Capturing Cross-Selling Synergies in M&A: A Key to Revenue Growth and Success in the Attention & Trust Economy

Capturing Cross-Selling Synergies in M&A: A Key to Revenue Growth and Success in the Attention & Trust Economy

In the dynamic landscape of mergers and acquisitions (M&A), capturing cross-selling synergies has emerged as a leading source of post-transaction revenue growth. However, achieving these synergies requires a deep commitment and understanding of the opportunity and how to execute on it. While cost synergies are more straightforward to estimate and often pay off quickly after Day 1, capturing revenue synergies is essential to ensuring that transactions meet shareholder expectations.

One powerful way to realize revenue synergies is through cross-selling, which involves delivering products and services traditionally sold to one set of customers to another set of customers. On average, there is approximately a 20 percent gap between the desired goal and the actual result when it comes to cross-selling, and it typically takes three to five years to capture the majority of synergies. To increase the odds of capturing these synergies, it is crucial to focus on the "six Cs," which are complementarity, connection, capacity, capability, compensation, and commitment.

Complementarity refers to how well the accounts, products, and services of the merging companies complement each other. This is a critical factor in determining the potential for cross-selling success. Additionally, having strong customer relationships to build on, as indicated by the connection between the companies, is essential. It is not enough to have a general relationship; the specific buyer's relationship matters significantly.

Capacity and capability are also crucial considerations. Can the salesforce effectively focus on cross-selling, and do they have the necessary skills for it? These questions need to be addressed to ensure successful execution. Moreover, compensation plays a vital role in incentivizing cross-selling efforts. However, a well-calibrated compensation plan alone will not achieve the desired results. It is necessary to couple it with the right recognition programs and nonmonetary incentives to spur salespeople to prioritize cross-selling.

However, commitment stands out as the most critical factor among the six Cs. Companies that are committed to cross-selling have the highest correlation with overall program success. This commitment should be reflected in the organization's strategies, resources, and leadership support.

While M&A teams can generally evaluate the overlap in customers or products, they tend to overestimate the potential complementarity of products. Therefore, it is crucial to conduct a comprehensive analysis to identify the true cross-selling opportunities. Additionally, sales leaders need to understand the relevance of new products to decision-makers and build credibility and trust in the new space.

In the ever-evolving Attention & Trust Economy, capturing the attention of customers is no longer enough. Trust has become a critical component in acquiring and retaining attention. The younger generation, particularly Generation Z, represents a significant portion of the population and has the power to switch brands quickly. For them, trust is built on brands delivering on their promises and aligning their actions with their brand vision. Any breach of trust can lead to the loss of their trust and loyalty.

Moreover, the definition of status has shifted from material possessions to access. The ability to access exclusive experiences, limited edition products, or information that others don't have has become a status symbol. Brands that control access and provide value to those who have access and influence are more likely to be favored by Generation Z.

To thrive in this rapidly changing landscape, brands need to go beyond prioritizing rapid growth and sales. They need to focus on delivering overwhelming value, fostering a sense of community, and creating a feeling of being an insider. By doing so, they can create brands that transcend generational boundaries.

Building an audience and cultivating a community should be the starting point for next-generation brands. Companies like Glossier and Barstool Sports have successfully utilized content to build a fan base and leverage their attention and trust for monetization. Generation Z, who are eager to express themselves and showcase their creativity, are drawn to platforms and media that allow them to do so. This has led to the rise of audio-based social media and communication, such as voice-based social networks and platforms like Discord.

In the realm of meta-verses, Tencent has made significant investments in the infrastructure and content required to create immersive digital experiences. Their ownership stakes in companies like Epic Games and potentially Snap, which possesses A/R, Mirrorworld, and digital mapping technologies, position them at the forefront of the meta-verse infrastructure development.

In conclusion, capturing cross-selling synergies in M&A is a key driver of revenue growth and success. It requires a deep commitment, understanding of the opportunity, and executional excellence. By focusing on the six Cs and understanding the shifting dynamics of the Attention & Trust Economy, companies can maximize their chances of capturing synergies and thrive in the ever-changing business landscape.

Actionable Advice:

• 1. Conduct a comprehensive analysis to identify the true cross-selling opportunities and potential complementarity of products in M&A transactions.

• 2. Prioritize building strong customer relationships and credibility in the new space to increase the chances of cross-selling success.

• 3. Couple a well-calibrated compensation plan with recognition programs and nonmonetary incentives to motivate salespeople to prioritize cross-selling efforts.

Sources:

• "Capturing Cross-Selling Synergies in M&A" (No specific source provided)

• "Off Topic 2020年のテーマ：Attention & Trust Economy｜Off Topic - オフトピック｜note" (No specific source provided)