Bits & Pieces

Mergers are a great way to boost market share, but they also risk abandoning a brand that customers know and love. Pulling bits and pieces from each company's strength and reputation is one way to guarantee the new entity's success.

Brand loyalty: It's something that consumers base decisions on without even being aware of the reasons. But for merging companies, understanding those reasons helps ensure that the new brand hits the ground running.

One issue is brand equity, a valuable asset that might be lost in a merger.

"We saw that, for example, when Alltel gobbled up 360° Cellular," said David Berndt, Yankee Group director of wireless and mobile technologies. "They had put a lot of effort into creating their green, oval logo, and when they merged with Alltel, they basically just lost it. Alltel doesn't really have a strong logo, and that's a big issue."

Ron Peterson, chairman of The Peterson Group, a consulting and design firm, said that a safe way to launch a new name is to determine which of the two brands has the greatest equity and then let the new company leverage that equity.

"It can get a little unwieldy, but you have to determine which of the equities are more important," Peterson said. "You could spend a huge amount of money creating a new company, and then no one may know who it is initially."

Another option is to introduce a brand under the old name, which gradually is phased out.

"We just did a new identity for an energy company," Peterson said. "There was one in Philadelphia and one in Chicago, and we used a name they had from someplace else to bring the whole company together. We'll still be using the logo and the energy company's names for quite a while (and) slowly phasing them out. Eventually the company will become a whole new company of its own."

Names and logos aren't the only aspects of the old companies that the new company might choose to adopt.

"The premier characteristics of all the companies should really be easy to point to," said Andrea Linskey, Verizon Wireless spokesperson. "For instance, GTE Wireless and AirTouch Cellular had robust, integrated, customized, mobile Web products. We're trying to take the best products and services from across the businesses and bring them up to the new corporation and disseminate them across the business."

Who's Your Audience?
A clear message about what the new company has to offer can be just as much a factor for winning customers as a recognizable brand. For some customers, pricing might be the deciding factor; for others, it's coverage or customer care. No customer base is homogenous, so different messages will appeal to different people.

"There are customers who aren't going to travel a lot; they're going to use their phones almost exclusively locally, and so they don't think, 'I need to get a phone from this company because they're a national provider, and I can call anywhere I want,'" said Selim Bingol, SBC spokesperson. "There is value in being able to appeal to different segments of the audience. Branding does matter, but there are different customer groups who are attracted to different things."

A clear understanding of the new company's goals helps avoid a muddy marketing message that can come with rebranding on the fly.

"They should really get a good marketing plan and develop objectives on where they want to go and how they want to grow based on what their market is," Peterson said. "A lot of Internet companies go through things very quickly, and then they're reinventing themselves constantly instead of doing it right up-front. That's confusing for the consumer."

Maintaining Status Quo
Sometimes, it's unnecessary to change names at all. One example is SBC, which bought PacBell and Ameritech but let them keep their names in order to retain their brands' equity.

"Even though those companies were part of the SBC family, they're still very much regional companies," Bingol said. "SBC has subsequently made a lot of moves to position the company to compete as a national player. But right now, PacBell competes in California, Southwestern Bell competes in five states, Ameritech is in five Midwestern states, and that's where their focus lies as regional entities. But that's shifting pretty quickly, and as it does, we'll have to address national issues like branding."

Bingol said that although SBC introduced a new rate plan, changing the company's name was unnecessary.

"There are national capabilities there now that didn't used to exist," Bingol said. "But we're able to let people know that those capabilities are there without having to change the name. In fact, we've made commitments that we would maintain the existing brands as we've acquired companies."

Bell Atlantic recognized that its brand wouldn't fly nationwide and worked with AirTouch to develop a new brand for their joint wireless operation. Linskey said that because of the 1984 breakup of AT&T, the new brand couldn't be tied to the old Bell companies.

"One of the line items in that agreement was that nobody was going to inherit one of those baby Bell names except for the core companies that had it that day," Linskey said. "So we couldn't extend that Bell name to PrimeCo, for instance, which was never a Bell company. I think that in 2000, when so much focus is on technology companies, it was a good opportunity for us to change from a regional Bell company name to something that was going to keynote reliability, untethered promise and a limitless future."

Educating Customers
Regardless of who takes whose name, educating customers is key.

"Bell Atlantic has done a great job on Verizon because they've sent notices to all their customers in their bills, and they've done a lot of advertising," said Yankee Group's Berndt. "Probably the most important thing in a merger is for the two companies to communicate with both sets of customers and assure the customer base and the potential customer base that it's the same quality of service or better than they had prior to the merger."

The desire for increased efficiency that prompts many mergers can have its drawbacks, including customers who feel lost in the shuffle.

"Customers need to know that they're going to be assured that the service is not going to deteriorate because there's going to be a bunch of people jumping ship because of job cutbacks," Berndt said.

Two easy ways to maintain a link to the past are the Internet and call centers: The old companies' Web sites should have a link to the new company's site, and any toll-free numbers that include the company's name, such as 800-AIRTOUCH, should be automatically forwarded to the new company for at least a year after the merger closes.

Direct mail is another education opportunity.

"You need to let your customers know what's happening with direct mail: not only the advertising but some customer-focused literature that lets them know that nothing's going to change with their basic current services," Linskey said. "You need to reassure and then (educate) customers, new and existing, (about) what the company plans to bring to them."

Even seemingly mundane things, such as business cards, signs and the way phones are answered also are key in the early days of a brand's launch.

"All of these things need to reflect the new name so everyone starts to use it and becomes familiar with it," Linskey said. "Word of mouth gets it out there."