The 80/20 Rule In Marketing

Richard Koch’s book, ” The 80/20 Principle: The Secret of Achieving More With Less,” explains the art of doing business and gaining profits by applying the principle of the 80/20 rule.

The book says the principle can be applied in business as well as to your everyday life. Simple examples are:

* 80 percent of what you accomplished at work comes from 20 percent of the time you spent working.

* 20 percent of your clothes will be worn 80 percent of the time.

* 80 percent of a company’s sales comes from 20 percent of their products.

Applied to business, marketers focus their time finding out which 20 percent of their marketing is motivating the most sales, or which 20 percent of their customers are producing 80 percent of their profits. Learning which 20 percent of their prospects are most likely to become buyers.

Richard Koch’s advice to marketers: When you discover which 20 percent of your customers are responsible for 80 percent of your sales, focus your energies in keeping these customers happy and increase your business transactions with them. Tap them for their referral power because those are contented and satisfied customers.

By applying the 80/20 rule, you can reduce your marketing budget because you can pay less attention to the 80 percent who motivate 20 percent of your profits.