The CMO's Guide to M&A Brand Strategy: How to Get it Right
Matt Bowen • January 10, 2021
Mergers and acquisition are on fire.

The total hit $3.6 trillion (with a T) globally in 2020 according to the Financial Times. And this was after deal-making in the first half of 2020, due to Covid, came to an almost screeching halt. So the second half of the year was truly exceptional and reflects what’s to come.

There are a lot of financial reasons for this, interest rates are low, equity markets remain high and companies are stockpiling cash.

If you look more closely, though, the reasoning and rationale behind the spurt of M&As is evolving. Whereas the typical key driver was once related to augmenting organic growth or attaining intellectual property or technology, many of the M&As are being driven by the shifting state of business—and even more so by the introspection created by a global pandemic.

While some acquisitions purely expand a customer and technology base—take Grubhub’s acquisition of Just Eat Takeaway, for example, others reflect something else that’s happening which has a major impact on Brand Strategy. Benjamin Gomes-Casseres, an expert on alliance strategies and professor at Brandeis University, refers to M&As as “remixes.” I like this because that is exactly what is happening, and more and more in not so traditional ways.

Take the acquisition of Salesforce and Slack, CVS of Aetna, or Amazon and Wholefoods. All are key examples of how the business landscape around us is shifting quickly, and companies are rethinking their portfolios to gain a new competitive edge, redefine an approach to their market or simply be on the defensive. 

But here’s the rub: according to research led by Harvard University's Clayton Christensen, up to 90% of M&As fail to live up to their planned potential. What gives?

While each case is different, there are common themes surrounding why ­– more often than not ­– M&As don't produce value. Most often, the culprit is shortsightedness—focusing too narrowly, and often unrealistically, on cost savings and financial synergies. The classic “spreadsheet” approach to inorganic growth.

As technology journalist Joan Indiana Ridon related in Red Herring Magazine “the lack of integrating the two companies is the real reason why most fail.” Integration comes on multiple fronts, including people, culture, technologies, processes, vision and encompassing it all: brand strategy and architecture.

My experience working with many post-M&A companies is that the integration of brands and the building of a forward-looking, strategic brand architecture is one of the key components that most often gets punted for later, and usually for all the wrong reasons.

Companies are very protective of their brands, and while negotiations are happening the tough brand discussion (beyond “what are we going to call the new organization?”) rarely gets addressed up front. It's thought that this will naturally work itself out over time. Marketing will sort it out.

But what really happens is nothing. Companies end up with a confusing mix of brands and product lines that make little sense internally, and even less so to their customers. This is true even years after the M&A.

I call these amalgamated messes “brand goulashes.”

The period just after the M&A presents an unprecedented gift to the leadership of the company. It’s a time to make changes—and take on the tough challenges. If decisions—such as what the new brand portfolio of products and services will look like are not made at this initial stage­­—they most likely will not be made later either and it will get exponentially harder. And an ideal reason (M&A) for making the changes fades away.

This, in turn, saps the company of clarity and simplification and allows “brand tribalism” to take over the culture.

Your new combination of corporate brand and product/service level brands need to work together in a way that tells your new, and complete story. Every time an acquisition happens, the company’s narrative changes. It’s a perfect time to revisit the corporate brand narrative so that it is truly differentiated, simple, and clear. Your employees need this badly and the market wants to understand who you are becoming.

But 2021 will also present an additional, heightened challenge to M&A brand strategy: the changing and evolving needs of your market due to the impacts of reevaluating almost everything brought on by the global pandemic.

Before you can determine what the best brand architecture strategy will be, you need to get inside the evolving mindsets of your customers. Companies frequently make the mistake of not taking a more data influenced approach to understanding the real equity that corporate brands hold and rely too much on internal points of view. In an M&A situation, this immediately sets up two entrenched camps of thought, with the acquirer usually calling the shots leaving a bunch of confusion, disillusionment and hard feelings in the wake.

By taking the first 90 days of the M&A to conduct deep dive brand market research, you can determine exactly what the perceptions, awareness and intent-to-buy levels are for all of the brands in the new portfolio.

