Based On Perception Back To The Value Of The Loss Of Customers To Win Back Mechanism

The development competency of an enterprise results from the quantity. and quality of customer portfolio. Enterprises are scrambling for three kinds of customers, namely, prospects, current customers and lost ones. They are competing with one another in identifying and acquiring valuable prospects, keeping current customers from being attracted by rivals and winning back lost customers from rivals. Neither the theory of customer acquisition targeting at prospects nor the theory of customer retention targeting at current customers can well deal with the issue of customer defection. How to win back lost customers is becoming a new research direction on customer relationship management. The Chinese researchers and professionals show their great interests in the mechanism driving the switch-back intention of lost customers, launching win-back strategies for various kinds of customers and the effectiveness of win-back strategies.Having a review on various theories corresponding to customer re-acquisition and a survey on customer re-acquisition management in auto insurance industry, this research raised three questions:â‘ How to define the perceived switch-back value of lost customers? What are its components and how do they drive switch-back intentions of defected customers?â‘¡How do the win-back strategies of enterprise impact on the switch-back values of lost customers?â‘¢What kind of factors moderate the driving mechanism of win-back strategies of enterprise to the switch-back intentions of defected customers via perceived switch-back values of defected customers? With the above questions, providing a new insight into customer relationship management of enterprises from the view angle of defected customers, this paper firstly puts forward the concept of perceived switch-back value of lost customers and analyzes its components based on the theory of competition-oriented customer perceived value and the theory of reasoned action, and then following the logic of "win-back strategies to perceived values to switch-back intentions", investigates the driving mechanism of win-back strategies of enterprise to switch-back intentions of defected customers via perceived switch-back values of defected customers and the moderating effects of the retention strategies of rival as well as the original switching reason of customers. Thus, the paper probes into the mechanism of enterprise's winning back lost customers based on the perceived switch-back values of customers.The paper empirically researches the driving mechanism and moderating mechanism of winning back lost customers with the survey on the auto insurance services market based on the theoretical model of the mechanism of enterprise's winning back lost customers. With the statistical analysis of 369 valid samples, the empirical research tests the theoretical hypothesizes and obtains a few interesting findings.The implications and the contributions of this research can be shown in the following five aspects:First, this research proposes the concept of perceived switch-back value of defected customer and its components, which contributes to build the theory of perceived value of defected customer. The paper states that the switch-back decision-making of defected customers who are different from ordinary ones is different from ordinary purchasing decision-making and is based on the balance of customer perceived benefits and costs in switching back to make a repurchase from the original provider. The perceived switch-back value of defected customer refers to the difference between the perceived value the lost customers obtained from the products or services of the enterprise and that from the rival. In addition, this research identifies three kinds of perceived value of lost customers, namely, perceived economic value, perceived interpersonal relationship value and perceived trust value by means of literature review, in-depth interview and questionnaire investigation. The "black box" in the process of switch-back decision-making has been opened thanks to this research. Thus, the research on the perceived switch-back value of lost customers and its components enriches the current theory of customer perceived value, and moreover, builds the theory on the perceived value of lost customer and extends the theory of customer behavior.Second, this research establishes an indirect model on driving mechanism of winning back lost customers, which advances the current research on driving lost customers to switch back. Different from the direct model Thomas et al. (2004) and Tokman, Davis & Lemon (2007) examined, the indirect model built in this research, abiding by SPI analysis framework based on the theory of reasoned action as well as model of technology reception, adopts perceived switch-back value of lost customer as an intermedium and explores the formation of switch-back intentions of lost customer, thus, examines the driving mechanism of winning back lost customers in a more systematic way. The findings show that the win-back strategies of enterprise drives the switch-back intentions of the lost customers via the values the lost customers perceived, which proves the indirect model on driving mechanism of winning back lost customers. Therefore, this research forms a deeper analysis on driving mechanism of winning back lost customers.Third, based on the theory of competition-oriented customer perceived value, this research creates a moderating model of winning back lost customers and proves the moderating effects of the customer retention strategies of rival and the original switching reasons on the driving mechanism. It is found that the customer retention strategies of rival negatively moderate the driving mechanism while the original switching reasons positively moderates it. The findings of this research proves the moderating effect proposed by Tokman, Davis & Lemon (2007) and furthermore suggests the moderating effect of the customer retention strategies of rival. Thus, establishing the moderating model of winning back lost customers from the visual angles of the rival and customers, this research helps to make up the deficiency of current research and thoroughly explore the moderating effect of driving mechanism in the real context.Fourth, this research systematically examines the mechanism winning back defected customers, which expands the research scope of customer re-acquisition and provides more findings. Since customer re-acquisition is a new field, the research system hasn't been established so far. This research attempts to build the model of mechanism of winning back lost customers by integrating driving mechanism and moderating one and examines the customer re-acquisition in a systematic and thorough way. It is found that the three kinds of perceived switch-back values, namely, economic value, interpersonal relationship value and trust value, drive the switch-back intentions of lost customers and the four kinds of win-back strategies, namely, tangible reward, information transfer, preferential treatment and interpersonal communication, in all positively impact on the perceived switch-back values. This research also finds that the two kinds of customer retention strategies of rival, namely, price-oriented retention and relationship-oriented retention, negatively moderate the driving mechanism while the two kinds of switching reasons, namely, price and service benefits, positively moderate the driving mechanism. Thus, this research expands the research scope of customer re-acquisition and provides more findings.Fifth, this research furthers the empirical study on mechanism of winning back lost customers and enriches the current results of empirical study. Lacking in empirical studies is an apparent deficiency in the research of customer relationship management (Yan, 2004). There are few empirical studies on the newly burgeoning researches on customer re-acquisition. This research explores the relations among the various variables in the model with in-depth interview and questionnaire survey and applying advanced statistic soft wares, such as, AMOS7.0 and SPSS15.0. The findings proves the driving relations from the win-back strategies of enterprise to the switch-back intentions of lost customers via the perceived switch-back values of lost customers, and meanwhile confirms that both the customer retention strategies of rival and the original switching reasons of lost customer moderates the driving relations.The theoretical study of this paper establishes the mechanism of winning back defected customers based on the perceived switch-back values and therefore furthers the current theories on winning back defected customers, while the empirical study of this paper provides more findings on winning back defected customers and therefore enriches the current studies. In a word, this paper contributes a few references for the future researches.Enterprises are increasingly laying greater importance on customer relationship management with the fierce competition in the market. Customer re-acquisition becomes another strategic focus besides customer loyalty due to high customer defection rate with low switching barriers. Enterprises are motivated to probe into mechanism of winning back defected customers and search for win-back strategies. The findings of this paper have implications for customer re-acquisition management. Therefore, this paper provides contributions on both theoretical analyses and practices on customer re-acquisition.