Have you ever heard about the 80/20 rule? If you haven’t, this article will probably be one of the most useful things you’ve ever read in your life. If you have, I hope I’ll give you a new perspective and relevant knowledge that you can implement immediately in your life – both personal and professional.
Many years ago the Italian philosopher Vilfredo Pareto formulated a principle, which remains in sociology as the “80/20 Rule” or “Pareto’s Principle.” It is as follows:
In every society, 20% of people produce 80% of the goods and profits. On the other side of the curve, 20% of the people produce 80% of the problems and losses.
If we transfer that in the business field, it will sound like:
You achieve 80% of the results by only 20% of the effort and the opposite –by 80% of the efforts, you achieve only 20% of the results.
The question is how to find out, which are this 20 % of the actions, and how to apply them in business and life. I’ll give you examples from my personal life to make it much easier for you.
I started to practice salsa a few months ago. Unfortunately, I missed the first few lessons. Many people will say it doesn’t matter that much, but it is not like that. I was into a new dance, and I didn’t know anything about its rhythm and steps. To be honest, I was a terrible dancer, and I was virtually like a tree.
The result was that I was progressively falling behind compared to the others, until one day the instructor came to me and said that I have only two options – I can take some private salsa lessons or I can start with the beginner’s group.
To be honest, I was upset at first. How is it possible that I’m not able to continue practicing with that group when I enjoy dancing so much (although I am awful at it)?! When I thought about it, I came to the decision to take some private salsa lessons. From the first lesson, I got the basics and the rhythm of the dance (thanks, Benny, you are such a great teacher).
And guess what happened – I started getting used to the fundamentals of the dance, and in a short period, I began to do some more complex steps without the difficulty I had before. I started to advance progressively, instead of gradually falling behind.
Why did that happen? My answer is – because I managed to learn the basics. My conclusion for salsa beginners is that the effort of learning the basics is that 20 % of the actions, that bring 80% of the results and you have to focus on that if you want to start dancing salsa faster.
It’s the same in my business. It’s a fact that I knew the 80/20 rule much before I started using it in practice (for my great regret). If I could turn back time, I would start earlier. That’s why I don’t want you to make the same mistake.
What exactly happened – I started to observe what was going on in the core of the business (before that I was more of an operational guy flooded with different day-to-day activities). Then I realized that out of 1800 items I sell, 99% of the profits comes from 15-20 products. I was surprised. Here the expressions of that rule are even more extreme – 1% of the products bring 99% of the profit.
This surprising discovery spurred me to test different offers for those products to make them more attractive to customers and eventually I began to bring in paid traffic to these offers. What was the result – 400% rise in the revenue for two months. Isn’t it great? Lol
I claim that this rule can be applied in every area of people’s lives. You just need to know how. I will tell you more about that in the next article.