The 80/20 Rule is more than just a mathematical ratio masquerading as trendy rule. You might know it as the Pareto Principle, but there are many variations of and uses for the 80/20 Rule out there. Its many variations have useful applications, and gaining the insight it provides could change your business for the better. For our purposes, let’s look at how it applies to productivity, products and services, and your client base.

What is the 80/20 Rule and Why It’s a Game Changer

In terms of productivity, there are certain activities or efforts that you do every day that help drive your results (20%), while many activities (80%) act as just filler for your day. The 80% fillers don’t serve as game changers for your business. In fact, 80% of the activities you engage in every day have very little to do with achieving your business goals. That’s hard to believe, right? But it’s true. If you can determine which activities are producing the greatest results, you can focus more energy and attention to those areas. Imagine what you could accomplish with more focus on the things that really bring results!

In terms of products and services, the 80/20 Rule holds that 80% of a company’s sales often come from only 20% of the products in the product line. If that’s true, then logically, the 20% should occupy 80% of the company’s warehouse and increasing these products that sell will increase overall profits. If your “product” is a service, then perhaps it makes sense to focus most of your marketing efforts on the 20% of services that are most in demand to build your client base and grow your business.

Along the same line, there is also a belief that typically 20% of your clients account for 80% of your sales. If you could understand the reasons those clients chose you and uncover the characteristics of those who make up that 20%, you could better align your marketing efforts for that target market. Obviously, that would increase your reach as well as your profits, while at the same time decreasing the energy you expend trying to appeal to those who are not as interested in what you offer.


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Maximize Your Performance By Putting the 80/20 Rule to Work for You

As a Productivity and Profitability expert, I believe that the smartest way to do business is finding ways to get more done in less time, while increasing your profits and still leaving you precious time to do the things you enjoy with family and friends. Embracing the 80/20 Rule, and making adjustments to your business based on the insights it provides, could really have a positive impact on your business and help you be more efficient with your valuable time.

You may find (in some of the areas) that the ratio for your business is something other than 80/20, but the principle remains the same. Finding your ratios can be a challenge, but can also serve in the best interests of your company. Find the 20% of products or services that bring in the most income and cut back on the 80% that provide minimal gain. Take a hard look at your daily activities and determine which ones are productive and growing your business and which should be reduced or eliminated. And take the time to determine which of your clients are producing the most revenue and target your marketing efforts to reach them – and more like them. That way, you can streamline your business to make the most of your time, energy and talent.


Want more information on ways to increase productivity and profits? Contact me!