Understanding and adopting the 80-20 rule for your business can change things drastically. This rule, when properly applied, can cut your marketing budget significantly without costing you any new leads or customers. Before you adopt this rule, you will need to understand what it is and how it works.
What is the 80-20 Rule?
The 80-20 rule was first developed by Vilfredo Pareto, who observed that about 80% of the income was received by 20% of the people. This is just one way to apply the rule and in short, the rule states, 80% of any output comes from 20% input.
Applying this rule to marketing changes the definition a little, but not much. In the marketing world, the 80-20 rule states, 20% of the marketing strategies you use will be responsible for 80% of your overall results. For example, if you invest in print, TV, radio, billboard and online marketing strategies, maybe one of these strategies is responsible for the majority of your new customers.
How Will the 80-20 Rule Change your Marketing Strategy?
Adopting the 80-20 rule will help you invest more in the strategies that work. Of course, this won’t work if you don’t have a good tracking system set up for all your marketing efforts. With the 80-20 rule in mind and good tracking, you will know where the majority of your targeted lead generation is coming from, how well those leads are converting and where you should invest the majority of your advertising dollars.
This rule applies quite well to internet marketing because usually there are one or two large strategies that account for most of your traffic. For example, a website may use SEO (search engine optimization) as their main marketing strategy. They may find their website listed on the first page for a targeted keyword in Google, Yahoo, Bing and many other search engines. However, Google is probably responsible for about 80% of their overall traffic from this strategy.
Properly Applying this Marketing Principle
Does the 80-20 rule mean you should dump advertising that doesn’t create huge results? No. It means you shouldn’t expect more from the strategies only producing 10% or less of your overall results. As long as a marketing strategy proves profitable, it’s worth the continual investment. However, with the 80-20 rule in mind, you may want to adjust the way you spend your advertising dollars.
Keep in mind, it may not just be that one strategy creates more lead than another does. It could be that a specific marketing method converts leads at a much higher percentage than any other. This is another part of looking at the overall picture when using the 80-20 rule as it applies to marketing.