Most B2B Teams Aim the 95-5 Rule at the Wrong 95%

The 95-5 rule in B2B says that most business buyers aren't shopping for what you sell at any given moment, so you need to reach them before they start. That advice holds up. What it leaves open is which buyers you should be reaching.

Most teams answer that question by default. They build early reach from the data they already hold: lookalike audiences seeded from the customer list, or account lists modelled on their best accounts.

So the brand budget keeps reminding one familiar kind of customer that the company exists. The firms it should be selling to in two years hear nothing from it.

Most business buyers are out of the market at any given moment

Professor John Dawes of the Ehrenberg-Bass Institute set out the rule in a 2021 article on B2B advertising effectiveness. His starting point is that firms change suppliers only every few years. In his words, "up to 95% of business clients are not in the market for many goods and services at any one time."

Take a market where buyers replace their supplier about every two years. Dawes works it through: "That means 50% are in the market over the course of a (whole) year, or around 13% in any quarter."

So 5% is a rough figure, and Dawes says so himself: "The 95% figure is not meant to be a precise rule." His own example lands nearer 13% a quarter.

Whatever the exact share in your market, the point for B2B buyers holds: at any given moment, most of the firms that could buy from you aren't looking.

Advertising has to build memories long before buyers shop

Dawes's case for advertising follows from those numbers. Advertising, he writes, "mainly works by building and refreshing memory links to the brand," and "these memory links activate when buyers do come into the market." A company that only talks to buyers once they're shopping has missed the stretch when those memories form.

Peter Weinberg and Jon Lombardo of the LinkedIn B2B Institute wrote up the 95:5 rule in marketing for Marketing Week in September 2021. The authors work for LinkedIn, which sells B2B advertising. Their summary is that "only 5% of B2B buyers are in-market to buy right now," and "the brand that gets remembered is the brand that gets bought."

Dawes's advice covers both groups. Keep reaching buyers well before they come into the market, and keep some targeting for the ones who are ready to buy now.

The rule never says which 95%, so teams reach the customers they know

Dawes's numbers count how many buyers are out of the market at once. Choosing which of them to reach falls to the marketing team, and most teams make that choice with whatever data is closest to hand.

In practice, that means lookalike audiences seeded from the current customer list, or account-based marketing lists modelled on the best existing accounts. The content follows suit, written for the buyer the company already wins. All of it points the out-of-market budget back at the segment the company already sells to.

Here's how that plays out in a made-up illustration built from Dawes's numbers. Say an invented software firm sells into a market where buyers replace their supplier about every two years. By Dawes's arithmetic, about 13% of that market is shopping in any quarter. That 13% depends on the two-year cycle Dawes chose for his example; other markets will differ.

The firm takes the rule seriously and runs brand advertising to buyers who aren't shopping yet. It builds that audience as the 200 accounts that look most like its best current customers. Every quarter, the same 200 accounts see the firm's ads again.

Meanwhile, mid-market companies are entering the market. Each quarter some of them start shopping too, and when they do, they've never heard of the firm. Its brand spend did what the 95-5 rule asks, reaching buyers before they shopped, but only buyers it already knew.

Choose the buyer you want in two years before planning reach

Before planning any reach, decide who you want to be selling to in two years. The customer list makes a weak starting point, because it records who chose you in the past. It's worth reading how to choose a target market before your customer list does.

Start with lost deals. Who were those buyers, and how did they differ from the ones who signed?

Then look for the deals you were never invited to. A kind of firm that keeps buying in your market without ever asking you to pitch is a buyer your brand isn't reaching.

The parts of the market that are growing come next, such as a new size of company entering it or a sector that has started to buy. Voice of customer research can tell you how those buyers describe the problem.

Write the result down as one buyer, by size, sector and buying role. For the made-up software firm, the line might start with the mid-market companies now entering its market, then name the sector and the role that signs off.

Aim a fixed share of reach at that buyer and watch the pipeline

Set a fixed share of your out-of-market reach against the buyer you wrote down, and hold it for several quarters. The rest can keep reaching buyers like your current customers, along with the ones ready to buy now.

Expect the signal to move slowly. Over quarters, look for new kinds of buyers entering the pipeline who already know your name when they arrive. For the made-up firm, that would be mid-market companies turning up at a first sales call already aware of it.

Adidas offers one sign that growth can come from people who aren't customers yet. Marketing Week reported in 2019 that econometric modelling found about 60% of Adidas revenue came from first-time buyers rather than loyal customers.

Lookalike audiences win on cost, so pick them on purpose

The strongest case for the default goes like this. Your best customers are the best predictor of who buys next. Lookalike audiences convert better and cost less, and chasing new segments spreads a small budget thin.

Most of that is true. Lookalikes are cheaper and they convert better. If leadership wants more profit from the market the company already serves, aiming the brand budget there is a fair choice.

The trouble is that few teams choose it. They land there because the customer list is the data they have, and then wonder why growth stalls. Who you sell to today is a record of past choices. Where the budget points next depends on your goals, and it deserves a decision.

If you're working out who your next buyers should be and how much of the brand budget to point at them, we're happy to talk through what it means for your brand.

Dawes's numbers make the case for reaching buyers long before they shop. Who those buyers are is a decision the numbers leave to you.