The 80/20 Principle

Updated: Mar 16, 2019

The 80/20 Principle is an amazing principle that can be applied to nearly everything including customers.

If you have 1000 customers the principle would state that 20% of them are bringing 80% of the revenue.

An easy way to see this demonstrated is to think about professional football fans.

Here is a curve representing those fans. At the bottom of the 80/20 curve is the fan who watches a game from home – the revenue he brings to the team is very low – basically only ad dollars to the network who are paying to broadcast the game.

Another fan that’s in the top 20% is someone who goes to the games buys food and jerseys and all the other stuff that goes along with going to the game and being a superfan. And then there’s the box seat buyer – they’re in the top 5%, spending upwards of hundreds of thousands of dollars a year.

The 80/20 Principle Applies To You

Now think of your clients and your marketing strategy in the same way.

You probably have a large number of customers that spend some money with you, but not a lot – they’re in the bottom 80%.

Now think about the top 20% and how much they spend in comparison to the bottom. The concept to understand, is that your top 20% and especially the top 5% have nearly an unlimited capacity if you can offer them complimentary packages and up-sell opportunities.

Think of the box seat holders, imagine what would you offer them – special VIP days to meet the team or have the coaches speak at their company? The opportunities are endless when you frame the ideas about bringing more value to the best customers and when you understand that you should be marketing to other people that are like the top 20% that already are customers.

Get the Right Customers and Employees, Work Less and Make More!

Most businesses suffer lost revenue due to these main problems.

There isn’t enough time in the day to sell enough products or services. Markets cycles cause times of high and low profit. Making it hard to predict revenue. Not enough of the right employees or right customers seem different, they go hand in hand. By marketing with the right strategies, your ideal customers and ideal employees will be walking through your door. Most business owners want to sell at some point in the future and for a profit. Yet they rarely actively work toward that goal with a defined strategy.

In our Free e-book Marketing Strategies Simplified… we apply principles to help our get everything you want out of what you’re already doing. By looking at what you’re doing well and making improvements through sustainable strategies, we’ll help you grow your business.

Get the ebook here FREE!

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