The 80/20 Principle in Business - Lessons Learnt from the Next Level Business Booster Event [Entrepreneurship Blog]
Concentrate on what actually matters by: really looking after your best customers, getting rid of time wasters and focusing on products and services with the most profit!
I know both guys from one of my previous businesses, Dunfermline Talks Business, the networking group I used to run in the restaurant, Grill 48. Ben spoke at one of these meetings about 7 years ago - how time flies!
One of the main takeaways I got from today’s event was the 80/20 rule or “Pareto’s Principle”. You may have come across this before...?
You wear about 20% of the clothes in your wardrobe 80% of the time. 20% of your efforts account for 80% of your results. 20% of your customers generate 80% of your sales.
This was a good reminder to focus on what actually matter in business. In other words, really look after your best customers, get rid of time wasters and really focus on products and services with the most profit!
The funny thing is, it’s usually the customers that pay you the least (or don’t pay at all!) that give you the most grief! Their expectations are way off and they want a premium service for a penny price tag - I wrote about this in a previous blog.
One of the messages which Alan and Ben focused on during this session was: it’s important to establish which of your products and services earn you the most money - on a per hour basis. This second part is important!
£100 which takes you a day to earn is NOT the same as £100 which takes you one-hour of work to earn!
Calculate the hourly rate of each of the products and services you sell. After you’ve done that, map them all out, in terms of how much time you spend promoting them e.g. in your newsletters, on social media, through content marketing, and through your other marketing channels.
Alan and Ben did two live demonstrations today, both were business owners in the crowd who volunteered. After working out their profit-per-hour on each product and service offered, they discovered that they were either promoting all of their products exactly the same or focusing on offerings that generated the least amount of money!
In other words, they were absolutely NOT focusing on the 20% of products or services that generated the 80% of revenue!
It sounds obvious, however, do you really know which of your products and services make the most profit…?
And if so, are you focusing on promoting them the most in your marketing activities…?
Kallum with a K
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly