the underestimated risk of user leakage

Can Twitter emerge from the chaos?

On Friday October 28, Elon Musk, the richest man in the world, formalized the news: he took the reins of the social network Twitter, bought for the sum of 44 billion US dollars.

The operation is part of what is commonly called “mergers and acquisitions”. The idea is to join forces with another company or to take control of the target company for often colossal sums. These are put forward by specialists in business strategy, who compare them to a number of customers to be won or to be gained in terms of synergies. The media often present the social consequences of the process.

In the case of Twitter, half of the employees were laid off in just one week.

More rarely is the fate of clients mentioned, including in the scientific literature. And yet, at the end of April, when the founder of Tesla announced his intentions to get his hands on the platform and when his board of directors accepted an initial offer, the web page monitoring tool VisualPing saw an 82% increase in US searches for how to delete your Twitter account. Tens of thousands of users, 41,287 for the single day of April 26, then migrated to the rival network Mastodon.

As we have shown more generally in recent research, the reaction of customers, users and other users to the announcement of a takeover operation is often tinged with pessimism and negativity.

Merger-acquisition… satisfaction?

An American customer satisfaction indicator shows that, on average, consumers are less satisfied, even two years after an operation of this type. In 2010, Continental Airlines lost 10% of the satisfaction level after its merger with United Airlines. In 2008, following the merger of two airlines, Delta and Northwest, Delta’s customer satisfaction index dropped by the same order of magnitude. When Compaq and HP merged in 2002, a survey showed that customers expected to reduce their purchases of the Compaq brand by 10% and the HP brand by 4%.

On paper, however, there would be a lot to expect from acquisitions. When it comes to Twitter, we can assume that Elon Musk’s financial means or the reputation of his companies like Tesla and SpaceX can be beneficial for users of the tool. And this, even if his intentions behind the maneuver remain a little obscure.

A company after a merger is larger, has more market power and can therefore negotiate from a position of strength with its suppliers. All of this has positive effects for the customer in terms of costs. The operation also facilitates the pooling of resources and skills. It can result in an increase in the level of investment in research and development and consequently facilitate the creation of new products or services, better suited to expectations.

However, nuances appear quickly. Our results show that satisfaction varies according to the types of operations, the sectors of activity, as well as the specificities of the countries of origin of the companies involved.

The simultaneous improvement of productivity and customer satisfaction is, for example, not easy to reconcile in the service sector where customers are sensitive to the personalization of the offer (difficult to satisfy by standardizing or proposing the same thing to all) as opposed to the manufacturing sectors. Satisfaction levels are also lower when it comes to horizontal acquisition (when a company acquires a company in the sector in which it already operates).

The reaction of Twitter users could thus depend on whether they are located in a democratic country (freedom of expression) or not, or on their perception of paid/free services.

Review your strategies

Following a merger or acquisition, many actually fear that the new entity will prove unable to provide an offer that meets their expectations. The long and complex time of negotiations and transition can be worrying, when for example uncertainties arise from legal proceedings, as was the case for Twitter. This perhaps more directly concerns employees whose positions could be questioned, unlike users.

For the latter, however, it is possible to think that administrative, technological and operational dysfunctions are inevitable. Moreover, they are not satisfied solely with their consumption experiences but see themselves as active players, in the same way as the other stakeholders that the company should take into consideration.

A relationship between a customer and a business is often tied to other relationships. Consequently, any modification affecting the latter may also have consequences for other stakeholders. A merger that results in layoffs can, in the eyes of the user, be synonymous with a loss of expertise and quality for the company. A study shows that the replacement of the executives of the acquired company can negatively affect performance.

The customer/user is not concerted when Elon Musk announces the new strategies for transforming Twitter from top to bottom and remains considered a mere spectator. Among these measures, we can cite the revitalization of paid subscriptions, the monetization of the distribution of very popular tweets or even the payment of content creators, which concerns him directly.

Managers involved in mergers and acquisitions should, in our view, understand that the customer is an essential element that deserves its place among the main strategic concerns. Our results are also an invitation, during the negotiation period, for clear strategies to be developed to inform clients of the future benefits they will derive from the maneuver. It is a question of thinking about investments which aim to improve customer satisfaction in the short term to prevent some of them from rejecting the operation in which they do not find themselves, at the risk of moving towards competitors. .


Through David RutambukaTeacher-Researcher in Marketing and Data Analysis (AI), ICD Business School.

The original version of this article was published on The Conversation.