As a climate tech startup, it is crucial to understand your target audience and segment them into buying groups. According to The 3% Rule, only 3% of your market is in buy-mode at any given time, while the remaining 90% may buy at some stage. Direct pushes through advertising may not be effective in this climate, especially for those who are not actively looking for your product or service.

The opportunity for climate tech startups lies in building a reputation and relationship with the bottom 90%, who may not be buying right now but will someday. This requires a shift in marketing approach from solely direct lead generation to demand generation, focusing on building a rapport and brand value for potential customers. By providing value-driven messages, startups can engage their audience and build a reputation that will position them as the go-to option when the need arises.

In the climate tech industry, it's essential to not only focus on the impact of your product or service but also provide value to your audience through informative and educational content. This way, you can engage your target audience and build a relationship with them, gaining their trust and loyalty, ultimately leading to a successful and sustainable business.

Because as we all know, stepping away from the (unsustainable) status quo is difficult and we all need a helping hand.

Why are value-driven communications valuable?

Direct pushes don’t work in the current advertising-saturated climate. Why? Because only 3% of people are in buy-mode. 

That is, out of your entire market, only 3% are proactively looking to your product or services. And if only 3% of your market is buying at any given time, then 97% of your market is not. 

Segmenting your target audience with The 3% Rule

Author and brand strategist Jeremy Miller calls this The 3% Rule which he outlines in his book Sticky Branding. It’s a model to segment your marketplace — including anyone who can buy your services: prospects, current customers, past customers — into buying groups. The 3% Rule divides your marketplace into five buying segments:

• 3% are active buyers. These are the people and companies that have a need and are actively shopping for vendors. They want to make a purchase in the next thirty to ninety days. These are sales leads.

• 7% intend to change. These prospects have a need but aren’t proactively searching for options. A well-timed cold call or marketing campaign can be very effective in this segment because they are receptive to new ideas.

• 30% have a need, but not enough to act. This group is not buying. They may look like and act like prospects, but they won’t make a commitment. They have other priorities. Until the need becomes more pressing, they won’t make a purchase.

• 30% do not have a need. This segment of the market does not have a need for your products and services, and are not receptive to any marketing messages. They may have just made a purchase, they may be too small, or they may not be ready for your services.

• 30% are not interested in your company. There is a segment of the market that does not fit your brand. Basically, these companies are never going to choose you. They may be loyal to the competition. They may have had a bad experience with your firm. They may use alternative options. Don’t sweat it. Just recognize that this dynamic occurs, and your brand can’t be all things to all people. 

According to The 3% Rule, the bottom 90% aren’t actively looking for your product, but they may buy at some stage. The top 10% are actively looking, albeit at different velocities. Miller says that this leads us to believe that there are two different types of marketing. Inbound and outbound. 

1. Direct. The top 10%. Marketing to people and companies who have a need for your services right now, typically described as “inbound marketing.”

2. Indirect. The lower 90%. Marketing to people who don’t have a need for your services, but will someday.

Before the internet, brands simply marketed to the top section via TV or newspaper advertising. 

But when brands aren't in buy-mode, they don’t want to be sold to. They want to be understood and have their hand held through the process. They don’t want a salesman, they want someone they can know and trust. Then when it comes time to buy, they don't shop on features, they go to the only option in their mind who can help.

The opportunity lies in the bottom 90%: Those who aren't buying right now

Most brands are great with direct marketing to the top 3% who are actively looking for your service. 

They’re comfortable talking to the top 10%. But the opportunity lies in the remaining 90% who are so often ignored because there is no direct and immediate benefit. 

That's where you can build a reputation before someone actually needs your product or service. 

This is the crux of demand generation, a new vision for digital marketing that goes beyond direct lead generation metrics and focuses on brand. On targeting people who you know are in your market before they are ready to buy. Building a rapport. 

So when it comes time to start looking, your brand is front of mind. Miller says, “That way they’ll skip right over the inbound marketing messages, and call your company first when they have a need.”

Key insight: Always give something away for free

If there’s one thing that you take away from this lesson, it needs to be this: GIVE YOUR AUDIENCE SOMETHING OF VALUE. 

Because if your audience is engaging with your messages, then they're spending their attention on it. And attention is the most valuable currency in the world today. 

With sustainability or impact in mind, however, we often get caught up in providing value for ourselves. We like to brag about the impact we’re making or challenge others, bring them down, harp on about how one company isn’t doing enough, or celebrate another that’s doing better. 

Whilst this is all fine in small portions, it should not make up the majority of the content you are putting into the world. 

It provides little-to-no value for your target audience, but rather only engages others deeply embedded in the sustainability field who already have the same views: Like an echo chamber. 

In the next lesson, we'll look at how to create a value-driven message which speaks to your target audience's pain points.