July 28, 2021
In the 1800s, Vilfredo Federico Damasco Pareto (an Italian economist and philosopher) created a philosophy that started out as an idea in his garden. While tending to his pea plants, he realized that about 80% of the harvest that he received came from 20% of the plants. He wondered if this phenomenon could be applied to other things. While researching, he noted that about 80% of land in Italy was owned by 20% of the people. Pareto kept applying this principle in different aspects and continued to find that the 80/20 rule applied. He created this thesis:
80% of the results come from 20% of the efforts.
This principle can be applied to many different facets of our lives, but it’s especially true in sales.
Okay, but how does this theory apply to my business?
When applying the Pareto Principle to the business world, the 80/20 rule suggests that 80% of your company sales comes from 20% of your customers. Think about it: you can probably think of a select group of your best customers who provide most of your revenue. They consistently contribute to your success through their strong purchasing power. But it’s usually a small group, right? Tag these customers as your “VIP Clients”.
Now that you’ve found your VIP Clients who generate 80% of your revenue, think about their characteristics. What separates them from your other customers? What makes them different and unique? Is it age, income, education, location, interest, shopping habits… you get the idea!
I want to grow my VIP Client list. How can I do it?
We all want our businesses to continue on their paths to success! In order to keep finding clients that fit your criteria for your VIP Client list (while continuing to make your current customers happy!), follow the Keep, Grow, Get Strategy.
To keep your VIP Clients, your allocation of time and resources must be adapted to cater to them. Perhaps you send them an extra Christmas gift every year. Maybe you have special customer service individuals who focus solely on your VIP Clients and their needs. Those small acts add up, and your VIP Clients will continue to be your greatest contributors to your success. This also allows your list to grow, as your efforts for their success will build the trust and confidence your clients have in you. This could lead to even larger purchases from your VIP Clients!
As we all want to grow our businesses and continue to be successful, begin to find more clients that fit the criteria defined by your VIP Clients (this is the Get part of your strategy!). This will allow your business to continue growing while catering to audiences that are like minded and have similar goals. It will be easier to make decisions and suggestions, as your 20% will be at the forefront of your mind. You want to super serve them as they will help your business the most!