“The law of the vital few and the trivial many.” That’s how the late Joseph Juran referred to Pareto’s principle. It is commonly referred to as the 80/20 rule.
Juran was the first to apply Vilfredo Pareto’s research. He found:
– 80% of the World’s GDP is controlled by 20% of the people
– 80% of the complaints come from 20% of the customers
– 80% of a company’s sales come from 20% of its products
I believe it’s high time to apply the 80/20 principle to traditional marketing.
If we subscribe to the principle that 80% of your results will be generated by 20% of your efforts, then we respectfully put forth the Purple Goldfish Corollary: 80% of your traditional marketing efforts will net you 20% of the results.
Today, traditional marketing is woefully ineffective. This attribution phenomenon isn’t new. According to the late legendary 19th-century retailer Joseph Wanamaker,
“Half the money I spend on advertising is wasted … the problem is that I don’t know which half.”
We believe 50% is an understatement and therefore propose that the vast majority of marketing dollars spent on the traditional funnel (the 80%) will net one dollar worth of return for every four that you spend given the Purple Goldfish 80/20 Corollary.
The overwhelming traditional view of marketing is the process of acquiring prospective customers. It is not uncommon to find companies spending 80 percent of their marketing budgets on getting consumers into the purchase funnel. We’ve become so preoccupied with generating awareness and interest that we tend to forget about our most important asset, our current customers.
We need to flip that ratio and apply it to traditional marketing. We need to heed Pareto’s Law and determine the 20% of traditional marketing we are doing that is generating the strongest ROI. Once you’ve earmarked that vital 20%, it’s time to focus a majority of the remaining 80% squarely on current customers.
By putting the focus on your current customers, you eliminate waste, drive differentiation, and generate the following three benefits:
– Reduce attrition
– Increase loyalty
– Drive positive word of mouth
Stan Phelps walks the walk. He stands out in the sea of sameness by modeling his own Differentiated Experience (DX) message: Differentiation isn’t just about what you say, it’s about what you do and, more importantly, how and why you do it. Stan leverages his unique collection of 5,000+ case studies on customer, employee, and brand experience to engage audiences with informative learning-based experiences. He believes purposeful DX wins the hearts of employees and customers, and differentiation ultimately boosts loyalty, retention, referrals, and results.
Find Stan’s in-person and virtual keynotes, workshops, and Goldfish tank programs at StanPhelps.com.