The 95/5 Rule

The 95/5 rule demonstrates that advertising and expecting immediate sales results is at odds with the way people behave (and how brand building works). John Dawe’s research makes the case for using the majority of advertising to reach people who aren’t in market now, in order to generate future demand.

Today

Just like successful investors don’t try to time the market, successful marketers don’t try to time the customer (credit goes to Lombardo & Weinberg for this analogy).

With all the data and three letter acronyms available to us - CPCs and CTAs and ROI and CPMs…it’s tempting to think that with just a little more data and slightly better targeting, we can increase the number of people who purchase our products as soon as we hit ‘publish’ on a campaign. 

But that’s not the way that marketing works. Instead of thinking about your direct response call to action being an all-powerful move that changes people’s behavior, think about direct response as “catching” the people who are ready to buy. It’s a subtle difference but has big impacts for how you allocate your budgets.

Today’s rule will show us why. 

Let’s dive in 🤿

The 95/5 Rule

🧐Rule: Up to 95% of business clients are not in the market for your product. Advertising works by building and refreshing memories linked to the brand. When buyers are ready to purchase, these memories are activated. This means that advertising mostly hits buyers who aren’t going to buy anytime soon. (side note: this study was done on a B2B business, but generally, the heuristic holds true for B2C, too).

➡️ Implication: Invest in lead generation for the 5% of people who are in-market today but invest far more in reaching the entire category with brand ads to generate future demand. 

❌Avoid this common mistake: Believing that advertising works right away. LinkedIn ran a study that showed that 96% of B2B marketers expect to see the main effect of their ad campaigns within 2 weeks. 

🏆 The case study to bring to the boardroom:

• 75% of companies buy computers once every 4 years

• 80% of companies change principle bank once every 5 years

• 90% of consumers buy new cars once every 10 years

💰 Bottom line: To grow a brand, advertise to people who aren’t in market now, so that when they do, your brand is the one they choose. Remember: brand 👏 drives 👏 future 👏 demand 👏.

👨‍🔬The OG behind this research: Professor John Dawes

Summary

This is a heuristic, and the research was done on B2B brands, but I think it’s a useful heuristic for B2C folks too. Most people aren’t buying, so stop selling and start being interesting, useful, or entertaining. Wouldn’t that make our jobs more fun!? I think it would.

💪 Let’s build better brands and businesses

If you’re ready to invest in growing your business, here are 3 ways I can help.

• Need a hand with growth? That’s what I do. Reply to this email to book an obligation free chat.

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• I’m interviewing experts on brand measurement and putting together a practical guide tailored by stage of business. To get the deep-dive when I’m done, click here.

That’s all! ✌️ Thanks for your time.

Amanda

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