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Renee Roberts of Antelope, Calif., still gets steamed when she thinks about what happened to her after Comcast bought AT&T Broadband for more than $50 billion two years ago. She says the company lost her $155 payment in its newly integrated automated system -- and then brushed her off. "No one cared," Roberts complains. "The attitude was 'we're big, so you have to deal with us."' Comcast concedes that it made some billing mistakes after the merger. Last year, to put matters right and fend off competition from satellite-TV operators, it instituted a program to train employees to "Think Customer First." Now, it says, customer satisfaction scores are back to where they were before the merger. But Roberts is long gone. She gets satellite service with a dish instead.

Mergers often make customers dissatisfied. And once that happens, it can take managers years to regain lost ground. That's the conclusion of an exclusive analysis done for BusinessWeek. The data, which was collected over five years as part of the widely respected American Customer Satisfaction Index, reports on customers' perceptions of 28 big companies that were involved in major mergers between 1997 and 2002. It showed that customers were significantly less satisfied on average even two years after the deals closed than they were before.

Customers' satisfaction scores were based on their perceptions of companies' prices, quality, and ability to meet expectations. In an eye-opening 50% of the deals, consumers gave the company lower marks in at least one of the three categories. Customers thought they got better service or prices from only 29% of mergers. Says Claes Fornell, who heads the index for the University of Michigan's Stephen M. Ross School of Business and the American Society for Quality: "Customers are increasingly frustrated because they perceive they have a lack of choice."

The frustration is sharpest with mergers in industries whose services have the most direct influence on the quality of Americans' daily lives. Oil companies, cable-TV outfits, and retail stores saw their satisfaction ratings plunge between 5.3% and 7.4% on average. And the effects can prove to be long-lasting. Five years after SBC Communications Inc. (SBC ) bought Ameritech Corp. for $70 billion in 1999, its customers still say they are less satisfied than they were before the merger. The company says its own surveys show the quality of service is now better than it was before the deal.

The monetary cost to individual consumers of service perceived to be worse may seem small, but it soon adds up. Maritz Research Inc. estimates that more than half of the nation's 109 million households have gone through a bank merger since 1999. Some recent bank deals scored better in terms of customers satisfaction. Still, if one person from each household spent a minute at work asking a bank how its deal would affect them, and was paid for that minute at current average wage rates, the cost of the time would be $900 million.

Many people do much more than complain. If they don't like a merger, they vote with their feet -- laying extra costs on companies and potential losses on their investors. New York-based researcher Millionaire Insight Programs estimates that about one-quarter of people with $1 million or more in investable assets get so upset that they take money out of their accounts soon after their bank merges. Investors seduced by the prospect of higher earnings find many mergers don't deliver promised synergies because factors such as aggressive cost-cutting or mismanagement turn off customers.

Now consumers are facing a new wave of mergers -- and possible disappointments. Kmart Corp.'s (KMRT ) takeover of Sears, Roebuck & Co. (S ) may portend more deals that could engulf a whole range of industries suffering from chronic overcapacity, such as financial services and long-distance phone services. Researcher Thomson Financial (TOC ) estimates that 10% more deals will happen this year than in 2003. Dealmaking, according to Thomson, may reach the highest number in three years and could accelerate even faster next year.

Some companies learned their lessons during the last merger boom. When struggling Qwest Communications International Inc. (Q ) spent $56 billion in 2000 to buy a poorer-performing local phone service, US West Inc. -- industry wags dubbed it "US Worst" -- Qwest's residential consumers felt they paid more for service that they perceived as 12.5% worse. During those two years Qwest upgraded its network and concentrated on serving corporate clients. It took a new CEO and two more years for the company to restore consumer satisfaction to premerger levels. Qwest did that by extending the hours of operation at its call centers and simplifying its bills so that people would know what they were paying for. Qwest's vice-president of marketing, Mark Pitchford, acknowledged the problems, adding: "A lot of work was needed to get us back to where we were serving our customers the way we should be."

Logistical Challenge

Other companies also discovered how badly customers reacted to cost-cutting. After their mergers, Exxon Mobil Corp. (XOM ) and BP PLC (BP ) closed or cut back investing in gas stations. Not surprisingly, customer satisfaction plummeted sharply in both cases. They and the companies they acquired all had customer-satisfaction ratings far above the industry average before their deals and the same or only slightly more afterward. According to our study, BP customers felt that they got 13% less value for their money in terms of the price and quality of service two years after the company's $55 billion merger with Amoco. ExxonMobil customers felt they got 14% less value for their money and that service dropped in quality by 5%. BP says that five years after its 1998 merger, customers are more satisfied with service at its 15,000 gas stations than before. In the past four years, BP spent $513 million to brighten up the looks of its stations and added features such as premium coffee shops. "It takes tremendous logistical effort to re-clad and re-logo a retail site network like that," says BP spokesman Scott D. Dean. ExxonMobil disagrees with the study's findings and says its own surveys show customer satisfaction never declined.

