Maximizing Results with the Pareto Principle: An 80/20 Guide of Efficient Resource Use￼
This is a transcript of episode 95 of the Let’s Get Data-Driven podcast.
My favorite thing about the 80/20 Rule is how it can lessen your workload… so I put the 80/20 Rule in action by repurposing a portion of this month’s featured workshop in the Membership to Get Data Driven into this podcast episode.. So, boss, this is, like THE MOST meta.
Let’s talk about the 80 20 Rule and find some ways you can put your work to work for you, too.
This month’s workshop for the Membership to Get Data Driven, we’re talking about the 80/20 Rule, also called the Pareto Principle. It’s a method you can apply to get more out of the work you’re already doing. What’s not to love about that? Essentially what I’m telling you, boss, is you do a lot. And let’s look at ways that you can get your work to work as hard for you as you do for it. Okay, so what is the Pareto Principle?
THE PARETO PRINCIPLE
It’s a concept that suggests that 80% of the effects come from 20% of the causes. It was named after a 19th century Italian economist named Vilfredo Pareto, which is a name I feel like I can say all day long. Income distribution: he noticed that approximately 80% of the land in Italy was owned by 20% of the population – kind of the equivalent of today’s 1%, where most of everything is owned by the 1%.
As he continued his research, he found that the principle applied to many other areas of life, such as wealth distribution, population distribution, business productivity. Others have since built on this concept, specifically as it relates to quality management, process improvement, as well as in fields like marketing, finance, and personal productivity.
So why the hey should you care? As digital marketers, I can see two really good reasons why the 80/20 Rule applies to your business.
- First, it helps you see more clearly what is happening with your traffic, with your leads, with your sales, with your content. All the things you’re investing, your time, your money, your energy, those valuable resources, what you’re investing those into, how you can get more out of those investments. And by applying the Pareto Principle to the content you’re generating, you can more easily create better content that will yield better results. Because you see and you understand the distribution of your results, especially when you see how we do it in the second part of this workshop where we put it on a graph. Yeah, you’re going to literally see the 80 20 rule in action on the dashboard that I will share with you in the second half of this workshop… but I’m getting ahead of myself already.
- The second area where the 80/20 rule best serves digital marketers is that it really makes it a lot easier for you to see the gaps and the inefficiencies in how you’re doing things with how you’re operating. This is actually where I want to start. Let’s talk use cases. You know, I love an example.
So we’re just going to walk through all the different ways that the 80/20 rule applies to digital marketers with these little use cases The 80/20 rule can have a direct impact on how you choose to use resources. A big one is time, boss – your time is #1
Let’s get more out of your time, right? There’s never enough time in the day. Or maybe there is if you redistribute it.
So the go to thing to say here is 20% of your time spent can represent 80% of your results. That’s sort of like the big one that people throw around. And it’s true that there’s a small set of activities that you’re doing that is generating 80% or a large portion of your outcomes, but let’s use it a little bit more, or rather, let’s look at it in a little bit more actionable way. Let’s think of the activities that yield no results. If I asked you to comment on what activities you’re spending time on that yield no results for you, what would you say?
I’m sure there are some things that immediately come front of mind when I say this. And by the way, if you want to pause this and jot your thoughts and feelings down on a piece of paper or on a digital notepad as we go, I encourage that wholeheartedly. And if you’re feeling like you don’t have really a lot of clarity around how exactly you’re spending your time, consider using a time tracking app or a tool like Harvest or Airtable Extension or something that will clock in. Your work hours and how you’re actually spending them. Like, what are you actually doing and how long it takes you to do those things.
So we can review exactly how and where you’re spending your time and to do it in an honest way. Because sometimes we’re spending some time and we’re not really attributing the right amount of time, either we’re underselling ourselves or overselling ourselves. You can typically also see that 20% of your time spent represents 80% of the tasks you could be delegating. This can help you see the stuff that you don’t have to continue doing. Chances are you’re spending a significant amount of time doing work that may not be the best use of your time.
And we’re going to see that in the dashboard in the database. When you see that distribution of your time spent, you can easily be like, oh yeah, I see that here. I don’t have to be spending so much time on this anymore. Like I said, we’ll see that in the second part of the workshop. But for now, just think of accounting for your time investment so we can later apply the 80 20 rule to how you’re spending yours.
Now, we’ve talked a bit about time. The next topic, it’s got to be money, right? Use case number two money. 80% of your revenue typically comes from 20% of your well, that’s going to depend largely on how your business model is structured, how that distribution is. For instance, if you sell services, the majority of your revenue will typically come from a specific segment of customers, which make up 20% of your overall customer list.
