The Pareto principle and cross-channel marketing
Life is lopsided, whether it be in business, software
development or coming up with good ideas for your own personal betterment. We
all know of areas in our lives that seem off balance. It's this reality on
which the Pareto principle
is based. Even those who can't think of the principle offhand will likely
recognize the spirit behind the principle under a more commonly recognized
term: the 80-20 rule.
Examples of the Pareto principle
One example of the 80-20 rule is 80 percent of profits are
made through 20 percent of customers. This ratio continues to repeat itself
when applied to profits and customers, complaints and customers and sales to
sales staff. It's also commonly referred to when describing the distribution of
wealth: the richest 20 percent control 80 percent of the gross national
product. Clearly, it's important for businesses to cater to some customers and
clients more than some of the others.
marketing is just one of many areas where the Pareto principle remains
alive and well. In any given business, it's important to have an effective
strategy that generates sales. After all, without sales there is no profit. For
example, if you make pogo sticks, you might spend 80 percent of your time and
money manufacturing your product and 20 percent on marketing and promotion.
Without putting that effort in, you might lose 80 percent of your business.
It's also important to know how to divide up your marketing
efforts across different marketing channels in order to best reach those
customers that bring you your most business. It's that 20 percent of customers
that will bring you repeat business, as well as refer
you to their social circles as someone they should trust and count on for
In Internet marketing alone, there is much subdivision, including
email newsletter marketing, blog subscriptions, popular social networking sites
and even specialized social networking. On top of that, there are other
Internet ads, television, radio, newspaper, magazine and direct mail. Ask
yourself who your most loyal customer is and how they prefer to be informed
about your product or service. It may sound complex, but the right software can
help you identify your marketing priorities and maximize your profits.
The other 80 percent
Some may think it's unfair to give so much attention to a
small percent of customers using tactics like special discounts or priority
treatment when it comes to some sales. But consider this: it's these people who
fuel your business and advertise for you with their likes and shares. Would you
think of denying one of your top salespeople their commission?
Of course, just because you need to make your prime
customers feel special and appreciated, it doesn't mean you should ignore the
other 80 percent. A certain amount of specials for new and occasional customers
may lead them to either become one of those coveted 20 percent or lead someone
else to do the same.