By Clay Deal - Integrated Marketing Specialist at Xapsis Integrated Marketing
There are still some missing percentages in this equation
that need to be addressed. Intuition
would tell us to fill in the remainder of the equation with the respected
opposite numbers; the remaining 20% of our profits come from the remaining 80%
of our customers. The majority of
business owners and manager know this simply cannot be true. So, how do the
numbers break down? Here is a more realistic
idea: the 70-20-10 Rule.
This rule compliments the Pareto Principle. If 80% of profits come from 20% of the
customers, then 70% of the customers bring in 20% of the profits, and 10% of
the customers CUT INTO the profits. You’ve
read that right. Most likely, 10% of the
customers you are doing business with are eating up profits. This can happen for a multitude of reasons:
pacifying upset customers, allowing customers to dictate work flow,
underestimating time required on projects, etc. The list can continue on and
on.
The moral of the story is we have to identify which customers
we interact with are the most profitable, and then evaluate what makes this set
of clients different from those who are having a negative impact on our profits. Are there key characteristics that these
customers have in common? What makes this 20% different? If we can isolate some
of these traits, we then have the ability to better segment our market, and
focus our efforts on those potential clients with the key traits. This should result in less problem customers and
higher profits.
Xapsis can help your
company determine which segments your firm should be concentrating its
marketing efforts on. Our whole goal is
to Maximize your Budget, Minimize
your Worries, and Energize your Brand.
Contact us today to find out how!!
"Pareto Principle." Wikipedia: The Free Encyclopedia. Wikimedia Foundation, Inc.. 12 July 2012. Web. 23 July 2012. <http://en.wikipedia.org/wiki/Pareto_principle>