Additionally, you can determine if the target persona’s reasons for choosing one brand over another—the associated Value Drivers—are changing. Assumed value drivers, from my experience, are almost always created by internal teams based on their experience or third-party analysts’ reports. As a result, companies find themselves off the mark when these assumptions get translated into marketing and sales messaging.

M&As further complicate this matter. In a study of over 220 marketing leaders conducted by Brandigo, 72% stated they have no or only limited confidence that their organization understands the unique and changing pain points of their target audience.

Add all of this together, and you can see why many M&As from a brand perspective just don’t deliver.

So, what’s the best-practices-approach to getting the brand M&A right? Below are steps that will lead you in the right direction.

  1. Take an outside-in approach. After an M&A, emotions are high and brand tribes form overnight. To help bring a more scientific and data-driven approach to tough brand strategy divisions, conduct quantitative research with target buyers. This will tell you which brands in the portfolio have the strongest equity and highest levels of intent to buy and will give you the data you need to do the necessary culling of brands right out of the gate.
  2. Focus on simplicity. The objective of brand strategy and brand architecture is to create clarity and simplicity to the company's assets. Creating a structure that is simple will ensure that it will scale with the organization, while bringing the clarity that everyone desires, both internally and externally. Data and insights will help this tremendously—while also helping to soothe internal brand tribal sore spots. One of the biggest mistakes companies can make is having too many brands without a strategic rationale for them all to exist.
  3. Create a new corporate brand-level story. How is your corporate brand differentiated in a meaningful way? Why should anyone choose you in relation to your competitive alternatives? Even if the acquisition was relatively minor, chances are it should have an impact on your corporate brand narrative. When you look across your portfolio of products and services (or swim lanes or divisions), does it tell a cohesive story? Or are they siloed? This should be part of your corporate brand narrative.
  4. Seize the window of opportunity to create brand clarity at the product/services level. The time of the M&A presents an unheralded opportunity to make tough decisions that, if not made then, only get tougher and more disruptive as the two companies settle into their new existence. Consider all of the brands that each company has, whether they are product or service brands or both. Draw out a logical structure for them that goes beyond just pushing the two organizations together. Which brands should make the transition? Which should not? Which should be downgraded from brand status altogether? This discussion will help drive the bigger conversation around the future business model of the combined companies. Cleanup your brand architecture now.
  5. Do not underestimate the impact that brand strategy has on company culture. Research shows that the tribal mentality that happens post M&A is a serious reason why they don’t produce the value that was hoped. Use your brand strategy as a way to drive a new unified culture and break down the inevitable walls that will arise. Internally, brands can do one of two things: create separate camps or bring teams together. You know which one you want.
Sorting out your brand strategy and brand architecture is never an easy task. Add an M&A to it, and it gets especially complex. Everyone internally, from both companies, has an agenda during this period. But don’t miss this great opportunity because waiting will most certainly cause disruptive issues and lessen the value of the corporate growth strategy. Culling the portfolio is especially challenging and should be based on data, not emotions. This is where a neutral, third party that uses brand research to inform a set of strategic recommendations can be an immense asset.

But, most importantly, take on the challenge as soon as possible. The odds are against you if 90% of M&A’s don’t deliver on their planned value. So make sure this won’t be the case for you. Nothing good will come from letting it “play itself out,” and, in fact, it might be the number one reason that will determine if the M&A is a strategic win.

