What is the 80/20 rule in marketing?

80% of your sales volume is generated by 20% of your customers. 80% of your revenues are generated by 20% of your products. 80% of your complaints come from 20% of your customers.

extension.umd.edu - Applying the Pareto Principle in Your Marketing—the 80/20 Rule

Why do females talk more than males?

As for why women are usually more verbal than men, women possess higher levels of language protein in their brains. Research shows that most women...

Last updated May 26, 2018

How much money does 1000 subscribers get?

YouTube does not pay you based on the number of subscribers you have on your channel. Subscribers are people who choose to follow your account so...

Last updated Sep 8, 2020

Promotion

Mastering Marketing

Applying the Pareto Principle in Your Marketing—the 80/20 Rule

In 1906, an Italian economist named Vilfredo Pareto created a mathematical formula to describe the unequal division of wealth in his country. The Pareto principle (also known as the 80/20 rule or the law of the vital few) states that in many cases, roughly 80% of the effects of action comes from 20% of the causes. Pareto showed that approximately 80% of the land and wealth in Italy was owned by 20% of the population. Here are some examples you may have already experienced in your business:

80% of your sales volume is generated by 20% of your customers

80% of your revenues are generated by 20% of your products

80% of your complaints come from 20% of your customers

80% of your quality control issues involve 20% of your products

Later he discovered that virtually all economic activity was subject to this principle. Pareto’s 80/20 rule is now used to describe almost any type of output in the real world. In particular, we can apply it to our marketing and productivity outcomes. Here’s how:

Mining Your Customer Analytics

Who are those customers in that 20% that generate 80% of your sales? If you can identify the characteristics of your top 20% of customers, then you can find more customers like them and grow your total sales. Apply the R-F-M Rule. Check your sales log to look up who bought most recently, bought more frequently, and who spent the most money. That’s a big chunk of your top 20% of customers. Focus your marketing message on them.

Get Stingy with Your Time

We’re all tempted to waste our time trying to please all our customers instead of the most profitable ones. Then there is our “to-do lists”. Crossing items off a long jobs list may be satisfying, but the 80/20 rule applied to our list suggests we need to prioritize where we spend our time. Prioritize handling your larger items that will generate the most significant results first. The small items still need attention but not at the risk of neglecting the most productive actions. When evaluating your mid-season goals, focus on a few goals or activities that are most critical to your success. Just like your to-do list, not all duties and goals are created equal.

Which skill make you a unique person?

Let's dive deeper into what each of these skills on this list mean: Conflict Resolution. ... Critical Thinking and Problem Solving. ......

Last updated Nov 12, 2022

How many new followers a day is good?

This seems to be the optimal number, so if you go too far over this, you will run the risk of overwhelming people. Starting with two per day and...

Last updated Mar 23, 2021

Promotion

Check your online analytics to see which blog post, Facebook posting, or other social media posting generated the best results. Make more posts similar to those and incorporate tools such as videos and more pictures in your postings. Also, check out Google Analytics to find the ranking of the keywords on your website. Consider that 80% of your web visitors came there from 20% of your listed keywords.

Product Development

Determine your “Hot Sellers”, those items that makeup 80% of your sales. These are the core products that you should work to enhance, promote, advertise, and push. That’s not to say you shouldn’t develop new products or diversity your offerings. Perhaps seasonal items or an alternative package size is a good fit for a new product. Realize that offering an entirely new product line will need additional time, resources, and staff support. Don’t ignore opportunities to add new items to your inventory, but don’t neglect your already branded items.

Conclusion

The Pareto Principle is not a law. The rule is a useful construct when analyzing your efforts and outcomes. Apply it with caution to your production and marketing efforts but; do apply it.

Print-Friendly Version

Mastering Marketing is produced by Ginger S. Myers and is published periodically containing important seasonal marketing information.

Explore More Mastering Marketing Topics

extension.umd.edu - Applying the Pareto Principle in Your Marketing—the 80/20 Rule

How to get more likes in Instagram?

How to get more likes on Instagram: 16 smart ways to get free Instagram likes Use the right hashtags. ... Tag relevant users. ... Write compelling...

Last updated Nov 29, 2022

How do first time authors get published?

Traditionally, budding authors that want to publish a book first need to partner with a literary agent. Once an agent is convinced of your book's...

Last updated Mar 24, 2021

Promotion

How can a female become rich?

7 Money Habits of Wealthy Women You Should Adopt Spend less than you make. ... Pay yourself first. ... Automate your money. ... Start saving and...

Last updated Feb 13, 2022

Promotion

How can I increase my subscribers without money?

More videos on YouTube Brand your video thumbnails. ... Use YouTube's clickable subscription tools in your videos. ... Think in terms of playlists....

Last updated Apr 17, 2022