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Episode 117

The 95/5 Rule: Rethinking Reach and Timing

At any given time, 95% of potential B2B buyers aren't in-market for your product. Only 5% are actively shopping. Most people your ads reach won't buy anytime soon.

This week, Elena, Angela, and Rob explore the 95/5 rule introduced by professor John Dawes in 2021. They discuss how this principle contradicts the familiar 80/20 rule, why the fundamental principle applies beyond B2B categories, and how brands can shift from "hunter" to "farmer" mindsets. The team also covers creative strategies for reaching the 95% who aren't ready to buy yet and why mental availability matters more than immediate conversion.

Topics Covered

• [01:00] Origins of the 95/5 rule and how it contradicts 80/20 thinking

• [04:00] Why the rule makes sense for B2B but challenges B2C assumptions

• [07:00] How modern marketing overemphasizes tracking immediate conversions

• [09:00] Calculating the 95/5 rule for your specific category

• [12:00] Creative strategies that build memory structures for future buyers

• [14:00] Shifting from hunter to farmer mentality in advertising strategy

• [17:00] Brand versus performance marketing balance under this rule

Resources:

John Dawes: The 95:5 Rule

Tyrona Heath: Why You Should Follow The 95-5 Rule

Today's Hosts

Elena Jasper

Chief Marketing Officer

Rob DeMars

Chief Product Architect

Angela Voss

Chief Executive Officer

Transcript

Rob: Your creative should be memorable. It should be relevant. It should be emotionally engaging so that when people are ready to consider you for that purchase, that they remember you and it keeps it that simple.

Elena: Hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions.

I'm Elena Jasper. I run the marketing team here at Marketing Architects, and I'm joined by my co-host Angela Voss, the CEO of Marketing Architects, and Rob DeMars, the Chief Product architect of Misfits and Machines.

Hey guys, we're back with our thoughts on some recent marketing news, always trying to root our opinions in data research and what drives business results, and today we're talking about the 95/5 rule. What is the rule? Does it hold true for every brand? And how can you align your marketing strategy with it? I will kick us off as I always do with some research, and this principle has plenty, but I'm gonna start with a little background on where it came from because it is a quote unquote, newer marketing principle. In 2021, professor John Dawes of the Ehrenberg-Bass Institute published a now famous article introducing what's become known as the 95/5 rule.

It was originally posted on LinkedIn and later picked up by Marketing Week. Thanks in part, to a push from John Lombardo and Peter Weinberg, who were then working at LinkedIn's B2B Institute. This caught their attention, partly because it contradicts a more familiar idea in marketing - the 80/20 rule or the Pareto principle, which suggests that 80% of your results come from 20% of your customers.

But here's Dawes' principle. At any given time, 95% of your potential buyers aren't in market for your product, only 5% are actively shopping. What follows is most people, your ads reach won't buy anytime soon. So advertising can't primarily work by triggering immediate sales. Instead, it builds memory structures and mental associations that prepare people to think of your brand later when they do enter the market. And his insight was grounded in simple logic and purchase cycle data. He cites examples like corporate banking or even payroll services where the average business changes providers every five years, meaning only about 20% of buyers are in market in a given year. For quarterly campaigns, that number drops to around 5%.

But the principle, it's not just limited to B2B, even though it started that way in B2C categories with long purchase times like cars, mattresses, home appliances, the same logic holds, and I'd argue that the logic holds for nearly any B2C category. For example, take Coca-Cola research from Ehrenberg-Bass and others has consistently shown that most people who buy a brand buy it rarely for Coke, the average loyal buyer might buy a few dozen cans a year, but the majority of buyers, sometimes 60 to 80% buy only once or twice a year.

These are your light buyers. They aren't highly engaged. They're not evangelists, but they matter because they make up the majority of your brand's customer base. And collectively, they often contribute more volume than heavy buyers do. Dawes also pushes back on an over-reliance on short-term digital targeting.

When people are ready to buy, they don't always search. They often go with brands they already know and familiarity. He notes is something you can only build before the buying moment, not during it. Instead of short bursts of high spend activity, brands should focus on sustained presence, targeting the 95% with memorable category-relevant brand messages.

