During the lunch break at our recently held Business Growth Masterclass, my administrator commented that we always seemed to get a certain ‘type of participants’ coming to our masterclasses. She had made the same statement during the last class a few months ago, but I did not pay much attention to it.
After the class, I spent time thinking about our participants and the commonalities she had noticed. That’s when I saw the 80/20 principle actually coming to play.
This principle is an old principle also known as the Pareto principle developed in 1906 by Italian economist Vilfredo Pareto. He found out that 80% of the land in Italy was owned by 20% of the population and this principle has been extrapolated to other areas of life; from time management, to hiring staff, finding good relationships and even to growing your business.
As I took a deeper look at our client base in the last one year, I realised that 80% of our referrals were coming from 20% of our clients – who were also referring people who were like themselves!
So how can you leverage this principle to grow your sales?
Identify your 20%
Look at your clientele for the last 1 year and identify the top 20% that have contributed to 80% of your revenues. Even if you are in the retail business, you will most likely have a select number of clients who buy more than others on a regular basis.
Find their commonalities
Discover what they have in common. Is it their income bracket? Gender? Lifestyle preferences? Dig deeper and collect data about their demographics and psychographics so you will understand them better. You can take it further by interviewing some of them to find out exactly why they have chosen you instead of your competition.
Give them a higher incentive
Once you have identified your top 20%, create a higher incentive for them to keep buying from you, give them preferential benefits and encourage them to refer more people like themselves through a referral scheme.
Find more customers/clients like them
Imagine what will happen to your sales if you find more customers like your top 20% who buy from you the most? Your business will experience exponential growth! Target your marketing activities to people with similar characteristics like you have identified in point 2 and they will most likely want to buy your products or services.
Use your time wisely:
Once you have discovered the type of people, or location or marketing activities that are bringing in the sale in your business, spend 80% of your time on those activities so you can increase your results!
This is quite a simple principle; if applied properly, it will give you results in growing your sales.