How the 95/5 Rule Drives Fintech Growth

First, allow me to clarify the difference between the buyer journey and the customer (or client) journey.

It’s easy to confuse these two ideas, because they’re not fundamentally different. The buyer journey is shorter, and the customer journey offers a more comprehensive view. 

Many businesses that I speak with have an intense focus on phases two and three. They want to identify prospects and convert them into buyers as fast as possible. This laser focus is especially present in startups, where operating capital is precious and revenue is king. 

That approach fits within performance marketing, and it can be a good way to boost growth initially, but it’s not sustainable. 

If you’re going to play the long game, you need a strategy that encompasses all five phases and creates a virtuous cycle. At its best, marketing is the process of guiding your audience through each phase of the customer journey and inviting your loyal fans to help you grow. 

Performance marketing plays an essential role, but brand marketing is what connects all the phases together and builds revenue momentum over the long-term.

Brand and performance marketing are distinct disciplines that have become highly sophisticated thanks to modern technology, and the last 150 years of advertising research. 

They’re also broad concepts that can encompass almost any channel or medium. From a tactical standpoint, it’s easy to see a rivalry, i.e., brand marketing vs. performance marketing. You may have heard fierce advocates for both sides. 

I’m not going to choose sides because I think both types of marketing are vital and appropriate for different phases. I like to use all the tools at my disposal. 

What Is Brand Marketing?

At a high level, brand marketing is about shaping how people see your brand and creating positive memories and associations. Those memories act as the catalyst when a person moves into the consideration phase (“looking to buy”). If your brand is top of mind, you have a much higher chance of winning their business. 

Going back to my orchard analogy from the beginning, brand marketing is where you plant seeds and nurture trees. It’s also where you cultivate the health of your trees even when they’re not producing fruit. Trees need water, fertilizer, and regular pruning if they’re going to reach full maturity and productivity. 

Brand marketing objectives:

• Establishing brand awareness
• Building brand loyalty
• Differentiating from competitors
• Creating emotional connections with customers

It’s easy for people, even marketing professionals, to dismiss brand marketing because of how difficult it is to measure and how much consistency it requires. However, brand marketing is foundational for performance marketing.  

What Is Performance Marketing?

Performance marketing is driven by metrics and seeks to deliver exactly the right message to the right consumers at the right time, thereby triggering a purchase or conversion, such as a newsletter subscription, a free trial, or a sales call. 

Performance marketing shares a lot of DNA with direct response marketing, where you’re designing campaigns for maximum conversion, and you track every metric that is relevant to your objective, including clicks, leads, and sales. If a tactic doesn’t generate a return on investment (ROI), you stop doing it and experiment with something else. 

In the orchard analogy, performance marketing is where you go through the orchard picking ripe fruit to sell. You don’t pick green or damaged fruit, or prune and care for your trees to ensure a successful harvest next year. 

Performance marketing objectives:

• Driving conversions (sales, sign-ups, etc.)
• Generating leads
• Optimizing ROI through precise targeting
• Enhancing measurable growth metrics

Marketing professionals are right to emphasize the importance of measurement, experimentation, and the willingness to cut back on ineffective marketing efforts. Performance marketing is as precise as marketing gets, with very little room for “because it feels right.”  

You don’t have to be a farmer to get what I’m saying. The time and effort you spend marketing your brand has a direct and measurable impact on the effectiveness of your performance marketing efforts. Just like if you neglect the trees in your orchard for nine months of the year, you won’t have anything to harvest in late summer and fall.

Which brings us to the 95/5 rule.

When you fully embrace brand marketing and performance marketing as essential activities for your company, you can use the 95/5 rule to guide your efforts and set rational (and ambitious) goals. 

A Powerful Bonus for Any Financial Brand: Affiliate Marketing

There is actually another marketing discipline that’s worth mentioning here. It combines brand marketing and performance marketing with a healthy dash of referral marketing as well. It’s commonly referred to as affiliate marketing.

Affiliate marketing is where your business contracts with other businesses or individuals to pay out commissions for any sales the “affiliate” drives through their own marketing efforts. Ideally, companies provide branded assets for affiliates to use in campaigns and unique hyperlinks for precise attribution. 

