Pareto’s principle is the idea that “for many events, roughly 80% of the effects come from 20% of the causes”.
Originally Pareto had observed that 80% of the land in Italy was owned by just 20% of the population. He then noticed that 20% of the pea-pods in his garden contained 80% of the peas.
In Marketing the principle is applied to illustrate that it is often just 20% of the activities you carry out that result in 80% of your income.
You can apply this to your particular business / marketing circumstances in the way that most suits you, some examples are below:
- Maybe 20% of your “best” clients produce 80% of your income.
- Perhaps 20% of your “difficult” clients produce 80% of your time consuming challenges.
- 20% of your top selling products are resulting in 80% of your sales.
- 80% of your leads come from 20% of your marketing efforts.
Take something that you would like to improve about your business or a particular issue you are having and see if you can apply Pareto’s principle to help you see where changes can be made. For example which are your top products producing the majority of your sales? Are these the same products that you are focussing your marketing efforts on in order to bring in even more sales? Who are your top clients or customers, perhaps it might be worthwhile celebrating the partnership with a small gift of thanks to them in order to foster the relationship.
How can you use Pareto’s 80/20 principle maximise the efforts in your business?
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