Another way in which you can use the 80/20 principle is in understanding consumer behavior. For most products, 80% of sales are generated by 20% of customers in a business' largest market segment. This ratio holds true even on a grander scale: the richest 20% of people globally consumes 80% of the world's resources. Business owners can apply these statistics by developing a budget and marketing strategy that hit the target with little wasting of time and money. Consumption numbers drive investment numbers, so put 80% of your advertising budget and effort in tried and true promotions, and 20% in innovative channels. This action yields a high ROI in a competitive market.
Finally, the 80/20 principle also relates to customer relationship management. You know President Lincoln's famous saying: "You can fool some of the people all of the time...." Well, you may quote me on this, the same is true of customer satisfaction: "You can satisfy some of the people all of the time...but you cannot satisfy all of the people all of the time." 20% of your customers will account for 80% of the problems. But do not become discouraged by not being able to satisfy all of your customers all of the time -- 80% customer retention is a realistic target for customer satisfaction and retention. Interestingly, even here, the 80/20 principle offers some positivity. In word-of-mouth marketing, of your already satisfied 80%, 20% will be highly influential in spreading the good word about your business!
Look our for our next blog on the Rule of 150.
|< Prev||Next >|