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Applying the 80/20 Principle To Your Business – WPCAST032

January 14, 2015

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.

http://media.blubrry.com/wpcast/wpcast.fm/wp-content/blogs.dir/483/files/episodes/WPCAST032.mp3

Podcast: Play in new window | Download (Duration: 27:03 — 24.8MB)

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
http://media.blubrry.com/wpcast/wpcast.fm/wp-content/blogs.dir/483/files/episodes/WPCAST032.mp3

Podcast: Play in new window | Download (Duration: 27:03 — 24.8MB)

Thanks for listening! If you liked this episode, please leave us a review in iTunes.

We’d love for you to comment below, or leave us a voicemail or message with your feedback.

Filed Under: Podcast • Tagged With: 80/20, 80/20 principle, perry marshall, pippin williamson, richard koch, tim ferriss, vilfredo pareto

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