The Pareto Principle has been bandied about for decades—held up by gurus as a golden rule of productivity and business success. But the truth is, it’s not a rule—it’s not a law of physics. It’s just that—a guiding principle.
You can, however, use it in some surprising ways to find untapped potential. In this post, we’ll explore a few of these uses, helping you to:
- Use your time more effectively
- Polish your customer personas to make more money
- Identify and nurture brand ambassadors
If you’re unfamiliar with the Pareto Principle, it may take some time to orient yourself to the concept. In a nutshell, the principle states that 80 percent of results come from 20 percent of inputs. The principle can thus be applied in myriad ways. This is just one of them:
- 80 percent of your success comes from 20 percent your actions
Applied to your brand, this means that only a few of your promotional efforts have any lasting impact. The immediate implication is that there’s always room for improvement.
If you can identify the few inputs that are making the biggest difference to your brand potential, you can replicate them. If you make a practice of doing this, again and again, you can make huge gains.
In the following sections, we’ll look at specific strategies that will empower you to do just that.
THE BROAD STROKES
The 80/20 rule, also known as the Pareto Principle, is frequently used in business. You can apply it just as well to marketing. In general, the following will hold true:
- 80 percent of your profits will come from 20 percent of customers. Your biggest fans will be repeat customers.
- 80 percent of your sales originate from 20 percent of products offered. If you sell 10 products, most sales will come from 2 of them—your big sellers. The other 8 keep the lights on.
This is why automotive companies offer a broad range of brands. Most are mid-range offerings, but a few will be luxury brands. It’s the luxury brands, roughly 20 percent of sales, that earn the bulk of the profits.
GM has Chevrolet, GMC, and Buick, but they also have Cadillac.
- 80 percent of customer complaints stem from 20 percent of customers. Some people just like to complain…a lot. There’s no escaping it.
- 80 percent of sales come from 20 percent of salespeople. This is common. A few salespeople simply outshine the rest.
Naturally, none of the above is set in stone. But if you look at your numbers, you’ll probably find that it roughly aligns.
The bottom line is that, according to the Pareto principle, the majority of outcomes are prompted, or triggered, by a disproportionately small input.
When taken as a general guideline, then, and not regarded as an absolute rule, the Pareto principle is useful to us as marketers and can be useful for brand building. For instance, we can use the principle to decide where to allocate valuable resources. To start, let us generalize that:
- 20 percent of inputs create 80 percent of outputs
- 20 percent of effort generates 80 percent of results
- 20 percent of actions lead to 80 percent of the consequences
The primary implication of the Pareto Principle is that small, calculated changes can have an immense impact on your bottom line.
You should analyze your data to identify the small, easily repeatable actions that are generating big results for your brand potential. Then do more of that.
Focus your time and effort on those 20 percent of customers who are generating the most profit. Spend time on those 20 percent of actions that help you build your brand. Identify those 20 percent of products that are generating the most profit and create more like them, if possible.
Finally, once you’ve used the principle to identify the 20 percent of X that is causing 80 percent of Y, you can use Ishikawa analysis—aka, fishbone analysis—to determine why the remaining 80 percent of X might be underperforming.
REFINE YOUR CUSTOMER PROFILE
This is a deceptively powerful exercise, but it can be quite powerful.
Once you’ve used the principle to identify those customers who are making up the bulk of your sales, you can analyze them to refine your customer profile.
First, let’s briefly review the process of building a customer persona. After all, trying to sell a product or service without understanding your ideal customer is akin to walking through a forest blindfolded.
THINK ABOUT WHO NEEDS YOUR PRODUCT
You likely have old customer personas lying around. It’s time to dust them off. Review your data and create new personas if anything jumps out at you.
Here are a few review questions:
- What does your customer do?
- What’s important to them?
- What draws them to your product? Need or whim?
Then create as many general personas as you can.
For instance, a software company that creates SaaS-based efficiency solutions for other businesses might have two—but likely many more—customer personas:
- Growth George. George is the founder of his own small business and is curious about how to improve the efficiency of his small team.
- Helper Hannah. Hanna is the customer support manager of a large company and has been given great latitude in finding a new help desk solution. She has resources, but she also has a choice. She wants a product that helps her help desk agents work efficiently, and she’ll need to see how the product outperforms her current solution before she commits.
Both potential customers would benefit from the product, but they have very different motivations for reaching out.
