LinkedIn B2B Marketing Trend #3-"95-5 Rule"

Hello, I'm David Dundua, CEO of the marketing company ReachHUB. This is my third newsletter, and today, in this article, I will discuss one of the LinkedIn B2B marketing trends - "95-5 Rule" Before reading the article, please subscribe to the newsletter so that you don't miss important news.

There is a tale about two advertising executives who embark on a journey in a car. The first exec proudly proclaims, “I saw an ad for Tesla and decided to buy this car.” The second executive, taken aback, responds, “But Tesla hasn’t advertised for years. How is that possible?”

It was possible because the first exec had encountered the ad as a teenager and it had left an indelible mark on her memory.

The most effective advertisements have the power to influence purchasing decisions long after they're seen. In this instance, the Tesla ad had made a lasting impression, ultimately contributing to a purchase much later in life.

Understanding the enduring impact of brand advertising is crucial, particularly in light of the 95-5 rule. This rule reveals that 95% of potential buyers are not ready to make a purchase today; they are currently "out-market" but may transition to being "in-market" at some point in the future.

This principle isn't just theoretical; it's supported by research conducted jointly with the Ehrenberg-Bass Institute. For example, 75% of companies purchase computers once every four years, while 80% switch banking services every five years. Even in the realm of B2C, approximately 90% of consumers buy new cars only once a decade. These statistics demonstrate that a large proportion of category buyers are not actively seeking products or services most of the time

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Despite this evidence, many marketers mistakenly believe that advertising yields immediate results. In a study with B2B marketers on LinkedIn, 96% expected to see the primary effects of their ad campaigns within two weeks—an assumption that proves to be a myth.

Consider your own business activities. Have you recently made significant purchases like updating your phone system or engaging with new payroll software? If so, you're likely not in the market for those items now. The purchasing cycles for many B2B goods and services are lengthy, challenging the notion that advertising drives immediate sales.

The misconception that ads function by moving buyers "in-market" is often reflected in the sales funnel model. However, ads primarily influence buyers who aren't even in the funnel yet. Your goal as a marketer is to associate your brand with relevant buying situations well before consumers enter the market. This ensures that when they do, your brand is top of mind. If consumers aren't aware of your brand when they enter the market, it's already too late.

This is where the 95-5 Rule comes into play. It advises focusing advertising efforts predominantly on buyers who are unlikely to make an immediate purchase.

To implement the 95-5 Rule effectively, consider shifting your marketing perspective from the traditional funnel model to an "in-market/out-market" paradigm. This approach is not only more customer-centric but also aligns closely with financial considerations, mirroring how CFOs evaluate sales in terms of current and future cash flows.

While it may seem counterintuitive to invest heavily in brand advertising targeting out-market buyers, it's essential for securing future cash flows and sustaining long-term growth. Therefore, prioritize lead-generation efforts for the 5% of in-market buyers while allocating substantial resources to brand advertising that resonates with future buyers. This strategic approach will not only drive immediate sales but also cultivate future revenue streams, ultimately contributing to the success and longevity of your brand.