This week James introduces the 80-20 principle to show that looking carefully at your customers can lead to super success.
I want to highlight an economic concept that is really useful to anyone looking to improve their business. The Pareto principle or the 80–20 rule says that for many events roughly 80% of the effects come from 20% of the causes.
So how might this affect you in your business?
If you can identify which of your clients or customers are:
- The 20% who produce 80% of your profits
- The 20% who produce 80% of your complaints and hassle
…then I’d suggest that it can make a profound difference. If you go on to extend this rule for other factors like:
- The 20% of your products that produce 80% of your profit
- The 20% of your sales staff that produce 80% of the sales
- The 20% of your marketing that produces 80% of the results
…then you can make decisions that with drive your profits to super success Of course it can be hard work analysing who are the best and worst customers, staff or suppliers. But having identified them you can then get to work replicating your best areas.
The Accountancy People offer a free initial consultation where we will review your finances and your tax efficiency and help you understand how the tax and financial administration works. We can certainly discuss the application of the 80-20 principal too! For further information please contact James Sheard on 0161 303 0610 or see www.theaccountancypeople.co.uk. Fees are agreed in advance, so there are no surprises.
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