August 4, 2024
DS Smith Website Case Study How do we unite and excite our employees post M&A under one unified brand? Challenge London based DS Smith, one of the world’s largest publicly traded packaging companies with revenues topping £8 Billion, headquartered in London, came to Brandigo to help define their brand’s core value proposition, purpose, and visual representation. This had particularly become a challenge as much of DS Smith’s growth had come from acquisitions around the globe so many brand silos, differing company cultures and brand value propositions existed. Brandigo was charged with creating a new purpose, essence, and positioning that could unify the company under one singularly focused brand. Solutions Following the format of 1) Who does the brand need to convince? 2) What do they currently think, feel and do? 3) What do we need then to think, feel, and do? 4) What moves them, what are the points of differentiation we can keep returning to and build upon? And 5) How can we get those points of difference out into real-world actions and behaviors? We started with understanding that much of the challenge was about the internal culture and employee brand. With that in mind, we interviewed dozens of employees across the different global locations, particularly those that had more recently been acquired by DS Smith and rebranded. From this, we were able to find the common, emotional thread that tied it all together, and that was wanting and needing to be not only the world’s top packaging company, but also the most environmentally forward brand in the space. A new brand purpose reflecting this was created as Redefining Packaging for a Changing World and crafted to a new brand essence and tagline: The Power of Less. Brandigo then create a new visual way to express this positioning, creating a brand icon called the D Window. The D Window is expressed as seeing the what’s possible, what’s new, what can change the world by looking through the window. We used the existing logomark to create this standard that became the focal part of the new brand. To ensure that the new brand essence, positioning and visual representation was used consistently by dozens of marketing teams across the globe, Brandigo created extensive Brand Guidelines that addressed every possible scenario, from marketing asset design templates, fleet signage, in-airport advertising, social, video, pitch decks to all things digital, the new Guidelines covered 215 pages. To launch the new brand strategy, Brandigo helped create a global employee event across dozens of offices and facilities in 9 countries and languages, including engagement events, contests, entertainment, training events and employee swag.