When you sell digital products, you’ll often have 80% of that revenue coming from 20% of your sales. So maybe you have a low priced offer that generates some income. It makes probably more sales than your other offers, but it brings in the least amount of revenue. It’s the high ticket programs you sell on the back end that generate the most revenue for you. Perhaps you have an ecommerce business where you sell hundreds of products, but even then you’ll typically find that 80% of your revenue is coming from 20% of the products you sell.
And the clincher with this business model is it usually isn’t the same 20%. It’s going to depend on what you’re promoting. Sometimes it’ll be seasonally based, sometimes it’ll be more categorical. And you may have hybrid models of this as well where you sell maybe you sell services and digital products and your services bring in the bulk of the money, and your digital products bring in a small amount of money, but it’s a good lead generator. All this to say how that shows up is really going to depend on your business model.
Chances are, though, that you can look at your revenue and see a big chunk of it coming from a very specific area. So specific customers, specific products, specific sales, specific campaigns. We’ll look at this more in depth in the second part and see the distribution of that on a graph.
But our next and third use case relates to lead generation or how you’re getting people on your email list. 80% of your leads usually show up as 20% of your we have marketing channels, opt ins revenue.
So most of your leads will come in from one or two marketing channels. You’ll typically have a handful of opt ins or free offers that produce exceptionally well for you compared to how your other optins, your other free offers perform. And you’ll usually have a handful of your subscribers, your leads that are actually buyers of your products. Now let’s just back it up a moment and talk about your marketing channels. Let’s say your social media isn’t where most of your leads are coming from.
Does this mean you should spend less time on those channels? Not necessarily. Social media isn’t typically going to be your most statistically significant lead generator. Keep in mind what social media is for. It’s a billboard.
It’s not a cart processor. It’s not a lead generator. Nobody’s opening their social media apps with the primary intent to be sold to, right? If we go back to the ABCs of digital marketing that I speak to in the Roadmap to Optimization, you have a for attracting new audiences, b for building relationships, and C for converting to sales. Social media is where you do most of the attracting and some of the building.
Social media serves a different primary purpose from lead generation. It’s your billboard and it’s to your benefit to approach it with that viewpoint. Just because a marketing channel isn’t showing up for you as a top lead generator, it doesn’t mean you should stop or you should pull back on the time you’re spending on it. It’s just about getting clear about your intent for the use of that marketing channel. Because if you are spending time on a specific marketing channel that you expect to be a lead generator, let’s say you’re running an ad campaign to grow your email list and then you see that something else is outperforming that investment.
When it comes to your email list growth, you can probably save yourself some coins by doubling down on the channel that is delivering, right?
Same sort of deal When it comes to your website performance, use case number 4: 80 percent of your website traffic represents 20% of your traffic sources your pages, your posts. So look at your website traffic and you’ll see that a huge majority of your traffic is coming from one to three sources. Look at what pages your top performing pages are, because usually most of your traffic is going to just a handful of pages that you have.
So look at them and look at maybe your top five most visited pages that will likely make up 80% of your traffic. And when you’re looking at those pages, ask yourself, are there ways of improving the visitor experience for those pages? Are there ways of making your offers, your value, your message even more evident or accessible on those pages? What about your posts? What are what are people interested in hearing and reading and absorbing from what you have to offer?
Again, are there ways of improving those specific posts that are getting the most traffic? And can we keep in mind throughout this workshop, we are not creating a to do list for you here today. Okay? Today is about creating awareness around what results and what returns you’re seeing for the efforts you’re putting forth. It’s about better understanding the cause and the effect of your work.
It’s neither good, it’s neither bad. All of this just is. But when you host your quarterly CEO day when you have a content strategy session. Take this information as a sort of backbone while you flesh out your ideas, your planning, your optimization. That’s what this is about, looking at your results in a way that will help you generate better results the next time around.
Use case number five email marketing. 80% of your subscribers, 80% of your content represents 20% of your most engaged with emails, subject lines, buyers. Because if we see you’re most engaged with emails, you can expect the majority of those engagements will come from a specific segment of your email subscribers and they’re going to represent a specific type of email that you’re sending out. Same deal with your subject line, same deal with the sales you make from your emails. You’ll see the same subscribers, the same type of content resonating more often than others.
So what can you do with this information? Well, you can use this information to create better segmentation within your email list. For instance, if you have a segment of people who are engaging the most with your emails and you see that there’s a thread, a commonality, a trend with those types of subscribers, that they have a specific opt in. That they’re all into. You can see that those subscribers that had that one specific opt in are more likely to be engaged throughout the client journey.
