The Pareto Principle and what it could mean for your business

In its simplest form, The Pareto Principle (or 80/20 rule) infers that there is an 80-to-20 relationship between effects and their causes. It originally referred to the observation that 80 percent of Italy’s wealth belonged to only 20 percent of the population, but can be projected onto many other aspects of life.

Take marketing for example, the same principle can be applied to show that roughly 20 percent of your marketing approaches yield 80 percent of your overall results. Business owners who subscribe to the 80/20 rule know the best way to maximise results is to focus the most marketing effort on that top 20 percent.

This can then be implemented into your business or social media strategy. When writing a blog, or a newsletter, target it towards that top 20 percent of customers who bring in 80 percent of business. Or when setting goals, focus on the top 20 percent that will drive the most business growth.

This is not a hard and fast rule, rather an observation that is apparent in day to day life. For instance, look at your wardrobe, around 20 percent of your clothes probably make up 80 percent of what you wear each day. The other 80 percent of clothes are still important (smart dresses, suits etc), but don’t consistently give as much output.

If considered correctly and your top 20 percent output is identified, this can significantly increase efficiency and productivity and lead to a better use of resources.

Have you applied the 80/20 rule to any aspects of your business?

Sunny wishes,

Jo & Vic