I sat in a powerful session by TrackSuit co-founder James Hurman at South by South West (SXSW) Sydney last week.
Powerful because I’ve never seen a better articulation of the 95/5 rule.
It was a packed room and he asked everyone in the audience to put their hand up if they were planning on buying a new phone in the next two weeks. Three or four hands went up.
He then asked who was planning on buying a phone in the next two years and almost every remaining hand went up.
That’s the reality of buying behaviour. That’s particularly the reality of B2B buying where the purchases are typically expensive and not happening on impulse.
The 95/5 Rule
The 95/5 rule was coined by Professor John Dawes at the Ehrenberg-Bass Institute for Marketing Science. It’s a B2B heuristic – not intended to be exact % – that buckets B2B buyers in two groups – in market and out of market buyers.
In market buyers are the 5%, and out of market buyers make up the remaining (whopping) 95%.
95% of the people that you want to do business with today are not actively in-market and looking to purchase your products or services right now.
Take a second to reflect on that because it’s really important.
The vast, vast majority of your target buyers are not interested in what you’re selling right now. But – at some point in the future – they will be.
So what do you do with this information?
First let’s understand the mindset, behaviour and attributes of each group.
5% – in Market Buyers
- Know they have a problem – They’ve identified a specific issue or need that requires attention and they’re motivated to take action
- Actively evaluating and considering solutions – They’re exploring different ways to solve the problem and shortlisting viable options
- Researching and validating their hypotheses – They’re looking for solutions, comparing different solutions against each other and trying to understand who or what is going to help them solve their issue
- Comparing options – They’re reading reviews, studying testimonials, and engaging with information to help them make their decision
- Engaged – They’re paying attention and actively seeking information
95% – out of market buyers
- Don’t know they have a problem – or – know they have a problem but may not know how to solve it – or if it is solvable
- Not actively searching for solutions – Consuming information incidentally, not deliberately seeking it out
- No time pressure or urgency – Not a burning need or desire to solve the problem quickly
- Passive – Not actively paying attention – busy focusing on their day to day operations
| In-Market Buyers | Out of Market Buyers |
|---|---|
| Know they have a problem | Don't know they have a problem |
| Actively evaluating and considering solutions | Not actively searching for solutions |
| Researching and validating their hypotheses | No time pressure or urgency |
| Comparing options | Passive |
| Engaged | Disengaged (for now) |
What This Means For You
Think About The Majority First
Think about the majority first. When thinking of launching a marketing campaign, don’t focus on the small number of people who are in market today. Think first about the vast, vast majority of people who are out of market and use that initial thinking to then guide your marketing strategy and direction.
Be There for the 5%
It’s really important that you’re showing up for the minority who are actively evaluating strategies and solutions today. How are you giving attention to and balancing both equally important groups in your marketing strategy and planning?
Tailor Your Messaging and Marketing Channels
Map out your buyer journey and key trigger moments from when someone first might come to realise they have a problem, to ultimately when they are ready to make a purchase decision. What information, tools and resources would be useful to the 95%? Then ask the same question for the 5%. There will be overlap in some areas and differences in others.
Think Brand First
LinkedIn showed us that 86% B2B buyers have a ‘day one’ shortlist, and 90% of buyers end up picking someone from their day one list. 6sense and Green Hat research showed us that by the time B2B buyers start the process of reaching out to partners, they are 70% through their buyer journey. How are you getting on the radar of the people you want to do business with, before they’re ready to go to market? If you’re not on their day one list, you stand a very little chance at winning business.
Have tracking and measurement in place
This is critical to understanding where, what and how things are working – and learning more about your business. Understanding how long your sales cycle is can start to give you some clues for how long the overall cycle is from even before someone realises they have a problem. Knowledge is power so make sure you’re tracking sales conversations, asking people how they heard about you and measuring all marketing efforts so you can see what’s working and what’s not. If you have the budget, investing in customer research, brand tracking and sentiment tracking are all 100% worth it – but if not free tools like Google Analytics & Google Search Console give you great data into your digital presence as a starting point
Manage Your Expectations Be realistic about what B2B marketing can achieve in the short term. If you’re thinking you’re going to turn a marketing campaign on and then sit by the phone anxiously waiting for it to ring in the first 24 hours – I hate to be the bearer of bad news but it ain’t going to ring on day one.
The Payoff: Play the long game
The B2B businesses that understand the 95/5 rule win not just at marketing, but at overall business growth.
You’re playing the long game. You’re building familiarity, trust and affinity with the people you want to do business with.
