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Do you vigorously apply Pareto’s Law to your business?

Pareto’s Law (also known as the 80/20 principle) describes the unequal distribution of wealth in society and how it is acquired by a minority of the population. The Italian economist Vilfredo Federico Damaso Pareto discovered this simple formula back in the early 1900’s.

The 80/20 rule allows business owners to determine whether you’re on the right track or not and empowers you to set priorities and take actions which could mean the difference between failure, survival, and success.

Applying the 80/20 principle to your business is tough in a recession. You have to be strong.

Revenue: If 80% of your income comes from 20% of your customers then take care of that 20% and reduce your contact with the other 80%.

Customer Service: 80% of complaints come from 20% of your customers. That 20% make the most unreasonable demands and give the least profit. It’s time to say “no more” and direct them to your competitors.

Marketing: 80% of your sales come from 20% of your advertising efforts. Identify which advertising campaigns are successful in generating the most revenue and forget the rest. 

Advertising online: When applied to pay-per-click marketing, 80% of your keywords will not deliver results. Conversions, leads and sales will be generated by 20% of your keyword list.

Time Management: As business owners, of all the tasks we perform each and every day, only 20% really matter. Those 20% are actually responsible for 80% of our results.

I know, you knew all that already!

Parkinson’s Law. Have you heard of it? Parkinson’s Law states ‘work expands to fill the time available for its completion’.

So a task will grow in perceived importance and complexity in relation to the time allotted for its completion.  In other words, a task that should only take an hour to accomplish can easily take a week if you give it that much time.

Too many of us spend too much time on the things that don’t matter and not enough time on the things that do.

 Parkinson’s Law is the adage first articulated by Cyril Northcote Parkinson as the first sentence of a humorous essay published in The Economist in 1955:

Work expands so as to fill the time available for its completion.

Tags: 80/20 principle, advertising online, apply Pareto's Law to your business, marketing, marketing online, paretos law, Parkinson’s Law, Vilfredo Federico Damaso Pareto, what's pareto's law