An Empirical Study Of Customer Win-Back Strategy, Customer Loyal Behaviours, And Marketing Performance

In the last decade firms are experiencing even greater difficulties than before in corporate management. Not only severe market competition induces high operation costs, but also a clear sign that it is more likely today to lose the once loyal customers. To obtain competitive advantage in this hostile modern market, firms have to find new profitable business models as well as new operation methods. To echo this view, the development of customer win-back strategy seems to provide a possible new thinking to tackle this obstacle. As a result, studies of strategies to win-back customers have started been an eye-catcher by both practitioners and academia recently.However, given the extensive studies of relationship investment and price promotion being the key tools to maintaining customer loyalty, we know very little about how these tools can be used as strategies to win-back a former customer. To understand better the mechanism underneath this enquiry, the current study introduces relationship investment and price promotion as the precedent strategies to win back customers and so to examine their effects upon marketing performance. Dick and Basu (1994)'s framework is used to define customers' loyal behaviors under different win-back strategy settings. To one hand, this design allows us to portrait the process of how a customer can be win-backed based on his/her different level of price sensitivity. On the other, it also provides opportunities to compare the impacts of affective bonds and economical rationalism upon customer satisfaction and share of wallet after win-back.By using a dyadic design,. the indicators of four-year marketing performance of 121 hotels are collected and 1500 questionnaires were distributed to the customers of these hotels covering three provinces in China. The valid sample size is 1074. The results show that, non-economical win-back strategies such as relationship investment are better able to encourage customers' internal motivation of consumption, and thus contribute to an affective long-term and stable bond with the service provider. On the contrary, economical win-back strategies such as price promotion are much easier to enhance customers' price sensitivity and, thus induce a more unstable, short-term, relationship between each other. To sum, this study provides a clear answer to the dilemma of firms facing the problem of wining back their former customers. Meanwhile, it also draws insight to our understanding of how western theories can be applied in Chinese market.