(Business marketing) How the 80/20 Rule Can Make Your Business Fly

September 27th, 2008 admin Posted in marketing |

By Jonathan McCulloch

You may have heard of the 80/20 Rule before, but in case you haven’t, it’s often called “Pareto Analysis” and was first given this name by management thinker Joseph M. Juran. He named it after the Italian economist Vilfredo Pareto, who observed 80% of income in Italy was received by 20% of the Italian population.

Since J. M. Juran adopted the idea, it might better be called “Juran’s assumption”.

Briefly, the Pareto Principle states: “only a ‘vital few’ factors are responsible for producing most of our problems”. The converse is also true: 80% of our successes stem from just 20% of the things we do right.

And the really interesting thing is this applies to almost everything we do, no matter how finely we slice and dice our set of factors.

For example, take the typical cross-section of people you’ll get attending a presentation on marketing.

On average, about 80% of them disregard everything the speaker has to say or, if they actually think it’s all good stuff, find or invent reasons it won’t work for them in their particular set of circumstances.

And 20% won’t.

Then, if we take the 80% of “naysayers” and apply the 80/20 rule to this “new” 100% we’ll find about 20% of them will be actively hostile to the ideas presented. And if we then took this 20% as our even newer 100%, we’d find about 20% of them will be truly vitriolic and spend most of his or her time trying to prove the speaker “wrong”.

And that’s fine. We should expect it. It’s inevitable and unavoidable.

But now let’s get back to the 20% of the people who won’t disregard what the presenter has to say.

This 20% takes the time and makes the effort to research the subjects the presenter talks about - including research on the presenter - and then they actually take action and apply the information to marketing their businesses.

Now, you might now be wondering how this all applies to you and your business. Well, as I mentioned before, the 80/20 rule applies universally, although, you’d be forgiven for thinking this was just my way of obliquely taking a swipe at business owners who won’t take good advice.

Nope. It isn’t that.

And if you apply the 80/20 rule you’ll figure out why I wouldn’t waste my time complaining about people who aren’t listening anyway (clue: since I understand the 80/20 rule, would I spend a lot of time on the 80% of people I know are resistant to my ideas or would I concentrate on the 20% I know won’t be?).

It’s simply this: you must get it into your head that the 80/20 rule applies to everything about your business.

So, if you examine your records you’ll find approximately 80% of your income comes from approximately 20% of your product or service line. You’ll find 80% of your “regular” income comes from 20% of your “regular” customers. You’ll find 80% of the things annoying you about your customers comes from just 20% of them (and I seriously suggest you identify them and bar them from your business).

I mean it.

You’ll be amazed at how much people will want to do business with you when you tell them they can’t.

You’ll find that 80% of your receipts come from about 20% of the sources, and you’ll find 80% of your profits comes from 20% of your products. The numbers might not be exactly 80/20, but the point is if you do the digging, you’ll find a massively unbalanced relationship between efforts and results.

OK, so now you know what the 80/20 rule is, what’s the best way to use it?

It’s easy.

Systematically go through ALL aspects of your business and apply the rule to all of it.

Then, when you’ve figured out where the 80/20 rule lies, make sure you’re spending 80% of your time on the 20% of the things that make you the most money.

In my experience, businesses that are struggling have this focus wrong: they’re spending 80% of their time and effort on the 80% of the bad stuff (and if you dice it down you find they spend 80% of the new 100% of their wasted time on the worst 20% of the problems).

You can re-engineer your business to take advantage of the 80/20 rule. You can market and position yourself so you attract only the 20% of prospects out there who are willing to pay top prices for great service and quality products.

One client of mine not too long ago discovered his shop was taking up almost 100% of his time (because he was behind the counter every day), but was responsible for only 10% of his sales. The other 90% came over the Internet.

My advice to him? Close the shop! It’s a total waste of time.

Wouldn’t you take a 10% paycut if it meant you didn’t have to turn up for work? And, realistically, it’s not as if he’s actually going to lose 10% of his business, not when he can invest the time previously spent standing behind his counter like a lemon in promoting his business online.

There is a corollary to the 80/20 rule called the 95/5 rule. It’s very similar to the 80/20 only it describes the phenomenon with more “intensity”.

So, for example, maybe 20% of the business owners I deal with who learn all this marketing stuff and actually do something with it see benefits in the form of increased profits, reduced costs, all with less work; but 5% of them are going the extra mile and doing all the “stuff” and making extraordinary profits.

At a conference I was at in the US not too long ago, the host did a quick breakdown of the attendees’ incomes and the figures were stunning - they fit the profile perfectly: approximately 5% of the people at the conference were making upwards of $5 million a year.

Finally, you need to understand this: you cannot change the percentages. It’s like a law of nature. Maybe it is one.

I’m not mathematician enough to be able to tell you if it’s one of those beautiful mathematical constructs the eggheads keep finding or not.

But empirically, it serves us well to accept it.

And since you cannot change it, the only thing you can do is choose which group you want to belong to.