Lumping both George and Hannah into a group such as, people who need a SaaS solution, would not be a great idea. This robs you of the opportunity to look deeper so you might understand their unique needs.
So, take a moment now to write out a few general personas. Include:
- What is the customer’s attitude toward your product and industry?
- Where does your product fit in with the customer’s search for a solution
- How does the customer find you?
- What language does your customer use when describing their problem?
- What objections would the customer have to try a new solution?
- What is the best way to engage with this customer?
Let’s take another look at Growth Graham. His company is growing fast, and he’s in need of a solution. He’s likely to google ‘business efficiency tool’ or similar and then reach out to the first few Google results.
This implies that you’ll find lots of Growth Grahams by ranking in Google, but you could also find Graham by advertising on Google itself.
Hannah, on the other hand, might be more likely to ask her peers for recommendations, in which case you’re likely to appear on her radar if you’re an established SaaS solution in your space and have a good reputation.
In either case, establishing yourself as a thought leader in your space is indicated, and, by extension, so is a prolonged content marketing campaign.
Looking at objections, we can see a few differences between Graham and Hannah. Both of them are under pressure to succeed, but Graham arguably has more at stake. Be prepared to get out in front of his objections in your marketing materials.
Hannah’s objections are likely to center around her own job security. She needs to be confident that the solution won’t backfire on her or leave her in a lurch.
IT’S TIME TO REFINE
Assuming that your brand has been out there for a while and you have data to analyze, it’s time to look at your top 20 percent customers and see how well they align with the new customer personas you just created. Looking at your data, are there any frequent customers who don’t seem to fit anywhere?
If so, that’s a sure sign that there is a use case for your product or service that you haven’t considered that could help your brand potential.
If you find any such mystery customers, tag them as a top priority for your marketing team. Reach out to them. Find out who they are and why they’re buying your product. It may be worthwhile to set up a survey and offer an incentive to the customer for filling it out.
Additionally, if you sell internationally, the Pareto principle will be at play in your data. You may find that just a few countries make up the bulk of your sales. Are you receiving heavy business from unexpected locales? Who are these customers, and how well do they align with your established customer personas?
THE PRINCIPLE APPLIED TO DIGITAL MARKETING
Naturally, you can apply the principle to your digital marketing efforts. Generally, we can say:
- 80 percent of leads come from 20 percent of online assets
- 80 percent of search visits come from 20 percent of keywords
- 80 percent of user clicks are made on 20 percent of on-page links
- 80 percent of shares come from 20 percent of social shares
Again, the implications here are rather obvious. Look at your content and determine which pieces are performing well above average. Study the topic, structure and other factors to determine why it has performed so well, and then attempt to duplicate it.
Then, perform Ishikawa analysis on the other 80 percent to see why they might be underperforming.
But you can take the Pareto Principle a bit further. It is, in fact, exponential.
Let’s assume that roughly 20 percent of your posts will generate 80 percent of the traffic, social shares, etc. But within that initial 20 percent, the principle still applies. The top 20 percent of the top 20 percent—4 percent overall—may represent up to 64 percent of your traffic, shares, etc.
This implies that you will have a few pieces of content that do exceptionally well, so you must identify those posts and give them even deeper scrutiny.
You can perform this analysis with a tool like BuzzSumo, as well. Simply search your niche and assume that the top results represent the top 20 percent. What makes these posts special?
In the here and now, ask yourself: for posts that do exceptionally well on your domain, what are you doing differently?
Are you, perhaps, including more calls to action, spurring readers to share? Or are you writing in shorter, more concise paragraphs, encouraging mobile users to consume more of your content?
Small tweaks like these can lead to staggering results, so it’s worth examining.
By the way, you can utilize problem-solving techniques to find out why something worked, too.
CRANK UP YOUR CONTENT MARKETING EFFORTS BY IDENTIFYING BRAND AMBASSADORS
The 80/20 rule applied to content marketing says that you will get most of your social shares from relatively few people. These people are your brand ambassadors.
These are people who like your brand, your message, your style, and they’re happy to share your content with their friends.
The implication here is that you need to nurture and protect these relationships.
Before we explore how to nurture the relationship, let’s briefly cover how to identify them.
You can use a service like ViralHeat or Mention to find people who mention your brand often. Look for those top 20 percent individuals who mention you frequently, and positively.
Your prospective brand ambassadors will also be more engaged than others. Check your social media posts for comments and @mentions on Twitter and other platforms.
Finally, brand ambassadors are likely to run popular blogs. If you see that someone is mentioning your brand often, check to see if they own a well-trafficked blog. If so, this is a strong candidate for brand ambassador.
HOW TO COMMUNICATE WITH BRAND AMBASSADORS
Once you’ve identified the top 20 percent brand ambassadors, it’s time to equip them so they can help you spread the word.
Communication is key here, but it’s not to be confused with mass emailing or constantly asking for favors. This is a relationship. They’re an ally, not a resource. Remember, they’re free to withdraw their support at any time, and they will do so if you pester them.
A good limit for direct contact is once per month or so, updating your ambassadors about upcoming products or specials. You can create a custom email list for this purpose.
But remember: a successful brand ambassador network is built from the ground up to be mutually beneficial. If you are sending out mass emails or asking for help with a campaign, you need to be prepared to give back too. One tactic that works well is to create a custom discount code that popular bloggers can share with their audience.
One of the most important things you can do to nurture these top 20 percent relationships is to keep detailed notes on your outreach efforts and communications with them. Recalling minute details about past chats will help you appear authentic.
If you’ve identified an influencer who is providing you with a big share of your social mentions, keep track of:
- The last email between the two of you
- Recent social mentions
- Blog posts featuring your products or mentioning your company
- Which content of yours they have shared
- The last time you sent them something for free
- The last time you reached out to them
Then, internally, rate their overall participation in the relationship from 1-5. Next, estimate their overall zeal and passion for your product or service from 1-5.
A good CRM solution can help you keep track of all this data.
This may seem time-consuming—and it can be—but this is all about nurturing those top 20 percent relationships so you continue to receive valuable free advertising. It’s well worth the effort.
STAY TOP OF MIND
Next, you’ll want to continually think of ways to remain relevant to them. Here are a few ideas:
- Share their content on your own social media
- Host exclusive webinars for influencers and ask for their feedback. Then actually implement it.
- Host influencer events, and make them the focus. This makes them feel special, but it also gives them photo ops with key people in your organization. And as you know, photos are very shareable.
- Publish a newsletter—just for these folks—with information about brand, company or product that is relevant to their audience. Remember, this is all about them. They’ve got no reason to promote you unless they do.
- Create infographics or publish research that speaks to a pain point their viewers or readers face. To remain relevant, solve problems.
- Send out Happy Birthday gifts
- Send out quarterly swag bags
TELL THEM YOUR STORY
To better help your ambassadors understand who you are, you must be able to concisely tell them your brand story. Who are you? The more readily you can answer that question, the more your fans can help you spread the word.
What makes you unique? How are you different from those faceless corporations out there? Why are you better?
GET THE OUTSIDER’S PERSPECTIVE
You are not objective about your brand. Nor are your employees. Your brand ambassadors offer you invaluable feedback precisely because they’re on the outside looking in. Gather their feedback whenever you can, and as often as you can.
Not only will they appreciate the opportunity to express their opinions, but you can glean valuable insights from them at the same time. The webinar format, as mentioned, is very powerful because it’s interactive and social, but you can also try:
- Face-to-face chats
Remember that brand ambassadors are also customers. Therefore, you should give their insights special consideration. Your brand ambassadors want what your other customers want. Here is a resource on awesome webinar best practices.
Remember the Pareto Principle.
If they represent the type of customer who makes up the bulk of your sales, you should give their feedback even more merit.
DECIDE HOW BRAND AMBASSADORS WILL HELP
Brand ambassadors crave opportunities to help. That’s great, right? Yes, but you should decide where to draw the line. After all, you don’t want your brand ambassadors doing things better suited to employees.
You will need to decide ahead of time whether brand ambassadors can hand out samples of products, offer demonstrations, host educational lectures, etc. If you are comfortable with select influencers helping in this way, you’ll need to devote resources into training these ambassadors. Additionally, you’ll need to make clear what they’re getting out of it.
We hope this concise guide has removed some of the mysticism associated with the vaulted Pareto principle. You can use it in your everyday life to uncover untapped resources and valuable relationships. What’s more, you can do so on a rolling basis, reaping more gains each time you go through the process.
What do you think about the Pareto principle? Let us know in the comments section below.