Wednesday, April 25, 2012

Pareto Principle (80/20 Rule) in Marketing



Pareto Principle (80/20 Rule) in Marketing

Vilfredo Pareto, Italian economist, contributed greatly to both marketing and business thinking and left us with some important postulates to consider in everything we do.
His theory and research, provided powerful insights for us to take further in exploring our ways to higher leverage, better outcomes, solutions, results. He originally analysed distribution of national wealth in US. Then we took his results and found transferability of his ideas and analysis to other significant areas of our lives...
V. Pareto has elaborated and validated that the largest portion of important results are merely steaming from very few activities we do in our lives.  It all boils down to following: 
·         80% of  results come from 20% of activities. 
·         80% of profits come from 20% of clients/customers/activities
·         20% of activities produce 80% of satisfaction
·         20% of people hold 80% of wealth
·         and so on and so on...examples are everywhere
You, see if everything is so easy quantifiable why we spend so much time, efforts, energy, resources on minor, irrelevant, waste activities, with people that cause us headaches, problems, negativity, etc?
And yet, without answers to this one. We know what matters but somehow pretend that something else is more important, urgent, with the faster payback, etc. We search for certainty, quick wins and solutions where so many before us seldom found their lucky breaks...
It all comes down to determining our core priorities, highest values, our "big rocks". 
Values drive behaviors, that force us to act or chose not to. Values determine everything. Performances and results steam from clarity. 
So the question is: 
If we know what makes us successful, what matters and what produces result - why we are not focusing on it unreservedly?
In life and business you must play full on, 100%, no excuses. You must be prepared to get your hands dirty and stick to the plans. Persevere.
Nothing will be given to you. You must deserve it. And you deserve it when you play within your areas of strengths.
When you eliminate waste and concentrate on your CORE. When you make your CORE stronger, better, more appealing, profitable, desirable...
Then you have something special, that soon becomes your  force... You have vital few vs trivial many activities to focus on. And when you focus on truly important, everything else is irrelevant to your prosperity. Everything else is marginal...
So, concentrate on 80/20 rule. Examples are all around you. You just need to recognise and apply them to your favor.