Evidence · B2B marketing

B2B brand growth and the 95:5 rule: what the research shows

Peer-reviewed studies show that double jeopardy, the pattern in which smaller brands have fewer buyers who are also slightly less loyal, holds in business markets as it does in consumer markets. Most of the rest of the B2B brand-growth argument, including the 95:5 rule, category entry points and the rarity of brand rejection, comes from industry reports written largely by one research group. The direction is plausible and consistent; the magnitudes are not yet independently established.

Definition

B2B brand growth asks whether the regularities that describe how consumer brands grow also describe business markets: that brands grow mainly by winning more buyers, that small brands suffer on both buyer numbers and loyalty, and that being easy to recall in a buying situation drives choice. The 95:5 rule is a heuristic stating that at any given moment only a small share of business buyers, roughly 5 percent, are actively in the market for a given product or service, while the rest will buy later.

What the research finds

Double jeopardy holds in business markets

A set of 32 differentiated replications, some more than three decades apart, found no boundary to double jeopardy, including capital purchases and six- and ten-year periods of continuous industrial buying. A simple two-input approximation predicted behavioural loyalty closely in these settings.^[1]

B2B brands share customers in line with market share

An industry report finds that business brands share more of their customers with large competitors and fewer with small ones, in proportion to competitor size, with little sign of protected sub-markets. The implication is that a brand's future customers are mostly current customers of bigger rivals.^[2]

Most business buyers are not in the market right now

The 95:5 rule holds that up to 95 percent of business clients are not buying a given product or service at any one time. If so, advertising mostly reaches future rather than current buyers and works by building memory links that are used later. This is a conceptual argument in a non-peer-reviewed industry report, not a measured result.^[3]

Buying situations cue brands in B2B too

An industry report extends category entry points to business buyers, treating situations such as a contract renewal or a new requirement as cues for recalling brands, and links brand sales to how many of these situations a brand is linked with. The report has not been peer reviewed.^[4]

Active brand rejection is rare

In two common business services categories, fewer than one in ten decision makers rejected any given brand, around 10 percent, and rejectors gave no single dominant reason. Lack of awareness is a larger barrier to winning customers than negative opinion. The evidence is an industry report.^[5]

Brands reduce risk for business buyers

A review of B2B branding research finds that brands give business buyers confidence and reduce perceived risk and uncertainty, while suppliers gain differentiation, pricing power and loyal customers. It also notes that branding is far less studied in business than in consumer markets.^[6]

How strong is the evidence?

The strongest evidence is peer-reviewed work on double jeopardy, which covers industrial and capital purchasing among many other settings. The 95:5 rule, category entry points in B2B, brand-sharing patterns among B2B brands and the low rate of brand rejection come mainly from reports published by the LinkedIn B2B Institute and written by researchers from one institute; they are not peer reviewed, and their numbers should be read as indicative. Independent replications are scarce, and long sales cycles, small buyer populations and buying groups rather than single buyers could weaken these patterns in some business markets. The step from these patterns to a budget split between brand building and sales activation is an inference, not something the studies reviewed here measured.

Claims tested against the evidence

Do brands grow through penetration or loyalty? Supported, with limits
Does the duplication of purchase law hold? Well established

References

Charles Graham, Dag Bennett, Katrin Franke, Cathy Lu Henfrey, May Nagy-Hamada (2017). Double Jeopardy – 50 Years On. Reviving a Forgotten Tool that Still Predicts Brand Loyalty. Australasian Marketing Journal (AMJ).
Jenni Romaniuk How do B2B brands compete (2021). How do B2B brands compete?.
John Dawes (2021). Advertising Effectiveness and the 95-5 Rule: Most B2B Buyers Are Not in the Market Right Now. LinkedIn B2B Institute (report).
Jenni Romaniuk (2022). Category Entry Points in a B2B World: Linking Buying Situations to Brand Sales. LinkedIn B2B Institute (report).
Jenni Romaniuk (2021). Brand Rejection in B2B: Incidence, Reasons and Implications. LinkedIn B2B Institute (report).
Sheena Leek, George Christodoulides (2011). A literature review and future agenda for B2B branding: Challenges of branding in a B2B context. Industrial Marketing Management.

Bibliographic details only. Follow the DOI to read each study at its publisher.

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