The 60:40 rule is a widely accepted marketing concept that helps to focus your resources on driving sales now (40%) and growth in the future (60%). As this general rule can be applied to any industry, it marks a perfect place for us to start this series on digital marketing tips for small business.
The school of marketing has been taught in universities for over 100 years. In that time many assumptions and principles have been created, tested and struck from the record - but a handful have stood the test of time. The 60:40 rule helps you to split your focus on long and short term marketing goals. Specifically:
60% of your marketing efforts should be focused on brand awareness activities that generate knowledge of your brand and create memory structures over time.
40% of your marketing efforts should be focused on sales performance - also known as conversion or direct response - to drive short-term sales by prompting people to ‘buy now’.
The rationale behind this rule is that building brand awareness is a long-term strategy that helps your business establish a strong reputation and a loyal customer base. Meanwhile, direct response campaigns are focused on generating short-term sales and revenue.
This rule of thumb has been a relief in modern marketing where short-term performance objectives heavily outweighed brand awareness objectives, driving sales now but not in future years. As a digital marketing tip for small businesses, its a worthwhile consideration for business owners.
Examples of brand and performance (sales) tactics
It’s important to understand that any digital channel can be used for both brand building and performance. The key distinction is your objective:
Brand objectives are designed to trigger emotions that build or reinforce brand knowledge with target consumers.
Performance objectives should trigger an immediate action like ‘buy now’ or ‘trial our product’ with target consumers.
Here are some tactical examples of brand building and direct sales that businesses can use to implement the 60:40 rule:
Brand building examples:
Content marketing: Creating valuable and relevant content (like blog posts, videos and podcasts) to attract and engage target audiences. Without selling.
Social media: Using social media platforms (like Instagram, Facebook, and LinkedIn) to build a community around the brand and share content with followers. Without selling.
Influencer partnerships: Collaborating with influencers or industry experts to promote the brand and reach new audiences. Without selling.
Public relations: Building relationships with journalists and media outlets to earn press coverage and improve the brand's reputation. Without selling.
Sponsorships and events: Sponsoring events or causes that align with the brand's values to increase brand visibility and awareness. Without selling.
Direct sales / performance examples:
Social media: Offering limited-time discounts or promotions (like BOGO deals or free shipping) to encourage immediate purchases.
Email marketing: Sending targeted emails to customers with personalised recommendations or special offers.
Paid advertising: Running paid ads (like Google Ads or Facebook Ads) to target specific audiences and drive traffic and conversions to the website.
Content marketing: Offering additional products or services to customers who have already made a purchase.
Loyalty programs: Creating a loyalty program to reward repeat customers and encourage repeat purchases.
By using a combination of these brand building and direct sales tactics, businesses can implement the 60/40 rule effectively and achieve both long-term growth and short-term revenue generation.
The marketing funnel below simplifies the general customer journey from an unaware prospect to a loyal advocate. Brand building is critical because it keeps you focused on growing awareness with prospects that will convert into sales later. Wondering when’s later? Read the marketing fundamental rule #2 [COMING SOON]
Source: Amazon
How the 60/40 rule can be applied in the Australian market
Example 1: Coca-Cola
Coca-Cola is a global brand that has been around for over a century. In Australia, the company invests heavily in building brand awareness through various channels, including television, social media, and sponsorships. For example, the company sponsors the Australian Football League and has a strong presence on social media platforms such as Facebook and Instagram. These efforts are aimed at establishing Coca-Cola as a household name in Australia and building a strong emotional connection with its customers.
At the same time, Coca-Cola also runs direct response campaigns that are focused on generating short-term sales. For example, the company offers discounts and promotions to encourage customers to purchase its products, although they are starting to reduce the need to discount. These campaigns are aimed at driving revenue and increasing market share.
Applying 60:40 to small business
By building brand awareness, small businesses can create a connection with their target audience and establish a strong presence in their industry. This can help them differentiate themselves from their competitors and build a loyal customer base that can sustain their growth over the long term.
On the other hand, small businesses also need to focus on generating direct sales to sustain their short-term growth. This can be achieved through various tactics such as offering promotions, discounts, or running targeted advertising campaigns.
By focusing on both building brand awareness and generating direct sales, small businesses can achieve a balance between their long-term and short-term goals. The 60:40 rule helps small businesses allocate their resources more effectively and maximise their marketing efforts for the best results.
Does 60:40 work for every industry and business?
While 60:40 is a valuable rule of thumb for many businesses, it may not be exact for every industry or situation. The ideal ratio between brand building and direct sales tactics may vary depending on factors such as the business's size, industry, pricing strategy, category stage, and competitive landscape.
For example, a startup in a highly competitive market may need to allocate a larger portion of marketing toward direct sales tactics to gain an initial foothold in the market. On the other hand, a well-established business in a less competitive industry may be able to allocate more resources to brand building to reinforce its market position.
Some industries may also require a higher investment in brand building due to the importance of trust and reputation. A financial services company may need to allocate a higher percentage of its marketing efforts toward building trust and credibility with its audience to overcome any skepticism or concerns about its offerings.
The 60:40 rule provides a framework to balance brand building and direct sales efforts. It's important to consider your unique characteristics, industry, and target audience to determine the most effective marketing mix.
Where did the 60:40 rule come from?
In 2013 Les Binet and Peter Field, also known as the ‘Godfathers of marketing effectiveness’, published new research titled The Long and the Short of It. The paper dissected a group of award-winning campaigns to understand why they were so successful. The pair discovered the best performing campaigns held brand building (long) objectives and performance / sales activation (short), with a general ratio of 60:40. This finding highlighted the fact that too many marketing campaigns were focused on short-term sales activation goals, especially when using digital channels.
There have since been valuable additions made to this theory, particularly around the definitions of what ‘long’ and ‘short’ means and the perfect ratio for different industries and products.
Still the fact remains: short-termism is not the most effective approach to marketing. The most effective marketing campaigns come from a combined long (brand) and short (performance) approach.