Marketing – Apply Pareto’s 80-20 rule to improve sales and customer satisfaction

Application of Pareto’s 80-20 rule improve sales It suggests, in many events roughly 80% affects causes from 20% efforts. In other words major results come from minor efforts or minor results come from major efforts. If you are able to identify these patterns in your business you can improve sales and ensure customer satisfaction.

What is Pareto 80-20 rule?

Italian economist Wilfred Pareto observed that 80 % of land in Italy was owned by 20 % of the population. Business management thinker Joseph M juran suggested this principle and named after pareto.The 80-20 rule can be applied in every aspect of our life. Application of this rule in marketing brings out unimaginable customer satisfaction and improved sales.

Common sense Observations:

1.We wear 20 % of favorite clothes about 80 % of time.

2.We spend 80 %of time with 20 % of known people.

3.We spent 80 % of our time on trivial matters 20 % of time on few valuable matters.

4.Our 20 % of work consume 80 %of our time and resources.

5.In business 80 % of sales come from 20 % of customers.

6.In business 80 % of your profits come from 20 % of your products and services.

7.In any organization 80 % of complaints are related to 20 % of problems.

Identify and focus for customer satisfaction and improved sales:

All of the above observations lead you to conclude that our 80% of results come from 20%efforts. Mere observation does not serve any purpose what is required is application of this rule in the business to bring out significant results. Let us identify top 3 elements of business and apply the 80-20 rule to know how it improve sales and customer satisfaction.

1.Our observation reveals that top 20% products give profit of 80%.Identify top 20% products or services which give more profit and improve their quality, expand their market, focus campaign on these products. That means you are shifting your focus to top 20 products.

2.Our observation also reveals that top 20% customers covers 80% sales. Identify top 20% customers who are covering 80% sales and focus on their relationships. Since these customers represents 80% of your sales, your survival in the business depend on their loyalty. Hence be in touch with them. Send them wishes whenever possible. Help them and give them value added services. Focus on these customers because they are your bread earners.

3.Our observation also reveals that majority complaints are related to few problems. Identify the problems which generate 80% of your complaints. Focus finding solutions to such problems that improve sales.

80-20 principle can be applied in all aspects of your work. Success of your business depends on shifting the focus from trivial more to valuable few. All successful business enterprises following this rule and optimizing their resources and achieving 100% success. Hence don’t work hard on all matters. Work smart on few right things and improve sales and customer satisfaction.

To improve sales Choose the right pricing strategy

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