Save Time, Money, and Your Sanity With the 80/20 Rule in Marketing

The 80/20 Rule is a potent little principle that can increase your business revenue and make your life easier.

The gist of the 80/20 Rule is that you get 80% of your results out of 20% of your efforts. For example, 80% of your revenue comes from 20% of your customers, or 80% of your sales comes from 20% of your salespeople.

It doesn’t always come out as 80/20. It can be more extreme with 95% of the traffic coming from 5% of the roads on your commute, or 3% of your employees creating 67% of the errors. The point is that large results come from small efforts.

It started with pea pods and moved on to business management

Economist Vilfredo Pareto developed the 80/20 Rule (also known as the Pareto principle) in 1906 when he noticed 80% of the land in Italy was owned by 20% of the population. It was in his garden too—80% of his peas came from 20% of his pea pods.

Pareto wrote about this mathematical curiosity for much of his life, but his idea languished until management consultants like Joseph M. Juran and Richard Koch popularized it. Since then, 80/20 has been a management and business favorite.

Why? It works.

How do you measure it?

You have to see 80/20 in action, and the best way to see it is to track it. If you can’t measure it, you can’t improve it.

Tracking doesn’t have to mean headaches, complex systems or costly efforts.  Here are a few easy, quick and inexpensive ways to do it:

• Install free Google Analytics on your website and set up a few goals. Use these to see which actions are generating new email subscribers, orders, contact form submissions, and more.
• Track phone calls. You can route them to a specific extension or you can ask callers how they heard about you.
• Coupons are also good for tracking. You can also offer an ad with a code and see who mentions the code at checkout.

Real-world marketing applications of the 80/20 Rule

Budget

Is your marketing budget small? You’re not alone. According to the 2016 State of Small Business Report, 63% of small businesses spend less on 7% of their revenue on marketing, so that tiny percentage needs to be effective.

Using the 80/20 Rule, look for the marketing expenditures that create the best results. Is there one tactic or person that’s generating the bulk of sales? There’s your 80%. What would happen if you stopped paying for the 20% of tactics that are generating the least results?

Social media results

I love social media and how it helps small businesses build loyalty, interact with current and potential customers, and build communities. However, some platforms and tactics work better than others.

With your tracking in place, find out what’s working on social media. Where are the bulk of your results coming from? What’s your social media ROI? Think about your data. What would happen if you stopped doing everything that wasn’t generating results? What would happen if you kept just your successful Pinterest page and forgot about Twitter?

Customer and client appreciation

Keep in mind that 80% of your revenue comes from 20% of your customers. Find out who they are and learn what, when, and how they order. These mega-customers deserve some extra attention; make sure your employees know them and work to keep them happy.

Time

Many entrepreneurs believe they must invest every waking hour in their work, but time doesn’t always equal success. What would happen to your business if you took a much-needed vacation? What would happen if you were sidelined due to illness or injury?

Author Tim Ferris got burned out by his 14-hour work days and non-existent personal time. In The Four-Hour Work Week, he outlines how he streamlined his work life so that he actually worked less, but accomplished more both personally and professionally. His tactics included farming out administrative tasks, checking email only twice a day, and regularly taking vacations.

You can do this, too. You can do this NOW, even if it’s just one thing you whittle away.

What’s the one thing you could stop doing that would free up the most time? Paperwork? Meetings? Think about the time you would save if you outsourced your admin work or cut just 20% of your meetings.

Website updates

Are you thinking about overhauling your entire website? Don’t. Start by looking at your site’s navigation and making sure it’s user-friendly so visitors can easily find the information they need. Once navigation is good, identify what 10 pages get the most traffic and update them with relevant, easy-to-read content and helpful visuals like charts, infographics, and videos.

Don’t worry about the other pages on your site. Most people will never see them.

What sells?

Steve Jobs dropped 70% of Apple’s product line so his company could focus on the 30% of products that generated results. Follow Jobs’ example, and identify the items generating your best results and then drop the duds. How much energy, time, focus and money could you be saving if you do it?

Now that you’ve got this, go apply it everywhere.