Because when people do enter the market, they reach for what's already in their memory, and that is the job of advertising. All right, so first, before we get into this, I'm curious if either of you remember the first time you heard about this rule and what your initial reaction to it was?

Angela: I don't remember the specific moment, but I do believe that it was through the LinkedIn B2B Institute. I think some of the content that they were probably pushing, I had forgotten that it was tied to Dawes. I had in my head that it was Binet and Field and correlated with 60/40. I think my first reaction was disbelief. I thought, five percent, like that's such a small percentage of the total market. But it's actually pretty easy to your point, to quantify it and to think about how that's a reality. Looking at your category's average purchase cycle or your own company data.

If you're in the mattress space and consumers buy a mattress every 10 years, then only 10% are in market. And then you break that down into a quarter or whatever the time period is. So it starts to make sense. I think the mind bender for me in adopting that mindset, which is realizing how much time, energy, and technology we pour into tracking and optimizing for that tiny sliver, that 5%, while almost in some cases completely ignoring the much larger group that we need to win before they're ready to buy.

Rob: When did I hear about the 95/5 rule? I would say right now. And thanks for that, Elena. No, it's a newer stat for me. I'm sorry. I, you know, you guys are really smart and I hear about this stuff and the numbers don't stick as well. But I will say that I think it makes a ton of sense for B2B, just considering, like you said, the long purchase cycles. Honestly, I struggle with the B2C comparison. And I have heard the same statistic that you've had regarding Coca-Cola. I'm not throwing shade at that saying it's incorrect, but I know very few human beings that only drink one or two cans of Coke a year. So I would call them weird, not the majority. So I struggle with that stat. But I've heard it and I'm not challenging the statistic in general, but I am challenging that it doesn't feel like, it doesn't meet the tummy check for me in terms of B2C, especially on mass products. If it's a niche or a high ticket item, I could understand that.

Elena: Rob, that actually is a good point because. So I think the Coca-Cola stat is just super interesting but you make a good point that relating it to the 95/5 rule might not be as relevant because they do mention in the research I was looking into, that in B2C, this rule applies more strongly when they have long purchase cycles. Yeah. So that's why they give examples of cars, mattresses, home appliances, where like with a Coke, you could be in market for a Coca-Cola anytime practically. Right. So that probably was not a good example on my part. I was just trying to think of when people were in market and when they weren't.

But yeah, it makes a lot more sense for long purchase cycles. And I came across it, I think the same way as Ange going through the B2B Institute. They have a bunch of different principles. And I remember coming across this one and it resonated with me because we sell a product that marketers typically look at once a year.

So most of our audience is out of market for something like TV advertising. So it just resonated a lot with me and I think we've used it internally to make the case for always on marketing because you gotta be in front of people. You can never really precisely predict when they're gonna be in market for your product. So this has already stirred up some conversation. Why do you think it does that? Is it because it contradicts the 80/20 principle or is there more there? Ange, what do you think?

Angela: I think it's because it threatens a core assumption in modern marketing that we can track and target and convert our way to growth. In a hundred percent of cases, it's not, it's not that the 80/20 rule is wrong, I think it holds in part - a small group of heavy buyers does account for a large share of short term sales. But the rule has been widely misinterpreted as a justification to only focus on that group. And the 95/5 rule reframes that thinking.

It reminds us that most of your customer base, often 60 to 80% are light buyers. They buy infrequently, they're not highly engaged, and yet in aggregate, they contribute an enormous portion of your total volume. Brands often overserve heavy buyers and underinvest in reaching those light ones. When it's that group that actually drives the growth and the market share gains. So it's not that the 80/20 rule is false, but it's more backwards looking. It describes where revenues come from, but if you wanna unlock future growth, you need to earn your way into the memory of that 95% who aren't ready to buy yet.

Rob: It's one of those statistics that definitely doesn't arm the CMO when they're going into the CFO's office and saying, Hey, you know, 95, 5% of the money we're about to spend is gonna make a difference, like right now. And they're gonna be like, how do you increase that percentage?

Angela: Right. And can you?

Rob: And can you? Yeah, yeah.

Elena: Yeah. That's how marketers end up with most of their budgets going towards paid search and capturing people right when they're ready to buy 'cause that's where people go when they're about to make a decision. Rob, you already brought up this popular objection to this rule, which is that it only applies to B2B brands, not B2C because of these longer purchase cycles that you have typically for a B2B product or service. So Ange, what do you think? Do you think that it's still applicable to B2C brands or are there some categories where it just simply doesn't apply?

Angela: I think a lot on this podcast we talked about the principles not being absolute rules. I think there's nuance around how this shows up for B2C. Some categories like impulse purchases, that could be candy, gum, lottery tickets. Are more maybe about immediate availability and less about conscious recall. But even then, people tend to grab what feels familiar. So memory still plays a role even if the purchase is fast, last minute, you're not really thinking you're in System 1 buying mentality. I think for higher frequency categories, snacks, bottled water, White Castle for Rob, people are technically in market all the time, but that doesn't mean that they're actively considering new brands all the time. Habits and heuristics dominate our buying behavior, and brands still need that mental availability to be that go-to automatic choice. So the split might look more like 80/20, but I think the principle still remains.

Elena: So this rule, it's simple enough, but calculating it for your own category is not super simple. Angie, how do we calculate or determine how the 95/5 rule is applicable to our category or maybe to a brand we work with's category?

Angela: Yeah, it takes a little bit of digging. I think the first step is just identifying your average purchase cycle. How often people are buying in your category or buying from your brand, or both, I think would be good numbers to have. You can get that from industry reports, your own customer data, consumer panels. For example, we brought up a car. People might buy a car every five to seven years, a mattress every 10 years, a phone maybe every couple years, shampoo every month or two. If you were, let's say, in the home appliance category, that average replacement cycle is roughly 10 years. That means 10% of the people are in market in any given year.

Then you're going to adjust that to your campaign timeframe. So if you're planning on a quarterly basis, divide that 10 by four. So now we're at two and a half percent of people in market during any given quarter. That's the heart of the 95/5 rule. Even in sizable categories, only a small fraction of people are actually ready to buy right now.

And from there it helps us validate that number against real world behavior. Looking at your category's penetration and how often people buy. Are most of your sales coming from a small frequent group or a large number of light buyers? That's how that works its way in here. If your brand has low penetration and low frequency, you're probably closer to a 95/5 dynamic.

And then I think other important considerations are things like seasonality or abnormal peaks. Retail, CPG categories like tax software can have big spikes during certain times of year. So your in market percentage may flex during those windows. But in most cases, doing this math forces a valuable, I think, realization. If people aren't buying now, your advertising needs to speak to those future buyers, not just the current ones.

Elena: Yeah, that makes a lot of sense. Rob, one thing I was wondering about was creative, you know, and should creative differ, do you think if you have this rule in mind?

Rob: Yeah, there's no shockers here. Your creative should be memorable. It should be relevant. It should be emotionally engaging so that when people are ready to consider you for that purchase, that they remember you and it keeps it that simple. We've talked lovingly about distinctive brand assets many times on this podcast as well.

So, logos, colors, sounds, characters, slogans. Use them and use them repeatedly, build those memory structures. Repeat your key message in your brand assets across all of your campaigns. And use creative that's relevant to a wider audience, so don't go too narrow in your messaging, keep people - we love a good broadcast channel and those are obviously great for speaking to that wide audience, so don't go too narrow in your message strategy.

Elena: So what would you say then, like if you are going to narrow, what are those creative mistakes or things to watch out for?

Rob: Yeah, the inverse, right? So going to overly rational functional messaging, all your energy goes into short term CTA heavy messages. I mean, we love a good CTA, we believe in CTAs, but when your entire commercial is a CTA, that's when you gotta really start asking, are you trading immediate action for establishing those memory structures, right?

Hammering an audience with buy now can actually cause fatigue and even resentment against your brand. So use those levers carefully. But just make sure that overall you're not advertising at the expense of your logos, slogans, visual identity, et cetera.

Elena: It's definitely an art to creating a spot that we always say remarkable work that works remarkably - something that has still a call to action but is gonna be memorable at the same time. So it's not just a trade off. We talk a lot about TV on the podcast, but how do we think brands, how should they adjust their overall advertising strategy if they wanted to follow this rule or something close to the rule?

Angela: I think getting your organization rallied around this principle is a great first place to start. Do people know what the 95/5 rule is? And then do we need to shift from thinking like hunters to thinking like farmers? Instead, that means moving away from those short bursts of conversion focused activity towards building a consistent, memorable presence over time.

The goal isn't to just show up when someone's ready to buy. It's to be the brand that they already know and remember when that moment comes. So in practical terms, this means thinking about broad reach media to grow mental availability. Of course, TV is great at that. But even outside of TV, radio, billboards, et cetera, just to be there, be memorable and ensure that you have that place in your consumer's mind before that buying situation arises.

Rob mentioned this, making creative choices that are distinctive, they're emotionally resonant so that those impressions work into the future because they're memorable, measuring success not just by immediate lift, but by long-term brand impact. So that would be looking at things like search. Obviously we should need to be looking at recall, penetration and growth. I think it's harder for marketers to sometimes justify some of those moves because they aren't immediate sales. They're not - I'm gonna hit the ROI goal today. The payoff isn't necessarily instantaneous, but brand marketing does drive sales. I think that's also a misconception that we can help educate our teams on as well.

Rob: You said a lot of great things there, but when you talk about being a farmer that requires patience, and staring at the dirt waiting for stuff to grow can be hard. But pick a lane and stay in the lane. I think it's really hard for CMOs to go, gosh, we just need to change something. We need action. Let's change the campaign. Let's change what we've been doing. Or a new CMO comes in and they're like, gosh, we just need to change for change's sake. But do you really? And having that patience to let your brand seed and to let it grow is hard. But necessary.

Elena: Yeah. I think too, even if you are committing to we're gonna invest now in things that are gonna be harvested over the long term. You can also have some proxies to check in and see how it's going. That doesn't mean you don't measure at all. You could be looking at direct traffic increases or branded search, planning brand studies. I mean, you could have a roadmap to how do we check in so we're not just blindly investing, even though marketers, we believe in the payoff. There could be some things you do to check in and make sure that you can track how it's going. Angie, you mentioned this a little bit, but I think that this brings up that conversation about brand versus performance marketing. What about that piece of the puzzle?

Angela: Yeah, the 95/5 rule isn't saying that performance marketing is wrong. It just says it can't do all the work if only 5% are in market right now, or if that's 8% or 10%, or even 20%, performance is speaking to that slice of the pie. And so how do you influence the other 95% so that when they enter market, they know you, they trust you. They're more likely to choose you.

So the balance needs to shift from performance first to brand led. Performance should harvest the demand that brand creates, try to not manufacture demand out of thin air. I think as marketers, there's so much data that we have in front of us that we feel like we can motivate people into market maybe before they're ready to go there. And then a good rule of thumb again in education amongst the organization are things like the 60/40 split, Binet and Field. Binet and Field is about 60/40 in favor of the brand. If you're aiming for that long-term growth.

Elena: To wrap us up here, what is one simple thing we think a brand could do this month to begin following this rule?

Angela: Oh, there's so many good ones. I think we mentioned a lot of them already. One that I would go to is, do you know why your light buyers buy you occasionally? What does that look like? So whether it's interviewing light buyers, synthetic audiences can be great, trying to get that perspective so that you can use that to shape that messaging for the future, would be a great place to start.

Rob: Elena, I'm gonna lean into one you already mentioned. My guess is that most marketers have done a great job at benchmarking their 5%. They understand it, they have a scorecard for it. If they didn't, they probably wouldn't have a job. But I'm always shocked at how few brands have actually done brand studies, and that's something you can do right now. How can you go ahead tomorrow, start a brand study? There's many ways to do them and they can be very cost effective. But how do you understand how you can achieve a bigger share if you don't even understand what share you're in? In terms of mental availability, in terms of aided and unaided recall. So do that tomorrow.

Elena: Yeah, that's a great piece of advice. I mean, we run brand studies for the agency and we're a TV advertising agency and it's still useful to see. 'Cause there's a lot of different things you can look at too, right, Rob? Like it's not just your national awareness. You can slice and dice and you can find out a lot about your audience.

Rob: Absolutely. And your competitive set.

Elena: Yeah, I think, like Ange said, we covered a lot of things they could do, but I'm just such a big fan of looking at your distinctive assets. I think that could be a good place to start. If you wanted one simple thing, just look at your brand, your colors, your logo. Do you have a mascot? Do you have a jingle? What makes your brand unique? And look at your competition. Are you the same color as a lot of your competitors? Do your ads look the same, especially if you're a B2B brand?

Are you using a lot of the same stock? I think we all see ads with the same stock men and women all the time, where you don't really know what brand it's from. That could be a good place to start. Just are there changes we need to make? Because that's a sad thing to think about, like maybe your advertising's working in the short term, but are you throwing away all these great gains you could be having if your brand was more memorable? Let's wrap up with a fun question. What's a brand that you only buy maybe once a year, but it always comes back to you, and why do you think it stuck in your memory?

Angela: I cheat a little bit on this one. For me it's Minted, I only buy from them once a year. It's for my Christmas cards. I always come back. But what I love about this example is that it does show how a brand has to have a holistic strategy for growth. You don't just win with creative or with reach. Minted absolutely has strong mental availability in my mind when I think holiday cards, I think Minted, but they've also nailed the full experience.

They store my entire address book, which means it's incredibly convenient to keep coming back to them. I'm not gonna reenter all that data just to save a few bucks during Black Friday with a deal from a competitor, which there are a lot of during Black Friday, Cyber Monday, and I think it's a great reminder that brand growth isn't one size fits all. Loyalty in running shoes looks different than it does in snacks, SaaS or something like that. You really need that holistic strategy. Mental availability, yes, but also emotional connection, product experience, switching friction. That's what makes a brand really grow.

Rob: I had to think about this one 'cause I do love to travel and I think if there's any category that has deep loyalty, it's travel, but for some reason, Airbnb is just starting to break into my consideration set where I'm using them like once a year. I'm not a heavy buyer yet, but if I'm gonna use, I don't even know what you call that crowd sourcing of hotel stays. What's the category? I don't even know what the category is. Whatever category they're in. I'm buying their category 'cause I trust them more because I think they've done a great job with their branding and so that's an area, if I'm gonna go out on a limb, I'm going with the Airbnb, but I'm not a total heavy buyer yet. Maybe down the road.

Angela: You trust them more than like a hotel chain? No. Or you just trust them more than like a VRBO?

Rob: That category. I dunno what the category is. Vacation rental by owner. Is that the category? But that's also a brand. See, they got a problem.

Angela: Do they or do they?

Rob: I don't know. Do you wanna be the Kleenex? I need a VRBO. I'm gonna go with Airbnb. That's what you don't want. But no, I do think they've done a great job with their brand. Their customer experience has been good, but I'm not a total all in person in that category, whatever that category is.

Elena: I think mine, and this is top of mind because I had my once a year of this last weekend, Arby's curly fries. So good. I never have them, but this weekend we were driving back from a triathlon and we stopped at Culver's and there was an Arby's next door. And we're like, okay, well obviously we have to get Culver's and then go to Arby's and get the curly fries from Arby's. It's about once a year. But whenever I hear Arby's in my head, all I hear is their Arby's "We have the meats," like it's just stuck in my brain permanently. And so I think that has to have something to do with it. Arby's has just had such consistent advertising and they have great curly fries.

Rob: They do and horsey sauce. Oh, I love that. I could just squirt horsey sauce right into my mouth, just skip the food. Those curly fries are good, but I can't eat a lot of 'em. And that says a lot 'cause I can usually eat a lot. They're like cheese curds to me. I can eat one or two. But then after that I'm like, I don't know. They're just, they're so rich. But they do an amazing job on the curl too. On those curly fries. You could darn near drink soda through 'em. They're like a straw. They're almost like a straw.

Elena: Yeah. It's down to an art for sure.

Angela: Rob, this is the 95/5 episode. You good for that one?

Rob: I thought this was a nerd alert and Angela was joining.

Elena: The only episode we're doing this week of the podcast, so.

Angela: I just like to poke at him if I can.

Rob: I think that's fair. I earned that one. Holy smokes.