The 80/20 rule can be seen everywhere, but the first to discover it was the economist Pareto, who showed that 80% of the surface of Italy is owned by 20% of Italians. This rule has been shown to work in all cases and circumstances.
The Pareto principle can be formulated as follows: in any case, there is a minority that is more important and useful than the other 80%. In practice, this looks like this:
- 20% of customers bring 80% of total revenue and they deserve the most attention;
- 20% of the pages of a textbook contain 80% of the required information;
- out of the 10 tasks for a day, 2 are more important than the other 8.
It is important to identify those important 20% and give them attention. If you do not focus on this minority, you will lose 80% of your time.
Here's how you can use the 80/20 principle for the benefit of your business:
Increase productivity
The Pareto rule helps identify priorities and focus energy in order to achieve maximum efficiency. Employers can thus classify tasks as more or less a priority and focus on the critical 20% that will produce 80% of the results.
Moreover, the Pareto principle can help identify the causes of employee lack of productivity. As a manager, you can use this rule to see the 20% of causes that result in 80% lack of productivity.
Increase profitability
No matter the business, the fact that 20% of your salespeople bring 80% of all your company's sales is an axiom. Depending on your ultimate goals, the Pareto principle can help you either focus on developing the 20% of salespeople who bring in the most sales or draw more attention to the other 80% of employees who are not yet successful.
In parallel, the same principle shows that a small percentage of the total number of customers bring you most of the profit. Likewise, a small portion of all the services and products you get attract the most sales. Thus, by analyzing existing leads and customers, you can identify which of them brought you the most sales and which products / services are most often bought.
Optimize your website
Rule 80/20 suggests that 80% of all visitors to your site are interested in 20% of the pages or information presented here. Those 20% of pages that attract the most traffic are the pages that need attention and optimization, in order to quickly increase traffic and sales.
The promotion you do for the company's website can also be analyzed to understand which are the 20% of strategies and actions that bring 80% of the result.
The Pareto principle is a simple phenomenon that can be applied in complex processes. It is especially useful in sales, because it helps identify customers, sellers and techniques that bring the best results.
