prices from only 29% of mergers. Says Claes Fornell, who heads the index for the University of Michigan's Stephen M. Ross School of Business and the American Society for Quality: "Customers are increasingly frustrated because they perceive they have a lack of choice."
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