Customers and Italian Land.

Vilfredo Pareto was an Italian farmer and economist who started noticing something startling in the late 1800’s. He notices that about 80% of the land in his area was owned by 20% percent of the population. He started talking about this in his famous work Cours d'économie politique.

After this, people started seeing more and more cases of the 80-20 rule in action. Farmers would notice that 20% of their fields would produce 80% of the crop. In the US, 20% of all citizens pay 80% of the tax revenue. And 20% of the richest people in the world control 82% of the wealth.

This is a key figure to know, because it can contribute to so much more than that. If you were to start tracking your own activities, odds are you will see Pareto’s principal in action. You will find that 4/5s of your effort probably does not move the needle. It does little more than keep your whirlwind in control.

Think about it a moment. Odds are good your worse 20% of customers take up 80% of your time and customer service complaints.

On the other end of the spectrum I bet 20% of your clients produce 80% of your revenue.

That hits pretty close to home, doesn’t it.

It may be time to streamline your business. It may be time to consider firing your worst customers and double the time you spend with your top customers.

I know most of us will never do this. Either we do not have the power to make this kind of decision ourselves or we will not move away from the people we have already sold.

If you are just starting your business, however, you can start creating good habits a lot easier before you develop bad ones. Do not chase traffic numbers for the sake of traffic. work hard to make sure you get the right kind of traffic.

For me, I would rather have 10 die-hard fans as opposed to 100 followers. I will take passion over quantity every time. The die-hard fans will be much easier and more fun to deal with as opposed to a bunch of mediocre customer who are willing to leave you over price.