While many affiliates use performance marketing techniques to promote your offer, they also tend to cultivate highly engaged audiences for their content. Not every affiliate is an influencer, but many are, and their endorsement of your product or service carries a lot of weight. 

The best case scenario is to partner with affiliates who are willing to serve as reputable brand advocates (brand marketing) for your company, as well as result-driven performance marketers who know how to drive sales. 

With the right incentive structure, affiliate marketing helps you expand your reach and stay very efficient with your costs. After all, you’re paying for conversions–or confirmed customers–not the campaign itself. 

You’ll see the real power of affiliate marketing come into play once I’ve explained the 95/5 rule in the following section. 

LinkedIn’s B2B Institute popularized the 95/5 rule in a paper published in partnership with the University of South Australia. It’s a ratio that expresses how much of your audience is ready to make a purchase at any given time.

Here’s how they arrive at that ratio:

“Corporations change service providers such as their principal bank or law firm around once every five years on average. That means only 20% of business buyers are ‘in the market’ over the course of an entire year; something like 5% in a quarter—or put another way, 95% aren’t in the market.”

95/5 isn’t a precise measurement; instead, it’s a useful model for evaluating who your brand marketing and performance marketing efforts are reaching at any given time. 

If 95% of your audience isn’t even interested in buying, then you would waste resources targeting them with performance marketing tactics (or, even worse, damage the relationship). On the other hand, your brand marketing efforts can always be relevant to your audience because you’re building a relationship—not asking for anything.

The first stage of the customer journey is about creating awareness and relies heavily on brand marketing. You might imagine that, in some way, you’re moving people through these phases like a shepherd with sheep. However, that’s not what’s happening. 

You’re building a marketing ecosystem that addresses all the different phases and allows people to move freely through these phases. 

Here’s an example of the 95/5 rule using an easily recognizable business: a car dealership. 

We’ll start with the 5% of active buyers; people in phases 2-3 of the journey, who are:

• Actively visiting dealerships
• In a lease that’s ending in the next 30-60 days
• Looking to replace a vehicle due to an accident or major repair
• Shopping for vehicles online

You can probably think of several other behaviors that demonstrate “readiness to buy,” including asking for car recommendations on social media and watching review videos on YouTube. All of these behaviors give you concrete data to use for performance marketing techniques, such as:

• Ad retargeting 
• PPC advertising 
• Social media advertising 
• Email marketing 
• Direct outreach via phone and physical mail 

The remaining 95% of prospects are in phases 1, 4, and 5, and you can reach them with brand marketing in a variety of ways:

• TV commercials or YouTube videos showcasing lifestyle and benefits of ownership
• Sponsorship of sporting events
• Long-term social media campaigns or influencer partnerships
• Educational content around maintenance and technology
• “Activations” or community events

You might be wondering why you would bother thinking about customers in phases 4 and 5. They have already purchased a car, and won’t need another one for years!

But that’s short-term thinking. If those people are happy with their car, they’re going to talk about it to their friends, especially if your ads spark conversations. 

Your happy customers will direct new buyers to your business if you give them a reason. And those recommendations are priceless (as in, you can’t buy them). 

Some companies hear about brand marketing and immediately turn off: “We can’t afford a big stadium sponsorship or Super Bowl commercial. That’s crazy money.”

They’re probably right. Those are high-profile opportunities that can generate a TON of visibility, but they might not be in your budget or produce the value you’re looking for. There are lots of other opportunities to get your brand in front of your target audience. 

An experienced marketing agency can help you find these opportunities and create assets that provide maximum visibility. 

In the next section I’ll unpack some of the factors affecting how prospects think and act. By combining this information with your marketing ecosystem, you’ll be better able to grow your audience and aid people in their customer journey as they become buyers of your financial product or service.

Product features and benefits are essential. They’ll be prominent in your marketing materials, but they aren’t strong enough to convert prospects into buyers and buyers into loyal fans. 