Cable companies, which consumers seem to love to hate, appear especially adept at alienating them after mergers. Consider Comcast Corp. (CMCSA ), one of our study's worst-scoring companies in terms of customer satisfaction along with rival operator Charter Communications Inc. (CHTR ). Comcast has been willing to take a chance on more complaints about poor service as they quickly upgraded the networks of the customers it acquires. That's because it can then offer improved features such as video on demand and high-definition TV. "We'd rather risk moving faster on the rebuild side because we know at the end we'll have a more competitive product," says Dave Watson, Comcast's executive vice-president of operations.

But absent effective remedial action when ratings slide, customers can stay mad for long periods. In 2003, two years after Charter paid $1.8 billion for cable systems from AT&T Broadband, customers still reported the quality of service was 12.7% worse -- the biggest drop among the 28 major deals studied. Charter points out that it hasn't done any major deals since then and says it tracks customer satisfaction on a frequent basis and does its "best to keep them satisfied."

Dissatisfaction Guaranteed?

In many deals, a slump in consumer satisfaction seems to be almost cooked in. Often, the data shows, takeover targets have a worse record than acquirers, whose own ratings are subsequently dragged down. That may be one reason why Hewlett-Packard Co. (HPQ ), which paid $19 billion for Compaq in 2002 in the hope of leaping ahead of competitors in the retail PC business, is still struggling to keep up with market leader Dell Inc. (DELL ), which has never made a major acquisition. When HP bought Compaq, our study reveals, customers were less satisfied with Compaq than either HP or Dell by a wide margin. Although HP says its own studies over the past 12 months indicate increasing customer satisfaction, the data suggest the deal didn't make customers much more satisfied. Meanwhile, Dell's scores rose 3.9%.

Of course, some companies manage to pull mergers off better than others do. For example, Bell Atlantic Corp. phased in changes in its billing and order-taking systems slowly when it bought NYNEX and then GTE to form Verizon Communications (VZ ) in 2000. And it was cautious about trying to upgrade its network at the same time. Bell Atlantic's reward: Customer satisfaction held steady after both deals despite a fall in the average rating of telecom companies. "You can talk a lot about new technology, but keeping customers is about service," says Paul Lacouture, president of Verizon's network-services group.

Customers also perceived some improvement after the last wave of deals that created several food giants. "It's very easy to forget the consumer during a merger," says Mark Addicks, chief marketing officer at General Mills Inc. (GIS ). But the survey shows its customers were more satisfied after it bought crosstown rival Pillsbury Co. in late 2001 for $10.5 billion, enabling it to offer everything from Cheerios to Yoplait and Green Giant vegetables. "We were focused from very early on not to miss a beat," says Addicks.

Now food giants are fine-tuning their merger practices to bring benefits to consumers more quickly. After Switzerland's Nestlé (NSRGY ) bought pet-food maker Ralston Purina Co. in late 2001 for $10 billion, it revamped canned Alpo dog foods within a year, in part by adding a flip-top lid, a first in large cans. The St. Louis company then freshened up Friskies cat foods with better ingredients. This year it used more marketing muscle to relaunch Purina Dog Chow. "The consumer is our focus, and we did not want to see that deteriorate," says Terry Block, president of Nestlé Purina Pet Care's North American division.

Shifting Priorities

Some banks have also learned the hard way that they must invest in consumers if they hope to keep them. In the late 1990s banks cut costs dramatically to make up for the high premiums they paid to buy rivals. "It was a generally accepted principle that you would lose a double-digit percentage of your customers," says David M. Carroll, a senior vice-president at Wachovia Corp. However, Wachovia changed its acquisition strategy dramatically once it discovered just how costly it was to lose customers. When First Union Corp. bought Wachovia in 2001 and then took its name, it made customer retention a top priority. "We meted out change at a pace that people could deal with," says Carroll. The result: Wachovia's customer-satisfaction score soared 10.6% two years after the deal.

Bank One has also changed its tune after losing hundreds of thousands of customers in the wake of a major merger. When Bank One, then called Banc One, bought First Chicago NBD Corp., it closed dozens of branches, crimped tellers' ability to solve customers' problems by reducing their responsibilities, and failed to integrate the two banks' multiple computer systems for years. Consequently, customer satisfaction plummeted 6% almost immediately, according to the study. It took a new CEO, Jamie Dimon, to clean up the mess by taking the opposite approach.

Fast-forward to JPMorgan Chase's deal with Bank One in July: Dimon is taking the same tack. The day the deal closed he melded the banks' ATM systems nationwide so customers could withdraw money and check their balances for free, opened new branches, and started offering Chase mortgages in Bank One branches. As a result, JPMorgan reported 187,000 net new individual accounts in the third quarter. That's a far cry from when Bank One lost 200,000 more accounts than collected in the year 2000 as it struggled to integrate First Chicago, which it had bought years earlier. "We're going to offer improved products and pricing soon," says Charles W. Scharf, head of the JPMorgan's retail financial services.

As corporate execs get the urge to merge again, they need to keep consumers' interests in mind more than they did during the last buying binge in the '90s -- for the sake of their customers and their companies' own futures.

Corrections and Clarifications "Why consumers hate mergers" (The Corporation, Dec. 6) incorrectly stated the cost to consumers of bank mergers. It should have said that if each household affected by such a merger spent an hour dealing with the aftereffects of the merger, the total value of that time at the overall average wage rate would be roughly $900 million.

By Emily Thornton with Michael Arndt and Joseph Weber in Chicago