The Sixty Twenty Rule

What it is

Sharp writes that the top fifth's annual share is "usually not far over 50% and rarely anything like the proverbial 80%". The averages printed in his book are 50 per cent for British body spray brands, 51 for twenty-two American categories, 55 for Australia and 49 for South Africa. A 2019 working paper by Sharp, Jenni Romaniuk and Charles Graham makes the same case. It was posted to the Social Science Research Network and does not appear to have been peer reviewed.

Daniel McCarthy and Russell Winer re-examined the rule in Marketing Letters in 2019 and found the top fifth supplied about two thirds of sales on average, and about 59 per cent in subscription businesses.

The figure depends on the measurement window. For Sure body spray, the heaviest fifth supplied 42 per cent of sales over three months and 53 per cent over twelve. A short window flattens differences between buyers; a long one lets them show.

In effect

A third or more of sales comes from the lightest four fifths of buyers, most of whom buy rarely. A plan that treats them as an afterthought is planning around a minority of the revenue. Any concentration figure should be reported with its window.

What it does not say

It does not settle the exact number. The Ehrenberg-Bass tables, drawn from packaged goods, sit near half; the peer-reviewed analysis, across a wider mix of businesses, sits near two thirds. Both are below 80, and the honest answer for any one business depends on its category and how its customers are counted.

The name itself overstates the tables printed beneath it in Sharp's book, which support a figure nearer fifty-twenty.

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