Pareto’s Law Applied To Business
The Pareto principle (also known as the 80-20 rule), states that for many things, 80% of the consequences come from 20% of the causes.
For instance, you wear 20% of the clothes in your closet 80% of the time. This equation also affects your business, as in 80% of your business will come from 20% of your clients.
The 80/20 Rule can help you streamline your schedule so you can spend time where it really counts.
Have you ever noticed that the people who ask the most questions, or are the most difficult, are usually the people who place the smallest orders?
While it is certainly important to provide great customer service, you need to place limits on your time and use it to your best advantage. Always be considering the ROI of your time.
For a test case, let’s say you sell cosmetics and a potential customer wanted to know if the product was tested on animals. Once you gave them the answer, they then wanted to know if only organic materials were used, so then you research that answer, and when you get back to them they will inevitably have another question, and then another question, and so forth.
An exchange like this could go on for several days, and at the end of it, the potential customer may not become your customer at all. If a potential customer is “on the fence” about a sale, do everything you can to get the sale, but if they finally hesitate, let them know you are available to help them place their order, once they are ready. Move onto the next opportunity.
It definitely feels good to get a sale and gain a new customer, but the time you spend chasing down small sales may be better spent on the “clients” who are ready and willing to place large orders.
Always direct your customers to your FAQ first, then support. Many of them will be better served immediately by the FAQ’s than for them to wait for live support.
But giving them the choice reduces the amount of actual support time, while incresing customer service.
Email can be another big time waster. Setting aside a set time in the morning and again in the evening to respond to your email can save you time during the day. Not very many of us have to be glued to our email boxes 24/7.
Of course another option is to actually hire a virtual assistant to answer your general business email. There may be some things you need to respond to yourself, but the vast majority can probably be handled by someone else.
Start a time log where you document time spent and results achieved. Experiment a little by tracking the time you spend on various tasks to determine which ones are actually productive.
It only stands to reason that devoting more time to those activities that have the highest return, will greatly increase your productivity and profits. Spending time in your highest value tasks exponentially increases your bottom line. In this case, you want to spend most of your time on those 20% of customers who represent 80% of profits.
Try it and notice how much more you accomplish. See you next time.