In a nutshell the 80/20 definition is that: 20 percent of the effort you put in provides 80 percent results.
In business, around 20 percent of your customers produce about 80 percent of your sales.
Getting to know and understand this 20 percent and knowing how to target more from this demographic will save you time sifting through the masses and build your client base to a healthy scale. The surprising thing is that lots of business owners ignore this rule, and try to engage all customers with the same effort. With 80/20 the focus should be on the most lucrative buyers primarily.
The rule affects many aspects of our everyday life:
• The Italian economist Vilfreado Pareto noticed that each year 80 percent of his crop of peas came from 20 percent of the pea pods in his whole planted plot.
• 80 percent of the population of the world live in 20 percent of the countries.
• While studying, 20 percent of your effort will gain 80 percent of the result.
• 20 percent of your staff will provide 80 percent of your production.
Use this rule to your advantage
Losing some customers: The rule can apply in negative areas also. Say for example you have 80 percent happy customers and 20 percent of your customers complain. This 20 percent take so much of your time and effort for no more revenue. It’s ok to lose a few of these customers, it will save you time and money in the long run to direct them to another company, then you can focus your effort on gaining in other areas.
In order for this rule to work on the promotion of your business:
1. You must go against the natural instinct to pay every issue the same amount of respect.
2. You must gain a awareness for the 20 percent in any given circumstance and focus in on it.
By Audrey Henry