For many events, 80% of the effect is due to 20% of the causes. In the case of a business it’s very likely that 80% of your profits will arise from:

• 20% of your customers;
• 20% of your products;
• 20% of your selling activity.

Dramatic improvements can be achieved:

• Identify the 20% of customers, activities, products or processes that account for 80% of contribution to profit;
• Maximising the attention applied to them.

Step by Step
1.Measure results by customer / product / activity.
2.Rank them in order of results (usually profit).
3.Draw a line at the cumulative 80% mark.
4.Focus your attentions on the customers / products / activities above the line.
5.Start asking questions about the common factors for items below the line.

Things to consider

Below the Line:

• Other business issues?
• Why?
• Strategic importance?
• Keep going?
• Give it up as a bad job?
• Turn-round feasible?

Above the Line:

• Loyalty
• Investment
• Protect and nurture
• Common factors
• Look for similar customers / products / activities

‘Inverted’ application of Pareto
The ‘long tail’ focus in internet marketing. Rather than focusing on high-popularity keywords, with the inevitable competition, some marketers concentrate on the much larger number of obscure phrases that each gets a few searches per month. Creating web pages that are search-engine-optimised for these is much easier than for the small number of popular and highly competitive key phrases. Google adwords campaigns can be made much more effective with this approach.

This was a guest post by Paul Fileman of SPS who are a national team of proven senior management professionals, passionate about working to help businesses achieve their next level of development and performance. Whether they are facing market changes, financial problems, people/skills issues, or are preparing a major project, they offer dedicated support from a multi-disciplined team of experts.

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