The following emotions and psychological motivators will help you construct a marketing strategy that continually strengthens your brand and supports your revenue goals. You want your performance and brand marketing efforts to be tonally matched, even if the executions differ.

Trust and Authority

For fintech and financial services, trust and authority are two of the most precious and intangible assets they can command. People need to trust your company at a fundamental level, or they won’t trust you with their money.

When a firm violates that trust, the fallout is massive. 

Your marketing efforts need to build and expand the perceived authority of your brand and the level of trustworthiness you offer to consumers.

Fear of Loss

Humans are more afraid of losing something they have than happy of gaining something new, even if the new thing is “more valuable.” Amos Tversky and Daniel Kahneman published a paper in 1979 demonstrating that a loss is twice as powerful as the equivalent gain. 

Financial firms can use this human propensity to their advantage, not by fear-mongering, but by positioning your company as the trusted guardian of what your audience values. 

Confidence and Control

A recent survey by Capital One revealed that 77% of Americans feel anxious about their money. They don’t want to feel out of control, but they also feel like there isn’t much they can do to regain it either. 

You can tap into their deep desire to feel confident about their money. Create educational content that helps consumers manage their money and build financial stability. If you’re marking B2B, then show your audience how your firm helps their business do the same thing. 

Familiarity

Aside from the personality types that crave novelty for its own sake, the majority of people prefer things that are familiar. This bias works in favor of brand marketing. By exposing people to your brand through multiple mediums, you turn awareness into familiarity. 

If you continue promoting your brand in strategic ways, you establish a foundation for the trust that is crucial for fintech and financial service firms. 

Tread carefully though, it’s possible for bad press and other business missteps to cultivate negative associations and familiarity that hurt your brand. 

Widespread automotive recalls are a good example of negative familiarity. 

It doesn’t matter if the issue is eventually attributed to driver error, as in the case of the 2009-2011 “unintended acceleration” of several Toyota vehicle models. The damage to Toyota’s brand was huge and long-lasting, including a loss of nearly $2.5 billion. 

Marketers, including myself, love neat, simple models, such as a linear customer journey. However, the theory just doesn’t match reality.

I tend to compare the real-world customer journey to a game of chutes and ladders, where the players move toward an end goal but constantly backtrack or leap ahead, skipping “essential” steps or retreading old ground.

Brand marketing and performance marketing help you meet your audience on their terms. You’re always inviting them to engage at a level that works for their needs and desires. 

In phase 1, that invitation is a simple introduction that you repeat at different times, in different channels, and using different mediums. 

Later, you might invite them to buy, but it’s only because they’ve shown interest. 

If you’re leveraging and mixing in affiliate marketing (and you should be), then your marketing partners are increasing the visibility of your brand and offer, bringing new prospects and customers to your virtual door. Affiliates may even help you unlock new markets or demographics that you hadn’t considered previously. 

At every step in the customer journey your job is to reassure the prospect that your brand can guide them to the outcome or progress they want to achieve. Sometimes, that reassurance is quiet and understated: a logo on a cup or an informative blog article that helps someone feel brave enough to make a phone call to ask for help. 

Your customers are going to follow their own path and as much as you want to flip a switch and turn everyone into a buyer, that’s not how you build and grow a sustainable business.

And tempted as you might be to devote the lion’s share of your budget to performance marketing and the 5%, experience has shown me that a lack of brand marketing can lead to a decline in sales in the long-term. Research from 2018 shows this decline to be 16% in the first year and 25% in the second year!

That’s an astonishing drop. 

I must admit that, sometimes, after a long week of talking with prospects, hearing their challenges and sharing how CSTMR could help, I do wonder how many of those seeds will bear fruit. 

The hard truth is there are many variables at play in today’s economy that fintechs and marketing stakeholders can’t control.

But then I remember that I have the privilege of seeing firsthand, every day, the 95/5 dynamic of brand marketing and performance marketing manifest, in my own business and countless others. When they’re integrated, aligned, and given enough resources, the momentum it gives your brand is unstoppable.

It takes consistent work–and time–before a bushel of Hill Country peaches lands on my kitchen counter. But I get them, and brand + performance can get you them too.