The idea, set out by Professor John Dawes of the Ehrenberg-Bass Institute for the LinkedIn B2B Institute in 2021, that only about 5% of B2B buyers are in the market in any given quarter, so around 95% are not buying now but will buy later. It argues for reaching future buyers, not just current ones.
Formula
Share in market per quarter = 1 ÷ (years between purchases × 4)
Example
A Pune B2B software firm targets 1,000 companies. If companies switch such software about once every five years, about 200 buy in a year and about 50 in a quarter, which is 5%. The other 950 are not buying this quarter.
How you'll hear it
“Our demo ads only talk to the 5%; the 95:5 rule says most of next year's buyers aren't listening yet.”
What it helps you decide
How much to spend on brand and content for buyers who are not ready, versus lead-generation ads for those who are, and how to judge each. If 95% are not in the market, demanding immediate leads from all content wastes most of it.
Where people misread it
People take 5% as a fixed fact for every business. It comes from purchase cycles: with a five-year cycle you get roughly 5% a quarter; shorter cycles mean more buyers in market. It also does not mean ignoring the 5%.
The story
The Pune software firm counts its buyers (illustrative)
The firm sells HR software to manufacturing companies. Its ICP lists 1,000 companies. Each company changes such software about once every five years.
| Target companies | 1,000 |
| Buying in a year (1 in 5) | 200 |
| Buying this quarter (200 ÷ 4) | 50 |
|---|---|
| Not buying this quarter | 950 |
The firm runs only 'book a demo' ads on LinkedIn. This quarter it gets 8 demos. The sales head says the ads work, and wants to cut the monthly article series because it produces no leads.
What that hides: the 8 demos came from the 50 companies in market. The articles reach the 950 who are not. When those companies enter the market next year, they will shortlist names they already know. Cutting the articles saves money now and shrinks next year's shortlist.
What to look at instead: how many of the 1,000 target companies know the firm, follow it or engage with its content, tracked quarter by quarter, alongside demos from the 50.
Figures are illustrative. Your in-market share depends on your own purchase cycle.
Estimate how many of your buyers are in the market now
The example's numbers are filled in. Replace them with yours.
Most of your buyers are not buying now. Content that builds familiarity with them matters as much as ads that capture current demand.
Don't confuse it with
- Brand building vs sales activation: the 95:5 rule is a reason to do brand building; the brand-versus-activation split is how you budget for it.
- Conversion rate: low conversion from a cold audience does not mean the audience is wrong, most of it is simply not in the market.
Related terms
Sources
- Advertising effectiveness and the 95-5 rule: most B2B buyers are not in the market right now, Ehrenberg-Bass Institute, 2021
- How B2B brands grow, LinkedIn B2B Institute