What Is The Pareto Principle?
How many times have you heard someone mention the Pareto Principle or the 80/20 rule: 80 percent of your business comes from 20 percent of your customers. I know it works and I have helped quite a few people apply it in their lives. Here are some workplace examples of the Pareto Principle or some call it the 80/20 rule. Perhaps you would like to apply the Pareto Principle to your Business?
Take a look at your business or workplace and see if this rule applies to you? Think about this for a minute. If you’re really getting 80 percent of your business from 20 percent of your customers, then you are getting the remaining 20 percent of your business from 80 percent of your customers.
Think About This
Why waste so much time, effort and energy trying to serve the 80 percent of your customers that are generating only 20 percent of your business?
Keeping this in mind – let me ask you 3 questions:
- How much time is being spent servicing people that don’t buy very much from you?
- Do you spend time answering questions from people who bought from you last year – and aren’t current customers?
- Are people calling you, asking lots of questions, take up your time, and then buying from someone else?
When you waste your precious time, effort, and resources dealing with these people, you aren’t giving yourself the opportunity to find new prospects who could become you valued and loyal customers.
Perhaps you have wondered why you’re so tired and business is slow?
Last week I got a call from the owner of a company that sells/rents equipment in the retail entertainment industry. He gets many calls per day from people who purchase hard-to-find replacement parts (that cost less than $100) for equipment that was purchased from competitors for large sums of money.
His staff waste a lot of time on these smaller insignificant orders which in turn means they don’t have enough time to call prospects who could purchase tens-of-thousands of dollars of new equipment. The owner of this business was wondering why business isn’t at it’s potential.
Take a look at how much time you are spending calling on, servicing, or answering questions from people who don’t do any business with you.
Stop Wasting Your Time
Here are 3 things you can do to help you eliminate people who keep you busy, waste your time, and don’t do business with you:
1. Keep track of everybody you speak with in a contact management program.
2. Keep detailed notes of everything that was discussed, how much time they took up, how much they purchased, and how timely they are about paying their bills.
3. Schedule regular follow-up calls and meetings so you don’t lose track and forget about your good customers. Make these customers a priority
When you here a prospect say the following;
“Call me in 2 weeks.” or “I’m in a meeting can you call me later.” or “Just send me something.”
they are probably blowing you off but don’t have the courage – guts – to tell you they aren’t interested. They may not see it but they are wasting your time by not expressing what they really think.
Spend your time serving your best customers – the 20 percent that generate 80 percent of your business. This will free up time to find, meet, and sell to new customers that have the same qualities and characteristics of your best customers
You’ll make more sales and money. More importantly it will be more fun.
Why Is This Difficult
If you are struggling to let go of customers or business it means you can work on issues like control, fear of missing out, scarcity or poverty mind set, emotional money ceiling. The list goes on. In my experience a lot can be gained by looking deep inside and changing your view of your business and the people around you. Most of these issues are emotional and they need to be cleared so that what you do can be done easily. Find out more about my 3 step Speed2Enlightenment Method here.