5 Ways Pareto’s 80/20 Rule Applies to Your Marketing Efforts

Pareto’s principle of 80% of results coming from 20% of our efforts is now so far reaching that you’ll find examples of its use in almost every industry imaginable. I find its use in marketing particularly useful, since sales equal cash and “cash is King” baby!

The 80/20 rule only requires a little creativity to make it work to help us solve even the biggest marketing dilemmas.

Keep reading to learn about the 5 ways 80/20 applies to your company’s marketing and sales efforts.

80/20 rule

1. 80% of profits come from 20% of customers.

If this comes as a surprise to you, it’s time you came to the realization that most of all that hard work you’re doing and marketing dollars you’re spending to attract as many customers as possible, is only attracting a small percentage of loyal customers. This is completely normal and par the course in sales and business. When you become as big as Apple or Google, that 20% is still a reality, it’s just a billion-dollar reality! Unfortunately, you can’t ignore the 80% that remain because there’s always a chance they’ll one day become twenty-percenters, adding big bank to your revenues.

2. 80% of product sales from 20% of products.

This is another harsh reality, and one that service companies better listen to hard and clear. If your portfolio of products and services isn’t diverse, you’re losing business as per what Pareto-principle-marketing dictates. Some products and services just aren’t going to fly; you need to know when to drop them in favor of innovating and adding more of what people want and less of what they don’t. I’ve been a huge fan of Marcus Lemonis’s “The Profit” since it first aired and you only need to watch an episode or two to see the stubbornness that so many failing businesses have in adopting this particular 80/20 marketing principle. I recommend the recent “Murchison-Hume” episode as a great example of a business with lots of crap nobody understands and wants to buy — and a failing business that Lemonis sadly wasn’t able to get through to. If people don’t buy it, stop selling it!

3. 80% of sales from 20% of advertising.

Marketing campaigns aren’t exactly as bad as the lottery when it comes to winners, but it isn’t a cake walk getting eyes and ears on your efforts either! Even then, the way they’re put together won’t always resonate with a huge crowd of hungry customers either — it’s all about how the ad is framed, right? One catchy radio spot with the right voice and personality might get you tons of walk-ins and calls, whereas the exact same worded ad with another announcer might fall flat. Don’t even get me started on how hit-and-miss Google Adwords campaigns can be. This 80/20 rule of marketing is the reason you can’t put all your eggs in one basket, in any aspect of your business, let alone staking your entire budget on a single marketing campaign.

This ad is really quite disturbing (what do you think?):

Image Credit: Bark/Flickr
Image Credit: Bark/Flickr

4. 80% of customer complaints from 20% of customers.

This isn’t likely to be a shock to most of you. If you disagree, you might have a problem — or you’re just that good and your percentages are much lower! Either way, if a business is checking all the boxes with regards to their service and engagement practices, chances are that the comparatively few complaints you’re getting are coming from a small percentage of your customers. There are plenty of upsides to this rule, if you understand how to manage complaints and make this select few as happy as you can. Two out of ten isn’t bad in my book!

5. 80% of sales come from 20% of the sales team.

This is really the only negative Pareto marketing rule to make the list, in my humble opinion. The fact that only 20% of your sales staff is pulling in the majority of sales is the reason why new car dealerships have such high turnover rates on their sales teams. If they’re smart, the owners and sales managers of this kind of business understand that most salesman are in fact born, not made. Sure, desperation and/or a deep passion for a business can certainly turn under-performers around, but rarely. This is also why so many sales gigs are compensation-based only, only the big guns that get deals signed ever get offered a salary. Embrace this rule and take action to get rid of the lower 80% and more sales are sure to follow. Train, observe, fire — repeat if you want more deal sheets coming in!

Feel like weighing in?

What do you guys think about this list of Pareto’s principal applied to the world of marketing?

Share what you agree or disagree with down in the comments. Lets get a conversation going about this.

Main Image Credit: thedjdisclosure.com