|
 RISING WOMEN EXPERTS...
I have heard of the 80-20 rule and though I get the basic
idea I am not quite sure how it applies to business. Can you clarify this
better?
By RWM Guest Experts
The 80-20 rule, also known as Pareto’s Principle or Pareto’s Law, was
first brought to fruition in 1906 by Italian economist Vilfredo Pareto from
his observation that 20% of the Italian population owned 80% of the wealth.
Since then, the 80-20 principle has been applied to other scenarios such as
20% of your time creates 80% of your results, or 80% of consequences flow
from 20% of causes, and so on.
One principle behind the 80-20 rule in business is that 80% of your profit
comes from 20% of your customers. The 20% consists mainly from the customers
that are already satisfied with doing business with you. They are your
repeat client and the ones who refer you to others. In this respect it is
vital that you concentrate on exceptional customer service, making sure that
those repeat customers are treated with respect, their needs are taken care
of and they are rewarded appropriately. This is customer appreciation.
The 80-20 rules also applies well when considering your productivity and
results during day to day business operations. When planning your day, let’s
say you have five tasks on your agenda. The 80-20 rules states that only one
of those tasks will be vitally important, the other four can be done later
or on another day. Using the 80-20 rule can help you to plan your week so
that you commit to doing your best at one task without getting sidetracked.
The 80-20 principle is also useful for determining which products or
services you offer are bringing you in the most profit. If 20% of your
products produce 80% of your sales, determine what those 20% are and
advertise, display and price them accordingly.
Especially for when planning your advertising campaigns, the 80-20 rule can
also help you to narrow down your message so you generate better response.
For instance, let’s take a business that offers a variety of spa services.
Most spas probably offer similar services so listing them all in a display
ad will only generate you the “so what” response. Within your business
analyse which service is the most popular among your current clientele and
why. Then advertise that specifically letting your readers audience know why
you are the best at it and don’t be shy to add an incentive like a free
added service or gift upon booking. Remember 20% of
activities/people/products/services are responsible for 80% of your success.
We have loads of good business advice to offer. Want your questions
answered? Want advice? We welcome you to email us at
experts@risingwomen.com
|
