Among the various strategies and principles present within the world of marketing, one concept has gained significant traction: the 95-5 rule. This rule, though simple in its essence, holds profound implications for how businesses approach their B2B marketing efforts. If you’ve been wondering what this rule entails and how it influences your marketing strategy, you’re in the right place. In this blog post, we’ll explore the 95-5 rule, its origins, its importance, and provide an example of it in practice. By the end, you’ll have a clear understanding of this rule and the part it should play in elevating your B2B marketing game.
What is the 95-5 Rule and Who Came Up with It?
The 95-5 rule was popularized by Professor John Dawes from the Ehrenberg-Bass Institute for Marketing Science. Through extensive research, Dawes discovered that the majority of potential customers are not actively in the market to make a purchase immediately but may do so in the future. Therefore the 95-5 rule in B2B marketing suggests only 5% of prospective customers are actively in buying mode, while the remaining 95% are considered out-of-market and may not buy for months or even years.
This insight challenges the traditional approach where businesses focused heavily on targeting only those ready to buy. Instead, the 95-5 rule encourages businesses to also nurture and engage the larger segment of the audience that is not currently in the market but could become buyers further down the road. By understanding and applying this rule, businesses can create more effective and sustainable strategies that cater to the entire spectrum of their audience.
The Importance of the 95-5 Rule for B2B Marketing
Incorporating the 95-5 rule is vital for companies operating in the B2B space for several reasons. Firstly, it broadens the perspective on market potential. Instead of limiting efforts to the small percentage of immediate buyers, companies can tap into a much larger pool of prospects. This long-term view can significantly enhance lead generation and customer acquisition efforts well into the future.
Secondly, the rule highlights the necessity of brand building and awareness. In a competitive market, staying top of mind is crucial. By engaging with the 95% who are not ready to buy, companies can proactively establish trust and recognition. When these prospects eventually enter the buying phase, they are more likely to consider a brand they are familiar with. According to Dawes, “People largely use their memories when buying, rather than searching. And when they do search they strongly prefer brands they’re familiar with”.
Additionally, the 95-5 rule stresses the importance of content marketing. Providing valuable and relevant content to the 95% can educate and inform them, fostering a positive perception of the brand. This approach not only nurtures potential future buyers but also positions the company as a go-to thought leader in the industry.
Finally, this rule can improve customer relationships and loyalty. By maintaining consistent communications and delivering value even when customers are not buying, companies can build stronger, more loyal relationships. This can lead to repeat business and referrals, further amplifying marketing efforts.
The 95-5 Rule in Practice
Understanding the 95-5 rule conceptually is one thing but seeing it in practice can truly highlight its significance. Let’s explore how this rule plays out in the context of purchasing new software.
In the B2B sector, companies often rely heavily on various software solutions for their operations. Whether it’s customer relationship management, project management, or enterprise resource planning software, the purchase decision is typically not made lightly or frequently. In fact, according to an article by Cognism, the average B2B buying cycle is 6-12 months.
The straightforward reasoning behind this is because most companies already have a software solution in place and are not actively seeking a replacement. They also may be satisfied with their current software and are simply not considering a change due to the perceived hassle and cost of switching. This represents the 95% of the audience who are not currently in the market for new software.
However, various factors can eventually push these customers into the buying mode. These include dissatisfaction with the existing software, new business needs, the end of a contract, or even a strategic decision to upgrade. When these triggers occur, the companies transition into the 5% of active buyers.
The difficulty behind the actuality of this rule is that, in most cases, there is no clear indication of when the switch will occur. By staying true to the 95-5 rule, businesses can naturally overcome this timing hurdle. Placing a clear focus on consistently staying in front of the 95% knowing that when they are ready to make a purchase, their brand is the customers top choice for consideration.
Reevaluating Your B2B Marketing Strategy
The 95-5 rule is a transformative concept in B2B marketing, offering a broader and more sustainable approach to reaching potential customers. By acknowledging that only a small fraction of your audience is ready to buy at any given time, shifting your marketing strategy to also engage and nurture the larger 95% is a smart play. This approach not only enhances brand awareness and loyalty but also positions your company for long-term growth and profitability.
At Stach Consulting, we specialize in helping businesses like yours understand and utilize the 95-5 rule to its fullest potential. This rule is not just a strategic advantage – it is a necessity in today’s competitive B2B landscape. Our team of digital marketing experts are ready to guide you in creating and implementing a customized strategy that engages your entire audience, from the 5% ready to buy now to the 95% who will buy in the future.
Contact us below to book your free 30-minute consultation and let’s get the conversation started!
