The 80-20 Rule (aka: the Pareto Principle) is a precept stating that 20% of your input (time, resources, effort) produces 80% of your output (results, rewards).
If you’ve done any sales training at all, you’ve likely heard the 80-20 Rule interpreted for sales and marketing as “20% of your customers contribute to 80% of your revenue.”
Sales and marketing statistics of the 80-20 Rule for Business often sited include:
- 80% of a company’s profits come from 20% of its customers
- 80% of a company’s complaints come from 20% of its customers
- 80% of a company’s profits come from 20% of the time its staff spend
- 80% of a company’s sales come from 20% of its products
- 80% of a company’s sales are made by 20% of its sales staff
But the 80-20 Rule isn’t just for sales and marketing. In fact, it can be generally applied to improve every single aspect of your business (and your personal life as well). Keep in mind though, that not all inputs and outputs are created equal, so “generally applied” is the key here.
Use the 80-20 Rule for business to evaluate areas for improvement and to determine the best use of your time/resources/efforts based on the results you’d like to achieve; not as an absolute ratio without flexibility. Only you know how the 80-20 Rule will best be applied to your own business.
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