Jon McCulloch is the hottest marketing sensation in the UK and Ireland and is now taking the US by storm. Receive his free monthly newsletter through your letterbox by leaving your details here: www.JonMcCulloch.com

Advertising Tips For Global QxBid Online Auctions
By auctionsdir

While online auctions offer many benefits as well as an opportunity to buy and sell internationally, the business can be risky. In fact, online auctions rank near the top among consumer fraud complaints. Use the tips below to maximize your Internet auction benefits. Selling Auction Items Before starting an online auction business, you should understand your legal obligations. Carefully create “terms of sale” that explain what you expect from the buyer and what the buyer should expect from you. When describing items, be very descriptive. Include the condition of the item, any flaws in the product, and state whether it’s used, new, or reconditioned. Be sure to price the item high enough to cover your investment, and include an adequate amount for shipping. Be very specific on shipping terms, your return policy, and any restocking fees. Also, always include photos with your items when possible. Auction items with photos tend to sell well. Once you’ve sold an item, be sure to ship it on time and give good customer service at all times. If accepting payments through an online auction, choose a method that will enable you to sell around the world. Some payment options are only feasible in your particular country. Many third-party online merchant services offer international payment systems. Find the one that works for you and your customers. Remember, with online auctions, you might receive orders from anywhere… Egypt, South Africa, USA, Kenya, UK, India, Indonesia, Germany, Argentina, France, Brazil, Nigeria, or anywhere in Europe. Buyer Auction Tips Buying from online auctions can be a great way to get quality products at low prices. Some products you might find at an auction online include salvage items, real estate properties, cars, antiques, auto care products, computers, jewelry, electronics, books, clothing, and so forth. The possibilities are endless. If you’re an auction buyer, observe the rules and terms of the auction online before placing bids. Keep up-to-date on auction news to become familiar with the latest trends. Make sure the item you are considering is what you’re really looking for. Check out the description, photos, guarantee or warranty, condition of the product, size, brand name, and so on. Also, consider shipping into your cost and from which country the item will be shipped. If you bid lower than retail, the shipping charges could make the product cost even more than the retail value. Some sellers will offer free shipping with high-ticket items. Also, consider the seller’s return policy, payment methods, and their feedback rating (if available). If no feedback is available, it’s up to you to determine if you want to give the new seller a try or not. Be Safe as an Online Auction Bidder Protect your personal information. Never give the seller more information than is needed. Your social security number, bank account information, or personal login information to the bidding site or any other site should never be solicited. If the seller tries to obtain this information from you, turn them in to the bidding site for investigation. With these tips in mind, you can successfully start an online auction business or become a smart auction bidder.

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Affiliate Programs Content - Duplicate or Not?
By tanny lahav

Affiliate programs are in their basic a duplicating system. The company that starts the affiliate program offers all the affiliates the same tools, the same URLs, the same pictures and basically the same content.You as a new affiliate have to duplicate your sponsor in order to succeed.

Disadvantage: If you are new to internet marketing and affiliate programs you should know that the search engines, for example: Google, Yahoo or MSN, do not like duplicate content. The search engines will only index one website and ignore the rest, or worse, send the website to the sandbox.

The search engines love fresh and unique content and the problem with affiliate programs is that it is not unique. Since all the affiliates receive the same webpages, they all receive the same content and their ID is the only thing that is different.

Advantage: Affiliate programs build to duplicate and this is the idea behind them. You send new prospects to your affiliate link, they join the program and receive their own affiliate link, to the same page you have, and they try to duplicate you and your upline. If they do it well they will succeed. You are only successful if your affiliates are successful. This is why you want them to duplicate your steps.

Another disadvantage is that if the affiliate program you just joined is a popular one. It means that almost everybody else already saw it and is promoting it. Your potential prospects are used to seeing it as well and will skip it.

On the other hand, the advantage of a popular affiliate program is that some of the prospects see it so often and they decide to join it, if it works for so many others, it may work for them too,because of its popularity.

Another advantage for affiliate programs is the fact that they have the best sales copy. The sales copy is written by professionals and its one and only purpose is to get your prospect to join the program or buy the products you are selling.

For most affiliates writing a good sales copy can be a very hard task, and they rely on the ones the affiliate program is giving them.

The solution is very simple: Do not promote your affiliate link directly. When using internet marketing to promote your affiliate links, unique content is the best way to go. Try blogging or article marketing, and write your own posts and articles. This will provide the unique content to the search engines, and you can use your blog to send your readers to your affiliate link.

Forums are another simple and free way to promote your affiliate program. By joining different forums in your niche and contributing to these forums you will be able to promote your affiliate program to other internet marketers and prospects, you will provide the search engines the unique content they are after and you will learn as well.

The conclusion is that it is perfectly OK to use duplicating when it comes to affiliate programs, and it is warmly recommended, as long as it works. However, there are different ways to use internet marketing for affiliate programs, and here you have to use your own unique content.

Tanny Lahav started her own internet home business in June 2007 with her website http://www.Learn2Earn2.com. Visit her website to find more Internet home business ideas to make money with affiliate programs.

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