Many people know, or have heard, of the 80/20 rule. The 80/20 Rule means that in anything, a few (20%) are vital and many (80%) are trivial. This rule can apply to quality control, sales, wealth distribution and more. In this discussion I will be defining it in terms of sales.
“80% of your sales comes from 20% of your clients.”
So how do you know if that is the case for your business? First, an analysis of your sales through your accounting or customer relationship management system (CRM) could point you easily to the answer. Don’t have the data? I would suggest that you survey your customers to determine 1) how they found you and 2) why they buy from you. Tracking where your customers come from or what leads them to purchase from you will help you in marketing your business.
Focus on the 20% that matters.
Let’s assume that you are tracking and you come to the conclusion that 80% of your business comes from 20% of your customers and that business comes all from referrals. This is a big clue to where to invest your marketing dollars! Developing a referral program to thank clients who refer new customers to you is easy and makes everyone feel good!
What if the same 20% of your clients (delivering 80% of your sales) are internet sales? Same thing. Invest your marketing dollars in internet advertising, SEO and other web devices.
In any small business, small marketing budgets are the norm and focusing those pennies on what matters could be the difference in growing your business or not.