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Too Big To Care? Why Mega-Mergers Threaten Us

by Colin Shaw on May 4, 2018

How big does a company need to get before it is too big to care about Customer Experience? If this week’s news is any indication, telecom customers in the U.S. and grocery shoppers in the UK could find out.

We all can see from surveys like this (#2), or this one(#6), Customer Experience has been a significant area of concern for many CEOs recently. However, in my view, the Customer Experience (CX) movement has plateaued over the past couple of years and I question the real commitment of CEO’s to CX.

Actions speak louder than research. CEOs are not doing anything about their stated concerns of building customer-centered experiences. What worries me is the size of companies today. Let me explain.

Two mergers in two different industries will have enormous implications for customers. On Sunday, T-Mobile and Sprint announced a merger for the U.S. telecom industry set to finalize for $26.5 billion next July. Across the pond, British grocery stores Sainsbury’s and Asda (owned by Walmart) announced they were in advanced stages of merger talks, a deal whose estimated worth is £10billion (or approx. $13.8 billion).

Both of the mergers will reduce the competition in each of the business sectors so the two merging companies can share costs and pool their resources to accomplish their goals of overtaking a market leader. Also in both cases, experts worry about the implications for customers—and the prices they will pay as a result of them.

As a global Customer Experience consultant hearing this news, I worry, too. I have to ask a couple of questions:

  • Are companies growing so large that improving the Customer Experience is no longer a priority?
  • Are CEOs demonstrating a genuine commitment to Customer Experience?

Too Big to Care?

We all know that monopolies tend not to care about Customers. They don’t have to. The less companies, the less competition, the less they have to focus on the Customer. It’s as simple as day follows night. When companies merge, it reduces competition, which has implications not only for customers but also for employees. In an opinion piece for the NY Times, David Leonhardt talks about an “oligopoly problem” wherein a few companies have a lot more market share than they used to have, which produces negative effects on wage and job growth, and contributes to rising prices. I agree.

The T-mobile/Sprint Merger reduces the national wireless carriers in the U.S. down to three, but they are hardly the only industry with this trend. Airlines, technology, retail (on and offline), and even hospitals have been merging over the past twenty years. Now there are but a few major players in each industry.

The T-Mobile/Sprint merger poses risks for telecom workers. The Communications Workers of America, the union for telecom workers, predicts a loss of 20,000 U.S. jobs and warns of stifling wages for those who remain employed. Likewise, for the shop worker trade union in the UK, who are eager to talk to Sainsbury’s and Asda about how they intend to protect jobs after the merger. After all, when there are fewer places to work, fewer places where specific industry skills are valued, then why should the company create better wages and work cultures for employees?

Reducing competition can have a similar effect on Customer Experience. Monopolies do not focus on customers. Why should they? When you are the only game in town, people can play with you or miss the game. Fewer providers means fewer customer choices. Fewer choices means providers require less attention to fostering a competitive advantage by providing an excellent, customer-centered experience.

T-Mobile built a customer-centered experience by disrupting the telecom industry. They lowered rates, ended the long-term telecom contract business model, and simplified customers’ bills by getting rid of hidden fees and unexpected taxes, attracting five million new customers to T-Mobile over the past five years.

However, the merger between T-Mobile and Sprint threatens this type of competitive differentiation. Former Federal Communications Commissions’ chairman Tom Wheeler credits the four-carrier model in the U.S. for keeping the price of wireless provider service flat or in some cases reduced over the recent past. “It’s hard to see how removing the competition that created improves things for customers,” Wheeler said in an NY Timesarticle on Sunday.

As for the Sainsbury/Asda merger, experts have little good to say about what it means to customers. The Labor Shadow business secretary even called out the merger for creating a duopoly with Tesco (the leading British Supermarket), which would have “unrivaled power to dominate, dictating choice and prices for consumers…

I founded my global Customer Experience consultancy in 2002. Let me assure you, I am then very aware, that when it comes to Customer Experience, the words dominate and dictate used in relation to how you treat customers do not create a trajectory you want for the outcome of your Customer Experience.

The best returns in business are born of an experience that puts the customer at the center of everything you do. Few leaders at the top have a true commitment to this concept and even fewer at the top of “mega-companies.” However, Apple is an indisputed mega-company that knows focusing on customers will get the best results. Apple’s CEO Tim Cook, says it well:

Cook says focusing on Customer Experience and making the best products is what leads to excellent stock value. “We don’t get confused that the focus should be on that,” Cook says.

Companies in all business sectors have merged and grown to enormous proportions over the past two decades. While CEOs have said they are concerned about Customer Experience, it does not play out in the mergers that reduce competition and combine market share. The bigger they get, the less concerned they are with building customer-centered experiences and empowered employee experiences. How big is too big to care about Customer Experience? I cannot tell you for sure, but if this trend continues, we could all find out together.

Has your customer experience been affected by a big business merger or takeover? Let us know in the comments below.

Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of five bestselling books and an engaging keynote speaker.

Follow Colin Shaw on Twitter @ColinShaw_CX.

Sources:

Mortiz, Bob. “4 concerns that keep CEOs awake at night.” www.weforum.org. 16 January 2017. Web. 30 April 2018. < https://www.weforum.org/agenda/2017/01/4-concerns-that-keep-ceos-awake-at-night/>

Shaw, Lynda. “What CEOs want to Hear in 2017.” www.forbes.com. 10 December 2016. Web. 30 April 2018. < https://www.forbes.com/sites/lyndashaw/2016/12/10/what-ceos-want-to-hear-in-2017/#6f349b838f5e>

Leonhardt, David. “Big Business is Too Big.” www.nytimes.com. 2 April 2018. Web. 2 May 2018. <https://www.nytimes.com/2018/04/02/opinion/big-business-washington.html?rref=collection%2Fbyline%2Fdavid-leonhardt&action=click&contentCollection=undefined&region=stream&module=stream_unit&version=latest&contentPlacement=19&pgtype=collection>.

De la Merced, Michael J., Cecilia Kang. “Sprint and T-Mobile to Merge, in Bid to Remake Wireless Market.” www.nytimes.com. 29 April 2018. Web. 30 April 2018. < https://www.nytimes.com/2018/04/29/business/dealbook/sprint-tmobile-deal.html?emc=edit_nn_20180430&nl=morning-briefing&nlid=8260305420180430&te=1>.

“Sprint and T-Mobile to Combine in deal that could reshape the U.S. wireless landscape.” www.nbcnews.com. 29 April 2018. Web. 30 April 2018. < https://www.nbcnews.com/news/us-news/sprint-t-mobile-combine-deal-could-reshape-u-s-wireless-n869916>.

“Sainsbury’s and Asda in merger talks” www.bbc.com. 28 April 2018. Web. 30 April 2018. < http://www.bbc.com/news/business-43933517>.

“Apple CEO Cook: Focus on customer experience, make the best products.” www.cnbc.com. 1 November 2017. Web. 30 April 2018. < https://www.cnbc.com/video/2017/11/01/apple-ceo-cook-focus-on-customer-experience-make-the-best-products.html>.

“Experts have their say on the Sainsbury’s and Asda merger.” www.theguardian.com. 30 April 2018. Web. 30 April 2018. < https://www.theguardian.com/business/2018/apr/30/experts-have-their-say-on-sainsburys-asda-merger>.

Colin ShawToo Big To Care? Why Mega-Mergers Threaten Us