Applying the 80/20 Principle To Your Business – WPCAST032

In this episode, we discuss the business applications of The 80/20 Principle. Many of these ideas come from the book The 80/20 of Sales and Marketing.

The Changelog

• Thanks for the latest 5-star reviews! UberNinjaReviewer and Donnacha in Edinburgh

The Core

• The 80/20 of Sales and Marketing by Perry Marshall
• The 80/20 Principle by Richard Koch
• Vilfredo Pareto: 20% of the pea pods in his garden contained 80% of the peas
• The 4-Hour Workweek by Tim Ferriss
• Applies to many things: wealth distribution, support tickets, WordPress plugin downloads, sales/customers, traffic sources, programmers
• Not always an 80:20 ratio, but there’s a disproportionate distribution

Our Takeaways

• 20% of sales reps drive 80% of sales (best sales rep is 16x better than an average one)
• Also applies to programmers – “10x programmers”
• 20% of clients make up 80% of your revenue
• 20% of clients take up 80% of your time
• These aren’t always the same 20%
• Productivity:
  • 80% of your productivity comes from 20% of your tasks
  • Divide everything into $10,000/hr, $1,000/hr, $100/hr, $10/hr tasks
  • Focus on strengths, not weaknesses
  • Outsource / hire
  • “There is nothing quite so useless, as doing with great efficiency, something that should not be done at all.” ― Peter F. Drucker

Starbucks Espresso Machine Principle

• 80/20 scales
• Offer a “super deluxe experience” like Starbucks
  • 20% of customers will spend 4x
  • 4% of customers will spend 16X
  • 1% of customers will spend 50x
• Pippin Williamson’s 2014 Review

“The Secret To Improving Everything” = Continuous Split Testing

• Improving a WordPress.org ad by 2x, sales page by 2x, checkout page by 2x = 8x sales
• A 10% improvement every month will double sales in 7.2 months
• Volume + testing/measurement