You know how it goes. The 80/20 Rule. Technically known as Pareto’s Law, or the Pareto Principle (for those of you that like to geek out).
Simply put, the 80/20 rule is a law (not a legal one but an economic one) whereby the vital few account for the trivial many.
Here are a few examples of the 80/20 rule in business
80% of your revenue comes from 20% of your customer base.
80% of your time is spent on 20% of the business activity.
You could also state it another way; 20% of the effort is responsible for 80% of the results.
Now, before we get too far off track here, I want to share with you the importance of Pareto’s Law as it applies to marketing your business.
You see, if we could get 80% of our results from only 20% of our team’s effort; that would be pretty cool, right?
(Disclaimer: The 80/20 rule shall not be used as justification to be lazy, settle, or otherwise not be a high achiever and have a high achieving team in your business.)
One use of the Pareto Principle in business is to clearly identify your ideal customer profile.
Clearly identifying your ideal customer or ideal client avatar is not the same as customer segmentation.
Identifying your Ideal Customer Profile truly is the key to business marketing, especially in online marketing.
Too often we encounter clients and prospective clients that are casting too wide of a net when attempting to acquire new customers. The same can be true when we try to weed out lesser quality current clients.
Businesses that cast too wide of marketing net are doing the exact opposite of the 80/20 rule…they are creating a new rule, the 20/80 rule!
They are hoping that they can increase their customer base 20%, by exerting 80% more effort.
Another way to look at the “20/80” rule is that by casting a wide net (focusing 80% of efforts) is only going to account for 20% of the results…this is ludicrous! You would not stand for that level of productivity from a team member; so why do we as business owners allow it to be the modus operandi of our marketing efforts?
The answer is we shouldn’t!
Ideal Customer Profile
Call it what you want, there are many names for the ideal customer/client profile, but the sole focus is how to get new customers and clients by clearly articulating (documenting) “whom” your business is looking for.
There are typically two main identifiers of your ideal customer.
- Demographics – age, income, gender, marital status, industry, etc.
- Psychographics – values, beliefs, lifestyle, hobbies, interests, etc.
Most businesses we encounter focus and emphasize the demographics. This is wrong!
The values, beliefs, lifestyle, hobbies, interest, et cetera of your customers are significantly more important than their demographic counter parts because these psychographics open the door to their hearts and minds.
With this information your marketing plan can now begin to speak with, and even move and compel, your ideal customers and ideal clients to take action. And that my friends, is the main goal of any marketing effort worth anything…compel people to take action.
It does not matter if you are a for profit business or a non-profit business. If you want to increase revenue and reach more people; you, through your marketing and communications, must begin to speak with your prospective clients and customers instead of at or to them.
Ensuring your marketing and communications plan not only includes, but has at its core (modus operandi) an ideal customer profile, will not only help you get more customers and clients, it will help you retain customers and clients by increasing customer satisfaction as you talk with them.