I grew up in a family where both of my parents were direct marketers and learned at a very early age about the importance of Pareto’s Principle (e.g. Pareto’s Law).
By that I mean, The Pareto Principle, named after respected economist and political scientist, Vilfredo Pareto (1848-1923). He specified that 80% of consequences come from 20% of the causes, asserting an unequal relationship between inputs and outputs.
PICTURE: Vilfredo Federico Pareto was an Italian engineer, sociologist, economist, political scientist, and philosopher.
Additionally, in 1906 Vilfredo Pareto, pointed out that 20% of Italy’s population owned eighty percent of all property. Or, again, One-fifth of all customers represent 80% of total sales.
80% OF YOUR SUCCESS COMES FROM JUST 20% OF THE THINGS YOU DO.
If 20% of what you’re doing is giving you 80% of your results, imagine what doing that thing 80% of the time and what your results would be. That’s why it’s important to remember this: If you keep spending time on the 80% that doesn’t bring many results, you will never have big results in life. And absolutely nobody will benefit from your failure or lack of results!
This principle serves as a general reminder that the relationship between inputs and outputs is not balanced. The Pareto Principle is also known as the Pareto Rule or the 80/20 Rule. Importantly, the 80/20 principle is one of the great secrets of highly effective people and organizations.
So, in marketing or advertising terms, that simply means that 20% of the items in a company, brand or system account for 80% of any successful outcomes. For example, if a company produces 100 products, twenty are likely to represent 80% of its profits. So, in marketing terms…you must always focus primarily on the 20% of customers that will deliver 80% of the impact or results!
Importantly, the 80/20 rule is one of the most helpful concepts for life and time management. This rule also suggests that 20 percent of your activities will account for 80 percent of your results.
But the Pareto Principle not only applies to good outcomes, it can also apply to undesirable situations or events. For example, in business, about 80% of all customer complaints relate to 20% of the products. Or even twenty percent of all computer bugs in existence at any one time are responsible for 80% of crashes.
The key point is, it is usually a small group of people or a market segment that are responsible for a large portion of your success and results.
And the same can be said for your life – just a few things you do are responsible for the large portion of your success.
WHY APPLYING THE PARETO PRINCIPLE IS USEFUL
The Pareto Principle helps us realize that most outcomes are the result of a minority of inputs. Therefore, if…
- Twenty percent of workers account for four-fifths of the results, so you should focus on rewarding them. Alternatively, you could send the other 80% on tailor-made training courses or even attempt to cross sell another offer
- 20% of customers make up 80% of our revenue/income, so you should channel more resources towards satisfying those customers. Most marketers today call these consumers or customers the heavy users!
Taken further, the 80/20 rule can be seen in different segments or markets too:
- 20% of authors sell 80% of the books
- 20% of your employees make 80% of your sales
- 20% of criminals commit 80% of all crimes
Additionally, the 80/20 rule suggests that the majority of products or services have an ‘unequal’ distribution.
Out of every five items, one will be ‘awesome.’ and give you fabulous results. That great product, service, thing, person, feature, or idea will account for the majority of your sales and impact! That’s the ‘sweet spot’ and that’s where you need to focus your time, attention and investment! This has consistently worked for me in: New York City, San Francisco, London, Hong Kong, Sydney, Singapore and even in Taipei, Taiwan!
PARETO PRINCIPLE ANALYSIS IN YOUR PERSONAL LIFE
Many personal aspects of your business and personal lives also follow the 80/20 principle. If you have an account, look at the ‘likes’ on your Facebook posts for example. You will most likely find that approximately 80% of your likes come from about twenty percent of your friends.
Even mobile phone messages seem to follow the Pareto Principle. In fact, 20% of most people’s smartphones contacts, represent about 80% of all your messages.
HOW TO LOOK CONFIDENT WITH THE 80/20 PRINCIPLE WITH EYE CONTACT
If you are having a one-on-one conversation, there is nothing more important than direct eye contact. This translates to 80% of the time your eyes are meeting those of the person you are speaking with and 20% of the time, your eyes can focus elsewhere.
Good eye contact not only allows your speaking partner to feel that you are interested in what they are saying. They will also appreciate and respect you more for doing so and ultimately, associate you with being a caring, confident individual.
HOW TO APPLY THE 80/20 RULE TO PERSONAL GOAL SETTING
When, I initially get briefed by a client, here’s how I think about applying the 80/20 effectively to my brief or project. First, I take a piece of paper and write down the primary ten goals from my clients brief and/or his business objectives. Then I ask myself: If I could only accomplish one of the goals on that list today, which one goal would I achieve the greatest positive impact.
This same Principle can be applied to your own life. What I’ve consistently found is, after you complete this exercise and determined the 20 percent of your goals that are most important to you, you will become more effective and the results you achieve will help ensure your success.
USING THE PARETO RULE TO ACHIEVE SUCCESS IN LIFE
The starting point of high performance, is a powerful mindset and great success and achievement has always been the same. It begins with you dreaming big dreams and having 100% clarity in the goals you set for yourself.
There is nothing more important, and nothing that works faster to cast off limitations than for you to begin dreaming and fantasizing about the wonderful things that you can become, have, and achieve.
DREAM BIG – DON’T LIMIT YOURSELF
As a wise man once said, “You must dream big dreams, for only big dreams have the power to move the minds of men.” When you begin to dream big, your levels of self-esteem and self-confidence will go up immediately.
When you begin to dream big dreams, your level of self-esteem and self-confidence will increase without you even noticing it. Your self-image will also improve. You feel more positively about yourself and your ability to deal with anything.
You will also feel more powerful about yourself and your ability to deal with what happens to you. The reason so many people accomplish so little is because they never allow themselves to lean back and imagine the kind of life that is possible for them.
You have made the individual choices and decisions that have gotten you to your current place in life. If you want to go somewhere else or be someone else, it is totally up to you to make the choices and decisions today that will eventually get you where you want to go. AND, that’s why you need to start applying the 80/20 Principle to your own life and goals before you start your next major project, campaign or chasing your next dream or achievement.
Again, there are no limits. I personally have found that Pareto’s Principle has allowed me to cast off my own limitations and begin to dream and fantasize about the wonderful things that I can become and have and do. Wishing you joy and abundance in everything you do!
MORE ABOUT GEOFF DE WEAVER:
Super strategist who directs Fortune 500 clients to define their vision, create a strategy, and harness their internal innovation to grow their business or reinvent their products.
Expert at building and transforming brands, businesses, and digital and physical customer experiences at scale.
History of success developing and executing cross-channel global marketing campaigns to drive brand positioning, equity, and awareness while increasing engagement and sales and loyalty.
Innovative entrepreneur, author, speaker, and advertising executive with vast expertise driving business growth, reinventing brands, and implementing global marketing campaigns.
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Twitter at: https://twitter.com/geoff_deweaver
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