The 95/5 Rule - Smith

The 95/5 Rule

The 95/5 Rule

How quickly do you expect to get a return on investment from your B2B marketing?

Most businesses think that marketing can bring in sales pretty much immediately, in fact, a study by Marketing Week stated that 95% of B2B marketers expect campaigns to bring in results in the first 2 weeks.

We see this short-term approach over and over again. And it’s understandable why, SMES don’t have the time and patience to be ‘brand building’ like bigger businesses. We need sales now, and that’s what we focus on.

But hard evidence by the Ehrenberg-bass Institute for Marketing Science and Linkedin B2B Institute says otherwise.

The 95/5 rule illustrates how marketing actually works.

 

95/5 Rule

It illustrates that 95% of buyers are out of the market, whilst 5% are in the market right now.

The 95% is where the money is, where the future cash flow is and where you need to focus some of your efforts. Yet most of us, especially small businesses, don’t think about this at all.

We spend money on short-term tactics. 

The majority of marketing effects are long-term. We don’t just see an ad or product and buy it there and then. Marketing builds associations over time, and when we’re in a buying situation, previous marketing helps us make a decision.

According to Google’s ZMOT (zero moments of truth) on average, we spend 11 hours researching, view 11 touchpoints and visit 4 different locations before buying a product or service.

This is where the 95/5 rule makes so much sense.

In most instances, the brand that gets remembered is the brand that gets bought – and that’s why it is paramount to have distinctive branding to support your marketing.

Standing out helps you be remembered for future sales situations.

What’s interesting about investing in the 95%, is the cost of reaching these people is significantly cheaper than targeting customers lower down the funnel.

Most small businesses focus their attention on driving sales right now, mainly through channels like PPC. But that’s where everyone is, and that drives costs up. But marketing to the 95% there’s less competition and cheaper advertising costs.

Businesses can hit a plateau of sales when they invest all their money in performance marketing, they start to see sales gradually build when they invest in driving awareness with out-of-market customers.

Are you stuck in short-term marketing tactics? Most businesses are, and the 95/5 rule helps explain the importance of investing in brand building and introducing yourself to future customers. Although it’s daunting to do, as you can’t see effects instantly or measure every detail like you do with performance marketing – it’s an inevitable next move for business growth.

 

Resources

https://business.linkedin.com/marketing-solutions/b2b-institute/how-b2b-brands-grow

The 95:5 rule is the new 60:40 rule

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Written By Oliver Smith – Creative Director and Founder at Smith
Oliver founded Smith in 2014 with a fellow graduate straight from University. Oliver believes in the power of creativity to drive business growth.
He works with clients in a variety of sectors advising on how brand and marketing can grow revenues, win more customers and solve business problems. He studied Graphic Design at Batley School of Art, is studying Brand Strategy at London Business School, has completed two Mini Mba’s in Brand Strategy with Marketing Week and Section School.

 

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