Strategies for Reacquiring Identity-Based Customer Defectors
by Harrison B. Pugh
Department of Marketing
Florida State University
Firms often engage with defected customers in hopes of reacquisition. This research proposes that the reason a customer defects, whether lackluster performance by the company (a performance-based defection) or a deviation between the identity of the customer and the perceived identity of the company (an identity-based defection), leaves defectors in different psychological states. In turn, these two types of defectors respond differently to communications sent during the critical period after customer defection in which firms must work to reengage the defected customer. Therefore, a customer’s reason for defection determines the most effective means to reacquire these customers, yet most firms do not differentiate between identity- and performance-based defectors. In a two-study, multimethod design based on a social identity theory framework, this research examines how different communications affect reacquisition of identity- versus performance-based defectors. In Study 1, experimental data empirically differentiate between the psychological effects of identity- and performance-based defections. Building on Study 1, Study 2 analyzes twelve years of firm-provided, longitudinal data on 4,186 defected customers’ marketing communications and payments (accounting for $11.5 million in revenue) to suggest that loyalty communications (informational messages focusing on the breadth of relationship benefits) are more likely to recover identity-based defectors whereas win-back communications (calls to action that asks to reestablish the relationship) are more likely to reacquire performance-based defectors.