pareto 80 20

After a L – O – N – G week in Disneyland, I held my monthly Internet Marketing Mastermind meetup last night.

I gave a presentation on customer loyalty & retention.

I think it was well-received. We talked about interesting facts about customer retention, how much it costs to acquire versus keep a customer, and other things.

Like how 20 percent of your customers will comprise 80 percent of your revenue.

You know, the old “80/20” rule that Pareto is famous for.

He didn't coin the term, by the way. A management consultant by the name of Joseph M. Juran named it the Pareto Principle after Pareto noted that 80% of his peas came from just 20% of his peapods.

True story.

Learn more about the Pareto Principle here.

Digging a little deeper…

If you look at nearly anything in the world, you will see that a relatively small proportion of “X's” go hand-in-hand with a relatively large proportion of “Y's.”

For example, it's common knowledge that 20 percent of your customers make 80 percent of your revenue.

But did you know that 20 percent of the books on Amazon make 80 percent of the sales?

Or that if you solve 20 percent of your business issues you'll gain about an 80 percent “lift?”

All true.

What's even more startling is when you look at the “10 percent” or the “5 percent” or the “1 percent.”

For example, if you dug deep, you'd find that your top 10 customers out of 100 probably contribute 90 percent of your revenue.

On Amazon, about one percent of all Kindles sold have 10 or more reviews. And guess what?

They make about 99% of all the sales.

Weird, right? But good to know.

Remember, you will find some great ebooks here. And great stock photos here.


Pareto, the Pareto Principle

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