All of us are guilty of it; we think quantity is better than quality, right? We say things like, “if I only had more business,” or “if I only had a larger customer base.” We are always trying to find the ad placement that gets the largest number of impressions, thinking that more eyeballs means a better return on the marketing dollar.
But according to the well-known Pareto Principle, this simply isn’t true. Named after 19th-century Italian economist Vilfredo Pareto, the Pareto Princple states that, for many events, roughly 80 percent of the effects come from 20 percent of the causes. (1) In other words, a small number of factors have the most influence.
In business, this means 80 percent of your business comes from 20 percent of your customers. While you want to do all you can to attract a larger audience, you should be asking yourself this question: “how much of my marketing budget is being spent to grow my 20?” If you don’t know how much, it’s time to find out who your 20 are:
- Identify. You have to know what to look for. Take 20 to 30 minutes every day this week to identify the top 20 percent of your customer base looks like. Here are some questions to help get you started:
- What do they look like?
- Are they male or female, young or old?
- Do they have families or are they single?
- What is their income status?
- Do they own their own home or do they rent?
- Ask Why. Ask them why they like doing business with you. It adds credits to the “love bank account,” which looks more like romance or friendship than business. In fact, the best definition for this approach comes from a marriage website: “The feeling of love is the way our emotions encourage us to spend more time with someone who takes especially good care of us — someone who is effective at making us very happy and knows how to avoid making us unhappy.” (2)
Of course, just knowing who your 20 are won’t boost sales. You must create an environment that attracts more of them and encourages the ones you have. It may take a while, but the fruitfulness of your labor will be fundamentally strong and enjoyable.
(1) http://www.nytimes.com/2008/03/03/business/03juran.html?_r=1
(2) http://www.marriagebuilders.com/graphic/mbi3200_love.html
