The Pareto principle is the 80/20 rule

Many of our followers may have come across the Pareto principle or the so-called 80/20 rule, but what exactly does it mean?

Vilfredo Pareto, an Italian economist and sociologist, introduced this principle in the 19th century. century, when he found that economic inequalities and wealth distribution were not proportional. He observed that people’s wealth is not equally distributed, but that 20% of the wealth belongs to 80% of society, while the other 80% of society has only 20% of the wealth.

The Pareto principle extends to marketing, suggesting that businesses and marketers should focus most of their overall work on the 20% that have the greatest impact on business results.

This 20% could be, for example, the most successful products, the most valuable customers or the most important marketing channels. By applying the Pareto principle, business results can be improved and resources can be used more efficiently.

Applying the Pareto principle in marketing

Using the 80/20 rule to optimise marketing strategies can help businesses target potential customers more effectively, increase sales and maximise revenue. Here are some ways you can apply this principle to your marketing activities:

1. Analysis of customer profiles

Examine which customer profiles generate the most revenue or bring the most value to your business. Identify characteristics that are specific to your most valuable customers, such as demographics, interests or behavioural patterns. Then focus on the most valuable customer profiles and try to attract and retain them.

2. Product portfolio analysis

Identify the products that generate the largest share of your revenue. See which products are the most popular and make the most profit. Then invest more resources and attention in these products and optimise your marketing strategies to generate more sales.

3. Analysis of the effectiveness of marketing channels

Find out which marketing channels bring the best results and conversions. Assess the different channels, such as search engine optimisation (SEO), social media marketing or paid advertising. Identify the channels where you get the best results and focus on them to maximise efficiency.

4. Optimising your content strategy

You can also apply the Pareto principle to content production. Identify the content that will have the biggest impact on your audience and conversions. These could be, for example, explainer videos, tutorials or product reviews. Develop this content and make it the focus of your content strategy.

Practical examples of the application of the Pareto principle

Let me give you some concrete examples of the application of the Pareto principle in marketing:

1. For an online store, the Pareto Principle tells marketers to focus on the products that generate the most traffic and pay special attention to the most valuable customers who return frequently.
2. In a social media strategy, the Pareto Principle tells marketers to focus on the most active social platforms where they can have the greatest impact in reaching their target audience and increasing sales.
3. In a content strategy, marketers use the Pareto Principle to identify the most popular and high-impact content and prioritise it, for example on the homepage or in the newsletter.

Applying the Pareto principle allows businesses and marketers to use their resources more efficiently and maximise business results.

The principle focuses on the most valuable customers, products and marketing channels that have the greatest impact. Use this strategy in your own business and see how your results improve.

I hope this article has helped you to better understand the meaning of the Pareto principle and the application of the 80/20 rule in marketing. If you have further questions, don’t hesitate to ask!