Guest Column | October 11, 2019

What To Do When Customer Information Doesn't Come With Business Acquisition

By Paul Leduc, Globe POS Systems Inc.

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Globe POS Systems has been in business for almost 50 years, the last 10 under my ownership. Over the past decade we went from 1 to 13 employees and have grown significantly in the Ontario region. However, six weeks ago we acquired a reseller in the Maritimes.

Even though we’re not in expansion mode, we are always listening to the market and right now we’re hearing a very concerning trend: many small resellers are nearing retirement with no one around to take over. These owners simply want to leave with a few dollars in their pocket and the knowledge their customers are well taken care of. The trouble is, they have an enormous amount of customer knowledge in their head and nowhere else, making any transition to a new owner much more difficult.

That was the case with our first acquisition that came with about 35 customers, just four hours away from us in Ottawa. The process was painful since the seller took his knowledge with him. We had to meet with each new customer and slowly create relationships, proving ourselves over time. Of course, there were and still are surprises and discoveries along the way, but overall the transition went very well.

The second acquisition, just last year, was a bit harder and involved about 55 customers with a great deal of cleanup involved. These customers were closer to us geographically than the customers from the first acquisition, but the region was larger and more difficult to navigate. This made it harder for us to meet each customer individually. Once we did meet the customers, we discovered they were using older hardware, and many were not PCI compliant and needed to have their retail software upgraded in addition to other changes. Navigating the transition with those customers was a bit easier since we had just learned the do’s and don’ts from the first group of customers. We did lose a few customers, but the loss was reasonable.

Our most recent acquisition has been the most challenging to date. This dealership we acquired had gone bankrupt, so again there was little to no transfer of knowledge and very limited resources. We did not pay anything for the customer list, which is great, but it still came at a great cost.

The first major challenge is that these customers are a three-hour flight away and there are 155 of them across multiple provinces. This required us to hire employees from the area and with the help of some vendors, we were able to get them onboard relatively quickly. Of course, the work environment was quite a big change for our new employees to get accustomed to, as we do not currently have an office in the region, so they must work from home. They had to learn our tools, ways of operating, and how to effectively work from a home office and the discipline it requires. This arrangement has proven to be very beneficial as they have helped us with the onboarding and supporting customers in the area, creating a sense of security that we did not have with prior acquisitions.

Unfortunately, the challenges we faced did not stop there as many of our newly acquired customers had paid for maintenance agreements to their prior provider. After much thought, we decided to honour these agreements until they where all paid up to assure them that we were fully invested in them as customers. Financially, this proved to be a very expensive can of worms to open. And still, the real challenges were yet to come. As we boarded each new customer, we discovered more than 83 percent of them were still operating windows XP, and most were operating older versions of software. Some of them were also operating older pin pad and were on the verge of losing service completely as those pin pads were about to be retired from the processor. In normal times, I would have been happy with getting ‘easy’ sales, but in this case, there were too many issues that needed to be addressed quickly and all at once. Since there were a lot of customers to attend to at once, creating meaningful and trustworthy relationship was and still is very difficult. Having the processor put pressure on both us and the customers has of course not helped the situation, creating a lot of confusion for the customers, and some lack of trust towards resellers in general.

So, still viewed as the new kid on the block, we had to deliver the bad news: their equipment needs to be replaced and their software needs to be upgraded for something called PCI, something they never heard of. Some of the customers were very apprehensive and we had to spend a great deal of time working with them and educating them on PCI, the requirements, and the need to upgrade hardware and software. This requires a great deal of our time and resources and even though I know some of them will not follow our advice, we must still try our hardest one customer at a time.

Through this ordeal, the best thing we did was bringing in familiar faces to our team, someone our new customers can relate to and who has experience with their current setup and hardware. Together with our local service techs, we are hoping that over time, a sense of comfort is created, but only time will tell.

After all of this, it is no wonder I almost have no hair left …

About The Author

Paul Leduc is the President of Globe POS Systems Inc.