Implications of the 95:5 Rule

Despite the clarity and applicability of the 95:5 rule, many GTM teams often operate with the expectation that anyone in their SAM is a potential in-market buyer. This misconception can lead to a disproportionate focus on tactics biased toward direct response or purchase, while brand- and relationship-building are neglected. When this happens, budget can be wasted, efforts can yield diminishing returns, and entire strategies can fall flat.

Applying the 95:5 Rule

So how can GTM teams shed light on buyer behavior, plan effective strategies, and support growth using the 95:5 rule?

We recommend three initiatives from our work with growth companies across the Summit Partners portfolio:

1. Do the Math

By factoring in size of the SAM, average interpurchase time period and average decision window, teams can calculate how many buyers will be in market during a given period.² For example, if companies typically consider renewing or buying CRM software every three years and take 90 days to decide, the quarterly 95:5 rule is closer to 92:8 with an estimated 8.3% of the market considering CRM software each quarter (100/3/4). If people typically buy a new bed every seven years and take 90 days to decide, the quarterly 95:5 rule is closer to 96:4 with an estimated 3.6% of the market buying a bed each quarter (100/7/4). And if people typically do an annual physical each year and take 30 days to decide where to go, the monthly 95:5 rule is 92:8 with an estimated 8.3% of the market buying an annual physical each month (100/1/12). Teams can then multiply the expected in-market percentage for the respective time period by their SAM and layer in expected win rates to determine how many customers they might realistically capture. This, in turn, can help with performance forecasting and budget planning.

2. Unify Plans

In our view, companies’ GTM strategies must evolve to serve both in-market and out-of-market buyers. Often, this results in two distinct motions: one “long,” targeting out-of-market segments and focused on building awareness and preference; and one “short,” targeting in-market segments and focused on conversion and sales activation. Marketing effectiveness research such as The Long and the Short of It suggests these motions are best when balanced and unified. Strategies targeting each of these audiences should be adapted in areas such as segmentation, marketing mix allocation, GTM hiring, operations, channel selection, offers, pricing and packaging, messaging and measurement.

3. Test and Learn

All campaigns should have clear success metrics that tie to specific objectives such as market awareness, consideration, preference or new business generated. Qualitative measures from surveys, interviews, or sentiment analyses conducted on a regular basis can be just as valuable as quantitative measures from purchase platforms, CRM, and direct response campaign tools to inform effectiveness. Especially for B2B markets, it’s important to recognize the limitations of attribution and the need for multiple measurement methods. And in all instances, teams are most successful when experiments are run as part of a coordinated, sustained program.

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