The 80/20 rule in Marketing

The 80/20 rule in Marketing has been derived from an Italian economist, Vilfredo Pareto who proved that approximately 80% of the Italian lands are owned by 20% of the country’s population.  This principle can be applied to different verticals like Economics, Business Operations, Computing, Sports, Health & Safety, and Optimization efforts.

In an organization, 20% of marketing efforts turn into efficiency, while the remaining 80% ends up as trivial effects. This brings us to one more approximation: 80% of the sales come from 20% of the customers. Marketers struggle hard to decipher the top 20% of their customers and once this is achieved, sales teams unload their sales pitches over these customers wanting to produce heaps of revenue, all while forgetting the pattern to unlock customers behavioral attributes.

Once the top 20% of customer’s general information is collected, Marketers have to look out for people with similar characteristics and behavior. But the searching process seems to be never-ending and unfathomable. This is where Facebook ads revive the dying marketer. Using Facebook’s custom audience’s option, Marketers can create lookalike audiences from their top consumers’ email ids (both first party and third party data), and Facebook ids. Now it is possible to acquire more customers of similar attributes and scale the revenue velocity.

Pareto’s principle doesn’t exactly tell us to ignore the remaining 80% of the customers. It simply suggests us to spend adequate time and resources over them. After all, 80 % of the customers stand somewhere in between being trivial and useful.