The Pareto Principle - Southport

The Pareto Principle a.k.a the 80/20 Rule

The 1 – Page Marketing Plan by Allan Dib

Vilfredo Pareto was a 19th-century Italian economist who noticed that 80% of the land in Italy was owned by 20% of the population. Hence the Pareto Principle, commonly known as the 80/20 rule was born. It turns out, the 80/20 rule holds true for more than just land ownership in Italy. It holds true for almost anything you care to think of.

Some examples include:

80% of a company’s profits come from 20% of its customers
80% of software usage is by 20% of its users
80% of wealth is owned by 20% of people

In other words, the Pareto Principle predicts that 80% of effects come from 20% of causes.

The 64/4 Rule

You can apply the 80/20 rule to the 64/4 rule itself. Take 80% of 80 and 20% of 20 and you end up with the 64/4 rule.

What this means is 64% of effects come from 4% of causes.

To put it in another way, the majority of your success comes from the top 4% of your actions. To phrase it yet again, 96% of the stuff you do is a waste of time (comparatively).

The most surprising thing is that the 80/20 rule and the 64/4 rule still hold up in a remarkably accurate way. If you look at wealth distribution statistics from the last century, you’ll notice that the top 4% own about 64% of the wealth, and the top 20% own about 80% of the wealth. This is despite this being the “information age”. You’d imagine that a hundred years ago only the wealthy had good access to information, hence it’s understandable why they held 80% of the wealth. Yet this wealth distribution statistic still holds up today, an age where information has been democratised and where even the poorest people have pretty much the same access to information as the wealthiest people.

This proves that lack of information isn’t the issue holding back the bottom 80% of business owners – it’s human behaviour and mindset.

Applying these rules to your marketing strategies and business growth techniques has a remarkable way of clearing the dust off the mirror, and allows you to hone in on that top 4% of action that will bring you the profit margins you’ve been aiming for.

If you’re interested in learning more about top marketing strategies like this, you can sign up for free for our 6 Steps to Building a Better Business Seminar which is being held on the 23rd of November at the Bliss Hotel in Southport from 9am-12:30pm. Even the parking is free!

If you’re unable to attend in person but would still like this free learning opportunity, we are holding an online zoom webinar on the 25th of November from 5pm-7pm.