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The Marketing Architects
From the Archive: The 95/5 Rule: Rethinking Reach and Timing
00:24:34
This week, we're resharing a top episode from the archive. Originally recorded a year ago, this episode on the 95/5 rule remains one of our most popular. Enjoy, and we'll be back with new content next week! This episode, Elena, Angela, and Rob...
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- [00:00]
A
Hey everyone, quick announcement before we start. I'm very excited to share that we've just released a free tool to help you apply what you're about to learn in this episode. So if you go to mymarketcalculator.com and just type in your website URL, we've created a tool that can show how the 95.5 rule applies to your brand in particular, aka it's going to tell you which of your buyers are in market at any given time. This was created by our teams at Marketing Architects and we hope it makes this marketing effectiveness principle a of lot little more applicable for all of you. So again, just go to my market calculator.com and try it out. I think it's super cool. I'd love to know what you think after you try it. Enjoy the show.
- [00:42]
B
Your creative should be memorable, right? 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.
- [00:55]
A
Marketing Architects hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions. I'm Lena 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 Demar is 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 95.5rule. What is the rule? Does it hold true for every brand? And how can you align your marketing strategy with it? I'll kick us off, as I always do, with some research and this principle has plenty, but I'm going to 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 a 95.5rule. 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 8020 rule or the Pareto principle, which suggests that 80% of your results come from 20% of your customers. But here's Daw's 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 this principle, it's not just limited to B2B. Even though it started that way in B2C categories with long inter 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 Aaron Burbass 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% by 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 to either of you remember the first time you heard about this rule and what your initial reaction to it was?
- [04:06]
C
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 Bennett and Field and correlated with 60 40. I think my first reaction was disbelief. I thought 5%, 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 categories 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 was just 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.
- [05:16]
B
When did I hear about the 95. 5 rule? I would say right now. And thanks, thanks for that, Elena. No, it's a newer stat for me. I'm sorry. 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 B to C 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. But I know very few human beings that only drink one or two cans of Coke a year. I would call them weird, not the majority. I, 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.
- [06:20]
A
That actually is a good point because. So I think the Coca Cola stat is just super interesting that totally like so many people buy it once a year. But 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.
- [06:40]
B
Yeah.
- [06:40]
A
So that's why they get example of cars, mattresses, home appliances where like with a Coke you could be in market for Coca Cola anytime practically. 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 along purchase cycles. And I came across it, I think the same way as Ang going through the BB Institute. They have a bunch of different kind of 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 audiences out of market for something like TV advertising. So it just resonated a lot with me. 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 is already stirred up some conversation. Why do you think it does that? Is it because it contradicts the 8020 principle or is there more there? Ang, what do you, what do you think?
- [07:37]
C
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. You know, in 100 of cases it's not, it's not that the 8020 rule is wrong. I think it holds in part. A small group of heavy buyers does account for a large share of a short term sales. But the rule has been widely misinterpreted as a justification to only focus on that group. And the 95.5rule 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 under invest in reaching those light ones when it's that group that actually drives the growth and the market share gain. So it's not that the 8020 rule is false, but it's more backwards looking. It describes where revenues come from. But if you want to unlock future growth, you need to earn your way into the memory of that 95% who aren't ready to buy yet.
- [08:42]
B
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 5% of, you know, of the money we're about to spend is going to make a difference like right now. And they're gonna be like how do you increase that percentage?
- [08:58]
C
Right. And can you?
- [09:00]
B
And can you? Yeah, yeah, yeah.
- [09:02]
A
That's how marketers end up with most of their budgets going towards paid search and like capturing people right when they're ready to buy. Because 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. 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?
- [09:29]
C
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 real system one buying kind of mentality. I think for higher frequency categories, snacks, bottled water, White Castle for ro. 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 kind of go to automatic choice. So the split might look more like 80 20, but I think the principle still remains.
- [10:27]
A
So this rule, it's simple enough, but calculating it for your own category is not super simple. Ange, how do we calculate or determine how the 95.5rule is applicable to our category or maybe to a brand we work with? CA category?
- [10:40]
C
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 of 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 time frame. So if you're planning on a quarterly basis, divide that ten by four. So now we're at two and a half percent of people in market during any given quarter. And that's the heart of the 95.5rule. Even in sizable categories, only a small fraction of people are actually ready to buy right now. And from there it's it helps us validate that number against real world behavior. Looking at your categories 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 too other important considerations are things like seasonality or abnormal peaks. Retail CPG categories like tax software can have big spikes during certain times of years. 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.
- [12:21]
A
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.
- [12:30]
B
Yeah, there's no shockers here. Your creative should be memorable, right? 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 and 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.
- [13:18]
A
So what would you say then? Like if you are going too narrow, what are those creative mistakes or things to watch out for?
- [13:25]
B
Yeah, the inverse, right? So going overly rational functional messaging, all your energy goes into like shift 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 got to really start asking are you trading immediate action for establishing those memory structures. 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, etc.
- [14:05]
A
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 going to be memorable at the same time. So it's not just a, 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.
- [14:25]
C
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 share of 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 going to hit the ROI book 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.
- [15:51]
B
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 sake. But do you really? And having that patience to, to let your brand seed and to let it grow is hard but necessary.
- [16:23]
A
Yeah, I think too, even if you are committing to, we're going to invest now in things that are going to 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 sort of a roadmap to how do we check in. So we're not just blindly investing. Even though like marketers, like 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 mentioned this a little bit, but I think that this sort of brings up that conversation about brand versus performance marketing. What about that piece of the puzzle?
- [17:00]
C
The 95.5rule 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 to 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. Bennett and Field is about 60:40 in favor of the brand. If you're aiming for that long term
- [17:56]
A
growth to wrap us up here, what is one simple thing we think a brand could do this month to begin following this rule?
- [18:03]
C
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 kind of shape that. Messaging for the future would be a great place to start.
- [18:24]
B
Lane, I'm going to 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 like tomorrow, start a brand study? There's many ways to do them and there can be very cost effective. But how do you understand how you can achieve a bigger state if you don't even understand what state you're in? You know, in terms of mental availability and in terms of aided and Unaided recall. So do that tomorrow.
- [19:10]
A
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 because 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 the dice. So you can find out a lot about your audience.
- [19:25]
B
Absolutely. And your competitive set.
- [19:27]
A
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? Like, 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 is working in the short term, but are you throwing away all these great gains you could be having if your brand was more memorable? Well, 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's stuck in your memory?
- [20:19]
C
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 going to re enter 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, Sass or Something like Mitted. 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.
- [21:26]
B
I had to think about this one, because I. I do love to travel, and I think if there's any category that has deep loyalty, it's traveling. 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. 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 estate. What's a category? I don't even know what the category is. Whatever category they're in, I'm buying their category because I trust them more, because I think they've done a great job with their branding. You know, that's an area. If I'm going to go out on a limb, I'm going with the Airbnb, But I'm not a total, total heavy buyer yet.
- [22:07]
C
Maybe down the road you trust them more than, like, a hotel chain, or you just trust them more than, like, a VR.
- [22:14]
B
Sorry, that cat. Yeah, that category. I don't know what the category is. Vacation rental by owner. Is that the category? But that's also a brand. See, they got a problem. Or do they? I don't know. Do you want to be the Kleenex? I need a. I need a vrbo. I'm gonna go with Airbnb. I 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.
- [22:39]
A
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. And I never have them, but this weekend, we were driving back from a triathlon and we stopped at a 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, though. 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.
- [23:17]
C
They do.
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B
And Horsey sauce.
- [23:19]
C
Oh, I Love it.
- [23:20]
B
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 them, and that says a lot because I can usually eat. 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. They do an amazing job on the curl, too, on those curly fries. You could darn near drink soda through them. They're like a. They're almost like a straw.
- [23:42]
A
Yeah, it's down to an art for sure. That's it for this episode of the Marketing Architects. We'd like to thank Taylor De Los Reyes for producing the show. You can connect with us on LinkedIn. And if you like the podcast, please leave us a review. Now go forth and build great marketing.
- [24:01]
C
This is the 95.5 episode. You good for that one?
- [24:04]
B
I thought this was a nerd alert. And Angela was joining us.
- [24:07]
A
The only episode we're doing this week of the podcast, so I just like
- [24:11]
C
to poke at him if I can.
- [24:12]
B
I think that's fair. I. I earned that one. Holy smokes.
- [24:17]
A
Marketing Architects. Thank you so much for listening. If you'd like to learn more about what the 95.5 rule looks like for your branding category, go to mymarketcalculator.com and just type in your website again. I'd love to know what you think of the output, so please reach out about that and have a great day.