Most of us are familiar with Pareto's Principle but may not know who he is or what it stands for. Wilfredo Pareto was an Italian economist who helped in the development of the study of microeconomics. Although you might not know the name of the principle you are probably familiar with the 80/20 rule. In a business setting, the rule would hold that 20% of your customers or clients would generate 80% of your income. However, the interesting thing about this concept is that it will work not only with your income, but your time, your productivity and anything else that can be quantified. So how can we work less and earn more using Pareto's principle?
Most of us in the professional services industry look to maximize our client or customer base because we feel that the more customers or clients we have the more money we will be making. Part of the challenge with this way of thinking is that we will be spending our time trying to make 100% of our clients or customers happy when 20% of them will be utilizing 80% of our time. Another interesting use of the principle is that 20% of our customers or clients will be generating 80% of our income. So wouldn't it make more sense to find out who our ideal client or customer is so that we can go out and market to these individuals and spend less time working with fewer clients or customers and earn more money?
One of the most fascinating uses of Pareto's principle is the fact that it works across the board. So, once you use the 80/20 principle in determining what clients or customers earn you the most amount of money, make a list of those individuals. You can then use this principle again to determine, out of your list , which people in this hybrid earn you the most amount of money. You can continue this exercise until you are left with a few clients or customers to determine who your ideal target audience is so you can develop the proper marketing materials to reach this demographic.
You can also use this exercise to determine who your problematic clients or customers are so you can terminate your relationships with these individuals. You will know who you should not take on as new clients or customers, and you can utilize marketing strategies that will not attract these individuals. You can now spend your valuable time servicing clients or customers that generate the most income and are the least problematic which will provide you with more income and less aggravation. What are some of the things that you can do to better service these elite clients or customers of yours and where can you find other individuals that you would like to convert to your clients or customers?
Once you have made a list of the most elite and ideal customer/clients, you can increase the amount of client or customer care that you provide to them. Call them on a regular basis. Send them regular emails or notes. Provide them with appropriate gifts, as a thank you, for a birthday or holiday. Go out of your way to let that individual know how much you appreciate them doing business with you. Become a person who constantly under promises and over delivers to this very important individual.
Once you have determined who your ideal clients or customers are you can obtain a great deal of information about this individual. Where do they live? What do they read? What type of services do they require? How did you get them as an initial client or customer? What pitch can you develop that would appeal to this ideal client or customer? How can you reach these individuals? Once you compile this information, you can develop a detailed marketing plan on how you can put your message in front of your ideal client or customer.
If you take the information that you have in your business and properly analyze it to determine where you are generating the bulk of your income, from which individuals, for what types of services, and how you receive these individuals, you can develop a comprehensive marketing program to attract more of these ideal clients/customers so you can ultimately work less and earn more.