Your M&A is Likely Hurting Your M&S (Martech & Salestech)
Avoid falling victim to cost-focused consolidation efforts that potentially limit growth.
Historically, corporate mergers and acquisitions (M&A) were undertaken to help companies scale, find cost efficiencies, gain access to distribution and block competitors. In the past decade, we’ve seen a digitally driven shift in M&A activity, with the focus moving away from barriers and efficiencies, and towards true growth: leveraging digital technology and business models to offer better products, more engaging experiences and more effective ways of working.
Beware of Antiquated Approaches to Integrated Management Offices
The most important role in a successful M&A event is the Integration Management Office, or “IMO”. With the digital-centric M&A model, IMOs need to change their approach from an operational focus of pruning off duplicate assets, consolidating teams and looking for organizational synergy, to a strategic rethinking of the firm’s approach to growth.
One critical foundation of growth that IMOs typically mismanage during M&A activity is the MarTech & SalesTech infrastructure. IMOs often focus on identifying and eliminating duplication of systems and subsequent cost reduction but don’t proactively explore improvements such as tighter cross-system integrations, cleaner data or more thoughtful process automation. While these sound like minor operational factors, they can become the underpinnings of more effective customer engagement strategies, compelling user experiences and powerful upsell/cross-sell/retention initiatives.
If organizations aren’t careful, MarTech and SalesTech can fall victim to cost-focused consolidation efforts and might come out of an M&A deal tied to systems that will suffocate growth. Here’s how to spot these dangers and avoid them.
Do Not Assume Your Options are Binary
We have yet to see a sales or marketing team 100% satisfied with their existing tech stacks and workflows. After a deal, you will have to invest time and money into consolidating and migrating systems. You will also have a large pool of vendors -many of which you have great interpersonal relationships with- feeling the pressure to hold onto their accounts.
Fight the urge to pick from a subset of existing vendors. You may find yourself with a system that is only designed for half of the company, or unable to scale into the new larger enterprise. Take the time to step back and make a holistic and strategic set of choices before diving into a large migration effort. It’s better to be at the bottom of the right ladder than halfway up the wrong one. As Amber Sundell, head of demand generation at Merative, a data and technology healthcare company, puts it, “We might have fewer marketing and sales systems these days, but everyone in this space continues to feel those budget and data standardization cuts/missteps.”
Clarify Your Desired Future State and Look Backwards
Your CEO and the deal team likely won’t stop talking about this future utopia of the new combined organization. That utopia two, five, or ten years from now probably doesn’t have tech stacks designed when the two companies were operating with different intentions.
For example, lead handling systems typically put potential customers into different categories or types. What if those categories are different between the two merging companies? And what if those categories are hard-coded into all sales flows and reporting systems — how will you operate?
Or what if your organization uses Platform X for email campaign management, and the acquired firm uses Platform Y, but they both use different sets of templates and other source data to trigger the message? Is it possible to send a demand generation campaign or order confirmation message without a manual workaround?
These sorts of “differences” are assumed and understood when framing an M&A event, but rarely is there budgeting for the hard work of standardizing data taxonomies, refactoring (reducing) templates, or re-integrating systems outside of core billing. What starts as potential synergy quickly becomes invisible technical debt. Often, that debt becomes a long-term liability for the resulting Marketing or Sales Operations Teams, and it persists for years beyond the merger event.
You are Building Pipes and Plumbing, not a Funnel
If you’re not already operating in a multi-business unit enterprise, the latest acquisition might spur it, or will in the near future. There is already an invisible wall between marketing and sales on a variety of dimensions, incentives, cultures, skills, styles, etc. And as you move towards –or deeper into – a multi-BU enterprise, you’ll likely have fragmented sales teams and centralized and decentralized marketing teams. From a demand gen perspective, you need to stop thinking of lead flows as a funnel, and more like pipes and plumbing. And don’t underestimate the people risks associated with M&A activities. Sundell states, “The employees who are redistributed or leave the organization after an integration, take legacy knowledge with them. You also find yourself missing reasons why things were or were not done in a certain way.”
How do you move forward with this approach? Examine each joint and pipe and look for leaks. Measure the pressure and flow rate at each valve and faucet.
And check the temperature frequently.
Translation: Standardize data formats and integration points to make sure systems are talking and information flows correctly from one step to the next. Use reporting to capture meaningful operational metrics and KPIs for each overall process and important sub-step. And use ROI analyses with clear and simple dashboards to know when the process is working and the effort was successful.
It is said that most mergers and acquisitions fail. Many believe that it is because deals are normally predicated on growth, but the integration process is dominated by cost-related decisions. The answer is both, and most importantly, your Salestech and Martech are your biggest demand gen investments. There will be opportunities to combine stacks to lower ongoing operating expenses. But don’t lose the opportunity to step back and fully re-evaluate your platforms to maximize your demand gen efforts to support the growth of the newly combined enterprise.