The majority of Australian brands can’t tell the difference between long-term customers and those responding to an offer, according to 5D’s CEO and founder Lyndall Spooner, who warns brands need to know “which customers they actually have”.
It comes after recent 5D research found a growing divide between how first-time and experienced buyers behave.
The findings, drawn from analysis of more than 2,000 real consumer decision journeys across a range of services categories, found that 66 per cent of first-time buyers had already planned to consider the brand they ultimately chose, reflecting the continued relevance of brand awareness and reputation for new entrants to a category. But among experienced buyers, only 50 per cent ended up choosing a brand they had already been considering, and according to Spooner, that gap is growing.
“For years, brands have treated customer marketing as something that happens before acquisition,” she said.
“But our research shows that what you do after the first sale is now the primary driver of long-term growth. The brands that are succeeding have stopped treating relationship building as a separate function and instead have started treating it as the core of their strategy.”
5D’s analysis shows that as consumers gain experience in a category, technology rewires how they choose by accelerating their willingness to explore. It gives experienced buyers the confidence and tools to compare and switch in real time. As a result, brands that rely on price and short-term offers to drive conversions are, in effect, renting their customers, with no guarantee of keeping them.
The research also found that roughly a third of experienced buyers’ brand choices were made about a brand they only considered during the decision itself and these customers are most likely to switch next time.
“Experienced buyers are not loyal by default. They split into two groups: those who are genuinely committed to a brand because of the quality of the relationship, and those who are simply responding to the best offer at the time. The second group might deliver solid net promoter scores, for example, but they will leave the moment a better deal appears. Brands need to know which customers they actually have.”
Spooner said the window for building a meaningful relationship with a new customer was narrowing.
“Every brand has a moment, usually during the first 12 months a customer is with them, where they can either deepen the relationship or lose the customer to the next offer,” she said.
“Technology has compressed that window. Brands that invest in better products, better service and better tools for their customers are the ones converting first-time buyers into long-term loyalists. The ones that don’t are left chasing the same customers over and over again at an increasing cost.”
