How to Calculate Your In-Market Buyers Using the 95:5 Rule

A couple of months ago, I posted about the 95:5 rule—a research-based finding by Professor John Dawes that shows, that up to 95% of potential buyers in B2B markets aren’t actively in the market for your product or service at any given time. Today, I want to dive a bit deeper and equip you with a practical resource: a downloadable file with a formula that implements this research so you can calculate your in-market buyers, optimize your advertising spend, and set realistic sales targets.

The 95:5 Research Insight: Why Only a Fraction of Buyers Are “In Market”

Research confirms that in many B2B environments, purchasing decisions are infrequent. This means that even if your total market is large, only a small slice of it is actively looking to buy at any one time. While 95% of your potential buyers remain in a dormant phase, the competitive battleground is the active 5%.

Focusing solely on capturing leads from this small in-market segment might yield some short-term wins—but it misses a much larger opportunity. By investing in brand awareness and consistent messaging, you build “memory links” with prospects, ensuring that when they eventually enter the market, your brand is already top of mind.

A Simple Formula to Estimate In-Market Buyers

To help you put this research into practice, consider this straightforward formula:

Where:

• N is the total number of potential buyers (for example, 500 companies).

 How to get this information? Conduct a TAM, SAM, SOM research.        

• T is the average interpurchase time (say, 2 years).

How to get this information? Conduct a survey, ask clients and potential clients how often they look for an alternative, then take into account the average sales cycle.        

• P is the time window being analyzed (for example, 0.25 years for a quarter).

How It Works in Practice

Let’s plug in some numbers:

• N = 500 companies
• T = 2 years
• P = 0.25 years (a quarter)

So, approximately 63 companies might be actively in the market during a quarter. This number represents your “active” audience—the group of decision makers ready to buy.

The Calculator

To make this concept even more actionable, I’ve created an Excel file that incorporates this formula. With this tool, you can:

• Input your own data: Adjust N, T, and P to reflect your specific market conditions.
• Quickly calculate your active market size: Determine how many buyers are in-market during any given period to do more accurate target planning.
• Align your marketing strategy: Use these insights to optimize your advertising spend and set achievable sales targets.

Download The Calculator Here

Shifting the Marketing Focus: Beyond Lead Generation

While generating leads is important, focusing solely on immediate lead capture might cause you to overlook a critical stage in the buyer’s journey. The research-based 95:5 rule shows that your best long-term opportunity is engaging the broader market—even when most buyers aren’t actively shopping. Here’s how you can build a more resilient marketing strategy:

1. Brand Awareness & Education: Run campaigns that consistently reinforce your brand’s value. When buyers transition into the active phase, your brand is already the one they recall.
2. Demand Creation: Position your messaging to resonate with prospects even when they aren’t ready to buy. Educate your market, share valuable insights, and plant the seeds of trust that will grow over time.
3. Demand Capture: When the small fraction of buyers become active, targeted strategies—backed by strong brand recognition—will help convert interest into sales.

Strategic Patience: Building Brands That Last

The battle for the active 5% is intense, but the real advantage lies in nurturing your entire market. By maintaining a consistent presence during both the dormant and active phases, you set the stage for long-term success. Ask yourself: Am I playing the long game by strategically building my brand, or am I just chasing today’s leads while my competitors win the 95% game?

In the end, the brands that balance immediate lead capture with sustained brand building are the ones that achieve lasting growth.