Maybe you can find ways to expose your less engaged subscribers by putting that offer in front of them, by putting that high value content on their radar and maybe turning them into more engaged users. You can use this information to inform the types of subject lines you’re going to use during a launch because you can see that sort of 20% of subject lines representing 80% of what is getting you results. Well, you can sort of repurpose that formula of how you wrote those subject lines in your next launch because you know they perform well for you.
Same deal with your affiliate marketing. Use case number 620 percent of your affiliates represents 80% of your sales, but also 80% of your commissions come from 20% of your relationships.
This kind of goes both ways. You have people who promote and sell your offers and you’ll typically have a handful of collaborators who bring in the biggest number of your sales. Likewise, when you’re promoting and selling other people’s offers, you’ll find that 80% of the commission payments that are made to you will come from 20% of the products you actually promote.
SOCIAL MEDIA ENGAGEMENT
Use case number seven social media engagement. The social media engagement is a little trickier only because there’s just so many other factors to consider.
But you’ll have a small amount of the content you put out and topics that you cover that will generate the biggest part of your engagement. Same thing with your followers. You’ll see the same people liking commenting slipping into your DMs. It’s a good idea to notice the people noticing you, right? Especially when they’re such a small segment of your overall followers. Hashtags you can expect the same handful of them to be your biggest producers as well.
You’ll see similar things happening with your organic traffic. Use case number eight, where the same few keywords will bring you the most search results. It’ll yield the most traffic. Hone in on those and how you can maybe better use them with your future content creation strategies.
Look at the pages, the posts. Again, you don’t have to look at the whole enchilada when it’s a handful of top performers that’ll tell you the story of where you can niche down on or what you can improve. And what’s more is you can look at those specific pages, those specific posts, and make sure that they’re set up for your audience to do the next thing that you want them to do. For instance, let’s say you have one specific page that performs really well for you and you don’t have an opt in on that page to learn more. This could be an opportunity for that top performing page to perform in more ways than one for you.
It can be a little more intentionally designed to follow the client journey that you have in mind for your audience.
Finally, we have ad campaigns. Use case number nine if you’re running ads you’re all too familiar with, the 80 20 Rule impacting your campaign performance, right? You’ll have specific ad sets, specific copy, specific creative audiences, even specific platforms that perform well for your lead generation and your sales made. And just to keep things interesting, these seem to be ever changing.
So what worked six months ago or even six weeks ago may no longer perform well for you. When people talk about how you have to be ready to test your ad campaigns, this is it. You need to throw a little spaghetti at the wall to figure out what is the right combination of stickiness for who you’re trying to reach and with which offers and when you’re doing that.
As a little bonus, let’s talk about how the 80 20 Rule impacts the feedback you’re receiving. You’re going to get all kinds of feedback.
Remember, a small segment of this will be complaints and they’ll typically mostly be the same complaint. This is valuable for you to take action on improving the customer experience. If you have just a few complaints come up over and over again, it’s a good idea to do something about it, right? But let’s also keep in mind that this applies to the trolls. You’ll get mostly love from your comments and your DMs, but you’ll occasionally get the trolls.
And even though they represent a small segment of what people are saying, the icky words, I don’t know what it is, but they have a way of just staying with you harder and longer, right? So this is your permission slip to let the 80 20 rule deal with this because the trolls don’t make up the big picture of who you are or the work you do. Trolls and negative comments. They can and they do exist, but they are not where your impact is made. Okay, say it with me.
They are not where your impact is made. Now, I’ve repeatedly said the 80 20 rule. The 80 20 rule. Listen, what we’re really talking about here is taking a limited view, limited scope on top, performing results, and approaching that as low hanging fruit to get even better results next time without having to put a bunch of extra work into it. So is the split always going to be 80% 20%?
Absolutely not. But what we’re looking at is how can we get the biggest chunk of our effects to generate better results for us, desired results for us, by just impacting a small segment of the causes. And nothing makes it easier to see this than seeing it on a dang graph, right? So we’re going to punch in the numbers in this easy peasy database that I have for you. We’re going to work through two examples.
The first case study is we’re going to look at the impact of the 80/20 rule on your time. And then the second example will be applying to a marketing campaign, which is going to generate a fancy pants dashboard like this one. If you want to access this dashboard, you can join the Membership to Get Data Driven for just $19, and you’ll have access to that dashboard. Talk soon, baiiie!!
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