Understanding the 80-20 Rule: Infograph

Understanding The 80-20 Rule – Infograph

Learn about what the 80/20 rule is, how the rule fits into a small business, 4 general steps to apply this technique in a business as well as 3 steps that marketers can use this to better improve their performance and hopefully increase sales.

Remember, this rule is not the end all be all. There are other techniques out there that will probably perform way better for your situation, but this one is just one of the more popular ones out there.

What Is The 80/20 Rule?

The 80/20 Rule basically means 80% of the effects result from 20% of the causes. Businesses can benefit from the rule by focusing on the 20% that really matters. 20% of the input (e.g. time, resources, effort) accounts for 80% of the output (e.g. results, rewards, revenue).

Vilfredo Pareto first developed the rule, or “Pareto’s Principle” in 1895 when he discovered that 80% of the land was owned by 20% of the population. Since then, businesses along with other industries, corporations and individuals have applied this rule in various shapes and forms.

Related Save Time, Make Better Decisions: The 80/20 Rule

How The Rule Fits Into Small Business?

The universality of the 80/20 rule proves to be a powerful guide for a business.

Inventory: 80% of the business is done by 20% of the selection of products or services.

Sales: 80% of business is done in 20% of the time (year, month, week or day) the business is open to its public.

Sales Productivity: 80% of the sales is generated by 20% of the sales staff.

Major Customers: 80% of sales is generated by 20% of the customers.

Customer Base: 80% of customers come from 20% of the area a business reaches.

Complaints: 80% of complaints come from 20% of the customers.

Advertising: 80% of business from advertising come from 20% of the customers.

Employees: 80% of work is done by 20% of the employees.

Supplies/Suppliers: 80% of what one buys comes from 20% of the vendors.

Meetings: 80% of the important discussions happen in 20% of the meeting time.

Profit: 80% of a business’ profit comes from 20% of the sales or 20% of the customers.

4 Steps To Take For A Business To Succeed

  1. Have a product range and put your effort into the 20% that gives you 80% of your sales.

  2. With a good possibility 80% of sales come from 20% of your customers, it is key to cherish the big purchasers and repeat buyers.

  3. Once you discover where the sales are coming from, identify the advertisements that work and strategically place them where they really produce.

  4. Check which top 20% of keywords, search engines, and websites are bringing your business the most traffic and build on those strengths.

3 Steps For Marketers

  1. Focus 20% of sales pitches and presentations on the best buyers. Even if what is said does not connect with 80% of people, that’s ok cause it resonates with the best buyers and members.

  2. Focus on your best subscribers. The 80% majority will not be buying or investing in the business, but the 20% who are investing should be the focus of the marketing strategy. Emails sent to subscribers should be created in such a way that they relate to the top 20%.

  3. Focus on your best customers because 80% of profits are produced by 20% of your customers. Most of the product development efforts and promotional offers should be focused on this 20%.
    Disclaimer: Goal Striver take no credit of any sort for the creation of this infograph and content.

Again, best of luck and effort on your success!

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