The Science Behind Creating Brand Loyalty that Every Marketer Needs to Know

By Matt Bowen • April 4, 2022
Achieving widespread, continuous brand loyalty is the ultimate objective for any company. Whether a B2B or B2C, having a customer base that enthusiastically and consistently chooses your brand over your competitors’ brands is what will elevate you—and keep you—ahead of the pack. While this may seem obvious, the truth is that “brand loyalty” often doesn’t make the list of a corporation’s goals. Increased revenues? Check. Increased market share? Sure. Increased profit margins? Absolutely. Increased brand loyalty? Crickets While most marketing folks will certainly claim that brand loyalty is of utmost importance, turning that into tangible action is very often a different story. Of course, some industries have long ago figured out that brand loyalty is critical. On the consumer front, loyalty cards, points, frequent flyer miles, etc., are all intended to create loyalty. But do they really? I have, and use, a CVS card, but does that actually make me loyal to CVS? Hardly. I go to CVS because it’s convenient for me and sure, I’ll be happy to save $2 off my next toothpaste purchase. Ana Andjelic, who runs the newsletter The Sociology of Business , describes loyalty programs like these exactly as they are: bribery schemes that have nothing to do with loyalty at all. They are only about driving economic transactions rather than true affinity for the brand. To really understand what’s behind loyalty, it’s important to first break it down to what it actually means. Brand loyalty is typically equated to customer satisfaction. Yet in reality, while the two are related, they are distinctly different measures. True brand loyalty transcends mere satisfaction and motivates customers to want to promote your brand for you. They tell friends and colleagues. They talk about it on social media. If your product isn’t readily available for some reason, they’ll forego buying it rather than settling for a competitor’s offering. That’s the brand loyalty litmus test. Customer satisfaction on the other hand is driven by consistently delivering on the functional benefits of your product. That is to say, your offering does what you’ve said it will. Brand loyalty is not driven by delivering the functional benefits of your product or service. Even if you do a stellar job of consistently delivering these benefits, it will not drive loyalty, because loyalty requires more than just doing what your customers already expect your products and services to do. If what you offer doesn’t perform as advertised, then you have no business offering it in the first place. Not to mention, it’s a safe bet that some of your competitors’ products perform just as well as yours. In what we call a Data Conscious methodology to brand strategy, we think of these in terms of brand value drivers. Some are expected—these are the functional benefits, some are critical, a step above and specific to their needs, and then you have value drivers that are delighters. Delighters are at the heart of brand loyalty. But before you can even get to brand loyalty, an important precursor needs to take place: customer commitment. Studies show that customer commitment comes in two forms: economic commitment and affective commitment. Economic commitment is when a customer keeps buying a certain product or service because there simply aren’t other good options or the cost of switching is too high. A good example would be the binding contracts that mobile phone or cable suppliers require (here’s looking at you, Comcast). But economic commitment is false loyalty. Many of these customers would bolt in a heartbeat if better pricing and terms were available elsewhere. Affective commitment is a whole different animal because it’s based on an emotional connection. Customers with an affective commitment stick with certain brands because they are emotionally connected to them. They seek out and choose those brands time and time again. Here’s an example of affective commitment: I live in a small city just north of Boston and like everyplace, the year of Covid put a lot of small businesses in a very tough place. A local restaurant, The Paddle Inn , was trying to understand how it could remain relevant and created what I would call a perfect affective commitment move. Every Tuesday they do what they call curb-side cooking school. Each online class focuses on one dish and they provide you all the ingredients you need in a bag that you pick up the day before. Then, at 5:30 on Tuesday, you jump into a Zoom cooking class with dozens of other people while their chef walks everyone through, step by step (often in a very humorous way), how to prepare that dish in real time. It’s more than just a lot of fun, it’s community. I will forever be loyal to this restaurant because of all of the surprisingly fun and memorable experiences they’ve created. And you can bet I’ve told a lot of other people about it too. Did they create this as a loyalty program? I doubt it. They likely were just trying to drum up cash flow on typically slow Tuesday nights. But as a result of creating over and above highly memorable customer experiences they are building a loyal community of customers for the long haul. There’s a key psychological component at play here. What we are really talking about in brand loyalty is actually memory. When we have an exceptional brand experience it gets lodged into our memory. This in turn gets translated into an emotional connection that all positive memories create. While important, the functional benefits of your product or service just don’t cut it when it comes to creating emotional connections. We don’t record functional benefits into memory, and therefore don’t make an emotional connection. In other words, when you deliver on just what you are supposed to deliver on with your brand, it’s quickly forgotten. But your brand goes beyond what’s expected and create an exceptional customer experience, it gets lodged into memory. It’s that lodging in the memory that is the spark that drives loyalty. So true brand loyalty is a result of first creating affective commitment. How do you do this? Well, for starters, all brand experiences need to align with the brand positioning itself. Experiences are a physical extension of what your brand stands for and why it is distinct. If your brand is solid in both of those aspects, then you can deconstruct the entire customer experience the way it is now and determine where it can be elevated to something that is exceptional, surprising and meaningful. If, however, your brand positioning and differentiation is murky, you have to first start there and build from that. Trying to create exceptional brand experiences on a brand that isn’t clearly positioned will likely add more confusion and be a waste of valuable budget. And speaking of budget, this is where marketers need to rethink how they allocate funds across all of their initiatives. A true brand loyalty strategy based on the principals above means that you need to transition a good portion of your focus from communicating expected functional and technical benefits to creating these exceptional experiences for your customers. This requires a reallocation of the budget; In general, I recommend at least 15-20% of your efforts and budget should focus just on your brand loyalty strategy. Research can help you further fine tune this by first understanding your reputation. For example, if research shows that your brand has a great reputation for delivering on things that are expected (or worse, unimportant), you can reallocate your budget to focus on improving your brand’s performance and perceptions on delivering experiences that delight which will ultimately will be at the heart of your brand loyalty strategy. Unless you’re in hospitality, chances are creating over-and-above customer experiences that delight could be revolutionary in your industry. It’s an exceptional way to differentiate your brand. A few tips to help get you started: If you aren’t delivering the basics consistently (i.e., the functional benefits of your products or services), you have to start there. You need to do that just to avoid dissatisfaction, and you can’t build affective commitment if you don’t meet the basic requirements your customer base expects. At the core of affective commitment is the practice of creating over-and-above experiences that generate emotional responses that, in turn, get recorded into memory. What this means to your brand depends on the relationship you have with your customers, but the baseline is true, regardless. Ask yourself, what can you do for your customers that will go beyond their expectations? How can you surprise them? How can you anticipate their needs even before they do? How can you personalize their experience? How can you make them smile? But remember, and this is the kicker, creating affective commitment is NOT about offering deals and discounts. Those might create economic commitment, but the benefits are short lived and will not lead to loyalty. Creating affective commitment and, consequently, brand loyalty, should be a top focus of most every marketing department. The financial returns can be significant not just from your existing customer base, but the new customers in their circle they undoubtedly will tell about the crazy great experience they had with your brand. Even better, it should rise above that and be a top corporate objective. Creating true loyalty––and then turning that conviction into a marketing channel in its own right––is what makes some brands so cleverly successful.
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