The 95%

Yesterday I got our car and home insurance policy renewal letter in the mail. It happens every year around this time and I'm always struck by the same thought: other than this, maybe, 20 to 30 minutes of quickly googling rates to see how ours compares, I never think about insurance. It's a once a year thing, and then I forget it. But my insurance company is marketing to customers like me all the time. Customers who have no intention of buying insurance or switching their providers. I mean, it's a very rare occurrence to have someone see an Insurance ad on TV, jump off the couch and run to their computer or phone to sign up for a new policy. But the insurance companies are spot on with how they should be marketing, because most of your customers are not looking to buy your services now.

The 95/5 Split

At any given moment, the overwhelming majority of potential buyers in any category are not looking. They are not researching. They are not comparing options or filling out forms or responding to outreach. They are simply living their lives, with no immediate intention to buy what you sell. If we're talking B2B, that group represents a staggering 95% of your total addressable market at any point in time. And this is where most marketing teams get mixed up. They focus on the 5% and ignore the 95%. The problem is, it's the 95% who will determine whether your brand grows.

The thing is, it looks logical: why spend money on people who aren't looking? Who are already entrenched in multi-year contracts with our competitors? Let's focus on the people who want us now! If you do that, you end up in a constant chase and a constant competition. That 5% are being courted not just by you, but by all your competitors as well. And the numbers show that the bulk of them (about 80%), already have a brand in mind when they start their search, and they almost always pick that brand. So you end up pouring a ton of money into attempts to land people who are already somewhere else. Now this doesn't mean you don't market to the 5%, it just means you do things a bit differently.

How Buffett and McKinsey Win the 95%

Warren Buffett understands this 95/5 split better than most. When he took full control of GEICO in 1996, one of the first things he did was octuple the marketing budget. Geez… And that investment in the marketing department wiped out nearly all of GEICO's short-term profits on paper. From a quarterly earnings standpoint it looked like a disaster. But Buffett was not marketing to people shopping for insurance that month. He was planting GEICO in the minds of people who would not need insurance for another two years, and the two years after that, and the two years after that. By the time those buyers finally did sit down to compare quotes, GEICO was already the name they knew. The gecko was already familiar. The decision was halfway made before the shopping even started.

And that's the key to actually winning the 5%: marketing to them when they are still the 95%. But, it means you need time. 12 months at a minimum, but closer to 2 years most of the time. Bigger companies can shorten that window, but smaller, newer companies need to give their marketing department time to grow their name.

Buying cycles in most B2B categories are long and infrequent. Companies don't switch their enterprise software, their legal counsel, their consulting firms, or their banking relationships every year. These decisions get revisited every five years, sometimes longer. Which means that in any given quarter, the pool of B2B buyers actively evaluating options in your category is small. And a marketing strategy built entirely around capturing that pool is, structurally, a strategy for slow growth.

McKinsey has published research, strategy frameworks, and industry analyses for decades. The vast majority of people who read McKinsey's content on any given day are not currently hiring McKinsey. They are executives, managers, and decision-makers who are doing their jobs, staying informed, and building a mental picture of which firms produce ideas worth listening to. That picture does not reset when they eventually do need outside counsel. It carries forward. By the time a CEO is sitting across from several consulting firms deciding who gets the work, McKinsey walks into the room already known. The question is rarely "have you heard of McKinsey?" It is whether McKinsey is the right fit for this particular problem. That is a very different starting point than a firm that shows up in the room for the first time during a procurement process.

When Marketing Becomes a Magic Bullet

This 95/5 split really becomes obvious to me when I see an organization trying to use marketing as a magic bullet to meet certain sales or revenue targets. All too often, I've seen VC-backed organizations change their annual targets because their VC had some bad news and is trying to recoup some cash wherever it can. One of their companies failed, so they lean on the others to make up the difference. And this leads to targets that have no connection to the companies' current growth trajectory.

So all of a sudden, the sales team is on the hook for $300M in sales instead of $100M. The sales team, in turn, tells management "we don't have the pipeline! Tell marketing to step it up!" and the marketing department is set upon to conjure leads in record time. So they pour all their budget into the 5%... And maybe, maybe, they even succeed. But then the long-term pipeline is dry, and next year they are in the same boat: no pipeline because the marketing wasn't to the 95%, so we need to target the 5%, most of whom have already made up their mind to go with the brand whose name they know the best: the brand who marketed to them when they were the 95%!

This is not an argument for abandoning performance marketing or demand generation. Those tools work, but they work best when a brand has already done the upstream work of being known. The problem is treating them as a complete strategy rather than one piece of a larger one.

I have seen this play out with a reasonable amount of consistency. A company runs a disciplined, well-targeted campaign. Cost-per-lead looks great. The sales team is happy. And then, six months later, growth plateaus. Not because the campaign stopped working, but because the addressable pool of active buyers was always small, and the brand has now largely saturated it. The future buyers, the ones who will be in the market in a year or two, were never reached. And because they were never reached, the brand is starting from zero when those buyers finally move.

Precision and Presence

Growing a brand requires thinking about two rooms at the same time: the one where people are actively shopping now, and the much larger one where people are not shopping yet but eventually will be. The first room rewards precision. The second room rewards presence. Most brands over-invest in the first and largely ignore the second, because the second is harder to measure and slower to show results.

There is an uncomfortable irony in all of this. The buyers most worth reaching for long-term growth are the ones your current marketing is least designed to find. They are not clicking your ads. They are not in your CRM. They do not have any declared intent. They are just people who will one day need what you sell, and the brands they will think of first are the ones that were present long before that day arrived.

The beautiful thing is, marketing to the 95% gives you stability. It gives you a foundation. And then adding marketing to the 5% on top of that gives you those extra boosts! But it's the 95% that gives you the strong, sustained growth.

Most marketing strategies are optimized for a moment in time. Growth, real and compounding growth, is built in all the time before that moment. Marketing should always be looked at as a long game, not a get-rich-quick scheme.

I'll leave you with one more anecdote before we end. I heard this story on a radio show decades ago, so forgive me if I get some of the actual details wrong, and maybe it's apocryphal, but it gets my point across very clearly.

During one of the world wars, for some reason butter had to be wrapped in unbranded, nondescript, wax paper. This resulted in consumers not knowing whose butter they were buying! Most butter companies stopped advertising. Why advertise when the consumer didn't even know whose product they were using? But one company (not the largest), decided to keep advertising throughout the embargo. And when the war was over their market share skyrocketed. All those customers kept hearing their name and when the time came for them to actually have a choice to pick, they of course picked the one brand they knew the most. The company marketed to them not for their purchases now but for their future ones.

*turns out it was margarine, not butter. And it wasn't that they couldn't have branded wrappings, it's that they all got pooled into one, wartime, organization called Marcom. The rest is pretty much the same: one brand, Stork, kept advertising, and after the war held a dominant position in the industry!