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.
The rule of 80-20 and cross-channel marketing
Cross-channel 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 similar needs.
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.
Today in a guest post from the wonderful Joseph Baker, a true friend to The Engaging Brand. Joe works at Professional Intern
