20/80 Rule in Lead Generation

The Pareto principle also explains why it is so important to test your marketing campaigns. Twenty per cent of your marketing efforts can be expected to produce 80 per cent of the results. You need to find out which 20 per cent of your marketing is the most successful and running comparative campaigns is a way to do that. A more general consequence of the Pareto principle is that you need to focus your efforts in all aspects of your business. Prioritize what is important and concentrate your efforts on that and you will be more productive with less effort.

The Pareto principle separates the vital few from the many less fruitful activities. It is named after the highly influential Vilfredo Pareto, an Italian economist of the late 19th early 20th Century, who observed that 80% of the wealth was owned by 20% of Italians and whose thinking has underpinned much of microeconomic thinking.

In lead generation classification that is based on Pareto’s Law, which states that a small percentage of items accounts for a large percentage of value. This value can be sales, profits, or other measures of importance. Roughly 10 per cent to 20 per cent of lead inventory account for 70 per cent to 80 per cent of conversion value. These highly valuable items are classified as A-quality leads. Moderate value leads account for approximately 30 per cent of inventory items and contribute to roughly 35 per cent of the total.

To help, consider that (in theory, anyway) if 20% of your actions generate 80% of your results, then 20% of that 20% produces 80% of 80% of your results. Now, you could, of course, apply this logic ad infinitum, and slice your days and hours and minutes and seconds into supposedly ever-higher-value slivers-but that would be preposterous, so don’t. But what just this additional round of multiplication means is that 4% of your effort (the 20% of your 20%) generates 64% of your results. In a 40-hour work week, that’s a period of a little over an hour and a half.

The trick with the 80/20 rule is identifying the 20% that really matters and focusing on those areas because they are the ones that drive your results. In my case, it was my project manager who helped me identify the 2 design issues out of the 10 on my list that would bring the most impact to the project.

To the delight of many successful entrepreneurs, the Pareto’s Principle applied to their customer base gross revenues tell them exactly the source of their profit as well as their unprofitable relationships. By applying Pareto’s Principle, also known as the 80/20 Rule, an entrepreneur will uncover the true source of their company’s profit.

One of the most useful applications of the 80/20 rule in marketing relates to profits. A typical business earns approximately 80 per cent of its profits from the top 20 per cent of its customer base. This knowledge enables companies to focus on maintaining relationships with these top customers. Loyalty and frequency programs are intended to offer the best value and experiences to customers who provide the best results.

The important thing to remember is that the 20 per cent is always the most valuable. Eighty per cent of your efforts and resources should go to that most valuable 20 per cent. For example, develop 80 per cent of your content to that top 20 per cent of your customer base. Offer 80 per cent of your best customer rewards to that group. Make sure you pamper them because they are truly the backbone of your efforts and the products of those efforts, they are truly your target audience.

You probably have hundreds or thousands of contacts on your client and prospect lists from your website, and email and social media marketing efforts. Keep close tabs on which customers made a recent purchase, are frequent buyers, or which ones were generous in their purchases.

Well, if 80% of your income comes from 20% of your clients, but you spend 50% of your time on it, by reducing the time spent to 25% by outsourcing certain tasks related to that work, you can spend more time on scaling your business by locating more clients like your 20%. All you have to do is identify your 20% target demographics’ customer profile, and engage in marketing efforts to gain similar clients.

We at Born intelligence can help you identify the valuable 20% of your business and help you develop the right target marketing plan to shift more resources towards the 20%, does that make sense?

Book your strategy call today, Right now!