Capturing cross-selling synergies in M&A: The GLEe Model

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Jul 25, 2023

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Capturing cross-selling synergies in M&A: The GLEe Model

Introduction:

Cross-selling is a powerful strategy that can unlock significant revenue synergies in mergers and acquisitions (M&A). However, capturing these synergies requires a deep commitment and understanding of the opportunity, as well as effective execution. While cost synergies are relatively straightforward to estimate and realize, capturing revenue synergies is essential to meeting shareholder expectations. One effective way to achieve revenue synergies is through cross-selling, which involves delivering products and services traditionally sold to one set of customers to another set of customers. In this article, we will explore the importance of capturing cross-selling synergies in M&A and introduce the GLEe Model, a framework that product leaders can use to form a product vision and address criticisms.

The Six Cs of Cross-Selling:

To capture cross-selling synergies, it is crucial to evaluate six core dimensions, also known as the "six Cs." These dimensions provide a strong sense of the cross-selling opportunity and increase the odds of capturing it successfully. The six Cs are as follows:

  • 1. Complementarity: How well do the companies' accounts, products, and services complement each other? Evaluating complementarity helps determine the potential for cross-selling success.
  • 2. Connection: Do the merged companies have strong customer relationships to build on? The difference between having a strong relationship with the account and with the specific buyer can significantly impact success.
  • 3. Capacity: Can the salesforce focus on cross-selling? It is essential to assess whether the salesforce has the necessary bandwidth and resources to prioritize cross-selling efforts.
  • 4. Capability: Does the salesforce have the skills required for cross-selling? Identifying any skill gaps and providing the necessary training or resources is crucial for successful cross-selling.
  • 5. Compensation: Are the right incentives in place for cross-selling? While compensation alone will not achieve results, coupling a well-calibrated compensation plan with the right recognition programs is essential.
  • 6. Commitment: Is the company committed to cross-selling? Commitment has the highest correlation with overall program success. Organizations that focus systematically on more of these six core dimensions outperform those that focus on one or none by more than 20 percent.

The Importance of Long-Term Thinking:

In addition to the six Cs, adopting a long-term thinking approach is crucial for capturing cross-selling synergies. The GLEe Model, a product vision framework, encourages teams to think big and think long-term. It emphasizes the importance of inventing the future and enables an "anything is possible" attitude. By thinking 3-5 years ahead, most things become possible, but the GLEe Model goes further by encouraging product leaders to think 10-15 years ahead.

Furthermore, the GLEe Model emphasizes the importance of not trying to do everything at once. Instead, it encourages finding a high-level product strategy that supports multiple phases of a company's growth. This approach allows for a phased, step-by-step approach to building a product that "dents the universe" and creates a significant, hard-to-copy advantage.

Actionable Advice:

  • 1. Evaluate Complementarity: Before embarking on a cross-selling strategy in an M&A, carefully evaluate how well the accounts, products, and services of the merging companies complement each other. This assessment will provide insights into the potential for cross-selling success.
  • 2. Invest in Relationship Building: Strong customer relationships are key to successful cross-selling. Invest in building and nurturing these relationships to ensure a solid foundation for cross-selling initiatives.
  • 3. Foster Long-Term Thinking: Encourage product leaders and teams to adopt a long-term thinking approach. By thinking beyond the immediate future, they can identify opportunities and develop strategies that will drive long-term success in cross-selling.

Conclusion:

Capturing cross-selling synergies in M&A is crucial for meeting shareholder expectations and driving revenue growth. By evaluating the six Cs and adopting a long-term thinking approach, companies can increase their chances of successfully capturing these synergies. Additionally, the GLEe Model provides product leaders with a framework to form a product vision and address criticisms. By following the actionable advice provided, companies can unlock the full potential of cross-selling in M&A and realize significant revenue synergies.

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