Pareto’s Principle – 80/20 Rule

Pareto’s Principle – 80/20 Rule

I write often in Great Ideas about the Pareto Principle. Here’s a better explanation of what the Pareto Principle is and how you should use it.

Italian economist Vilfredo Federico Damaso Pareto observed in 1906 that 80 percent of the land in Italy was owned by 20 percent of the population. Later, he found this seemed to apply to other parts of life, such as gardening: 80 percent of his peas were produced by 20 percent of the peapods. Over time, this concept has come to be known as the “Pareto Principle,” “The 80/20 Rule,” and even “The Vital Few and Trivial Many Rule.” Another of Pareto’s most noteworthy theories is that human beings are not, for the most part, motivated by logic and reason but rather by sentiment.

What does this mean for sales?

Do 20 percent of your clients produce 80 percent of revenues/sales?

-Focus on key prospects/clients.

Do 20 percent of your actions produce 80 percent of results?

-Focus on the things you do best and do them well consistently.

Does 80 percent of success come from just 20% of the effort?

-Success usually comes from doing things consistently well, not with extreme effort.

Pareto’s Principle, the 80/20 Rule, should serve as a daily reminder to focus 80 percent of your time and energy on the 20 percent of your work that is really important. Don’t just “work smart,” work smart on the right things.

This week take an hour and focus on getting rid of things, clients, and tasks that don’t bring value. Re-focus your efforts on the items that have the greatest payoffs.

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