The 80/20 rule is a concept that is constantly banded around in business books, blogs and even used commonly in life. This rule is fundamentally important and by mastering this rule and making some key changes you can radically improve your profits, staff wellbeing and efficiency.
The 80/20 is also known as the Pareto Principle, due to Vilfred Pareto (an Italian economist) noticing that 80% of income in Italy was received by only 20% of the Italian population.
Now you may be thinking, how does wealth distribution in Italy have an impact on my business? Well it doesn’t. But as it turns out this principle applies to plenty of business situations (and has been calculated to be correct) that do apply to your business.
Common examples of the 80/20 rules in business include:
- 80% of your sales coming from only 20% of your customers
- 80% of customer complaints coming from only 20% of customers
- 80% of sales comes from 20% of products that you stock (i.e best sellers)
I’m sure you are now beginning to see how this is a super cool method used by savvy business owners to turbo charge their business.
The key to making the most of this principle is knowing how and when to use this principle. The best thing about the 80/20 rule is that as you have seen above you can apply this principle to many areas of your business.
Take for example a company who sells 10 products. You know that 2 of the products comprise 80% of the sales of the business. Once you know this you can train your sales team to push those two products to help turbo charge your business.
The best part about the 80/20 rule is that its adaptable to any business and can be used in many areas so you really have no excuse not to use this business tool to grow your business. So what are you waiting for? Go and turbo charge your business and start today!