Small Business Marketing
One of my all time favorite marketing “rules” and one that’s gained in popularity in recent years thanks to books like “The Four Hour Work Week” is simply known as the 80/20 Rule (aka the “Pareto Principle” in honor of Italian economist Vilfredo Pareto).
A quick Google search will get you all the details about the rule and its history, but I’m going to give you the basics here and show you how applying it to your Small Business Marketing can make or save you a small fortune.
At its most basic, the 80/20 rule says that with just about anything you do, approximately 80% of the results you get will come from 20% of your efforts. Of course the numbers you see may vary and you’ll find this to be true with many things in your personal life, but as it applies to your business, this means that you’ll typically find the following to be true in Small Business Marketing…
• 80% of your business will come from just 20% of your customers
• 80% of your sales will result from just 20% of your sales force or your marketing and advertising efforts
• 80% of your customer service or support issues will come from just 20% of your customers
• 80% of the work that your employees perform
Take just a moment and think about your own business and how you can apply this rule to your benefit.
A good place to start is by identifying your ideal client or customer, those special 20% that provide you with most of your business, and thinking of ways to get more new clients like them. Can you be more selective with your advertising efforts, or ask your best customers for referrals to people like themselves?
There’s also nothing wrong with turning down new clients who come to you but don’t fit the mold of the ideal client you’re looking for. You don’t have to turn them away empty handed though – take some time to research some of your competitors and if a prospect contacts you that’s not a great match, refer them to another company. An even better option is to develop a formal Small Business Marketing referral agreement with your competitors to pay you when you send them clients who are a better fit for their business than for yours, and you can also pay them for prospects they send to you.
Now, depending on just how aggressive you want to get with the 80/20 rule, you might also consider “firing” the 80% of your clients that don’t contribute much to your business, so you’ll have more time to deal with the ideal, profitable clients that you wish to attract.
If that sounds a bit too drastic, start with just those customers that cause you the most pain and trouble, and suggest they work with another company who might be a better fit for them. Work out some kind of joint venture deal as mentioned above, and not only will you save and make more money by dealing with just the right customers, you can also profit by sending your non-ideal clients to someone else!
Finally, you should also look at the internal processes within your business and see where the 80/20 rule applies and where it can save or make you money.
Take a good look at the work your employees perform and see if you can identify the tasks that produce the most results so you can eliminate the ones that don’t impact your bottom line. This could be anything from how your phones are answered to how paperwork is filled out and filed, and just a few small changes to identify and eliminate the least productive things done in your office can have a huge impact in your business.
