Service firms, which have high attrition rates, are finding it exceedingly difficult to grow their customer base. Despite
their extensive retention efforts, customers still defect. For these firms, “lost” customers may pose a rewarding “lastresort”
opportunity. Reacquiring customers who left the firm may help these firms not only regain their lost profits but
also usurp profits from competitors. However, some pertinent questions remain as to whether lost customers are
worth the investment in reacquisition and whether they will remain profitable if reacquired. This is the first study to
empirically demonstrate how (1) the lost customers’ first-lifetime experiences and behaviors, (2) the reason for
defection, and (3) the nature of the win-back offer made to lost customers are all related to the likelihood of their
reacquisition, their second-lifetime duration, and their second-lifetime profitability per month. The study shows that
the stronger the first-lifetime relationship with the firm, the more likely a customer is to accept the win-back offer.
This study also presents relevant implications for managers interested in identifying new avenues for growth through
effective resource allocation on the reacquisition and management of lost customers. Finally, the authors outline if
and when managers should choose between maximizing reacquisition and profitability.
Keywords: customer reacquisition, defection reason, win-back offer, second-lifetime duration, second-lifetime profitability