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Pareto's 80/20 Rule Mindset:
The Fastest, Easiest Way To 
Increase Your Profits
by Bill Thomas Jr

Marketers 8020 RuleIn 1897 an Italian Economist named Pareto attempted to prove the distribution of wealth and income is not random, and that a consistant pattern appears throughout history, in all societies.  Henceforth, his "law" of income distribution became widely known as the 80/20 rule.

It seems that later he discovered that his principle was valid in many other areas of his life.  For example, in his garden, 80% of the peas were produced by 20% of the pods . . . and so on, and so on . . .

Examples of the 80/20 Phenomenon in Business

  • 20% of your sales force produces 80% of your company revenues.
  • 80% of your revenues come from 20% of your clients.
  • 80% of complaints arise from 20% of your customers.
  • 80% of your income is produced by 20% of your activities.
  • 80% of wealth in America is produced by 20% of the people.

The Reason For This is Fairly Obvious

If you observe people, you'll immediately see about 20% of the population is pulling the wagon -- doing about 80% of the work and generating about 80% of the weath.  These people, in general, are the business owners.  Nearly everyone else is riding in the wagon.

Most of the people would rather just ride along in the wagon, perfectly happy with their 8 hour days and collecting a regular paycheck, doing as little as possible to get it.

About 50% of the people riding in the wagon are not doing much, but they're really not hindering your progress; however, about 30% are just pure dead weight!  These people are actually pulling you down -- killing your progress!

The Number One Mistake Businesses Make

The tendency is to take the best customers for granted, and pay too little attention to them.  They already love us, so we get lazy and forget about them because they are profitable.  Yet, we continue to spend a proportionately huge amount of money and resources trying to convert the 80% into customers.

We are making the dead weight money sucking losers the focus of our attention with our mailers and newslettes.  What a basic mistake.  Why do we focus on these people?

Cut Them Loose and Reward Your
Best Customers . . . Over and Over!

It's amazing how we obsess on these people.  They can never be turned into wagon pullers. I think as entrepreneurs, we see them as a challenge - we're so excited about what we are doing that we just don't believe that these people don't care less about what we are doing.  We are preachers trying to get them into the church.

Cut 'em loose.  Reward your best customers with more, larger, better.  Market different products to them.  Repeat customers cost about one eighth of the money to sell than to acquire a new customer.  Focus 80% of your efforts on those 20%!  Just by implementing this "rule", you'll save a ton of resources, make more money, plus you'll have more time to spend with your loved ones. This is the marketers mindset.

Structure a System That Automatically Sends the Chaff to
Your Competition . . . While You Harvest the Wheat!

Won't it be nice to reap the rewards of the 80/20 mindset and watch the "battery drainers" head on over to your competition.  The only thing better would be to automatically sell them to your competition.  Hmmmmmmm . . . [read on]

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