Trounce competition during a merger

February 1, 2003 By    

All of you have seen or know of a competitor who sold his company in your area. You also likely saw the changes made and the problems that may have occurred during the transition period. You likely gained several customers during the transition process ­ just by answering the phone!

If two of your competitors merge, it could be one of the best things that could happen to your company. The integration might lead to mistakes and considerable confusion. Big changes made during the first six months can have a disastrous affect on the operations.

Changes made over time may not have much affect and decrease the chances of customer or employee turnover. Of course it depends on the buyer and the transition team. But mistakes and confusion during acquisitions can be good for your business!

By following these steps you can trounce the competitors during a merger:

1) Develop a “magnet” affect

In the confusion following an acquisition, some of employees may find themselves in the job market. Create a hiring strategy that may strengthen your own company during the process.

Don’t break rules (ethics), but sometimes employees get let go during a consolidation ­ just make sure you don’t hire the “bad apples.”

2) Create an aggressive marketing/sales promotion

Your competitors will lose focus on the business as they work through all the details of the acquisition. Use this opportunity to sell yourself and your business as locally owned and operated.

Be ready with an abundance of services and new promotions to build your customer base. Many of your competitor’s customers may not know “Hometown Propane” was sold. As you know, one of your strengths lies in the fact that customers like to buy from a locally owned and operated company. Take advantage.

If you spend $2,000 on advertising, how many new customers does it take to break even? The chart below details the customers needed to break even in the first year.

Break Even Analysis
Annual Usage Gross/Net Margin Dollars Customers Needed
750 gallons 40 cpg (gross) $300 7
750 gallons 15 cpg (net) $113 18

3) Develop flexible strategies
Don’t forget the propane industry is complex, too complex for one strategy. Create different options to take advantage of all the opportunities that may show themselves.

Have you spoken with your tank manufacturer about financing tanks over three years? Set different strategies for commercial and residential customers.

Don’t just sit back and answer the phone and “attract” 10 customers from the fallout, when a little sales and marketing could bring in 40-plus new accounts. Be proactive not reactive.

Leverage advertising
What have you done to further emphasize the work that the Propane Education & Research Council has been doing? With both local and national commercials, ads in various magazines and other avenues, propane is going to be known everywhere.

PERC advertising in local markets is being seen and recognized by prospective customers now using fuel oil, electricity or another heating source. Piggyback on PERC and sell the benefits of using ABC Propane.

Quit blaming weather as the sole reason your company didn’t make the money it should have. Make changes that will help your company regardless of the weather.

Many companies reduce their marketing and training budgets after a warm winter. Why? The phrase is old, but true: “you have to spend money to make money.” The key is to spend it wisely.

Advertising is not an expense but an investment. Ask new customers why they chose you. What better way to find out what marketing ideas work best for you? Yellow pages, newspaper ads, radio, billboard or word-of-mouth. If one doesn’t seem to be working, do something else. Is it time to build a website?

What if employees were offered a commission for each new customer who stayed for one year? What if a customer was offered a gift certificate to a local merchant for referring new customers to ABC Propane?

Be creative and ask your employees for their thoughts. They are your field staff and have more contact with customers than you do.

Good luck!

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