The 80/20 Rule aka The Pareto Principle

You’ll hear the 80/20 rule talked about a lot in business and finances and you’ll constantly hear bloggers in these fields mentioning it. It’s actually quite a simple principle and one that when mentioned most people seem to understand almost immediately. If you’ve never heard of it, or don’t understand why it’s so important, continue on reading and you’ll quickly see why this discovery by Pareto is vital to your business and personal performance and productivity.

The Pareto principle simply defined says that, for many events, approximately 80% of the effects come from 20% of the causes.

Pareto discovered this principle while gardening when he observed that 80% of the peas in his garden were produced by 20% of the peapods. He then took this information and applied it to land ownership in Italy by showing that approximately 80% of the land was owned by 20% of the population. He published this in his paper at the University of Lausanne titled, “Cours d’économie politique“.

The Pareto principle has since been applied with great accuracy to a number of other areas including many areas of business, finance and self-help.

For example, in business you’ll often hear the phrase 80% of your sales comes from 20% of your customers. In self-help books you’ll hear the statement that 80% of your productivity comes from 20% of your efforts, etc.

The reason this principle is so important is that you can take it and apply it to almost anything you’re doing to increase your productivity, sales, reach, etc.

After I first heard of this principle I applied it to my marketing accounts. I quickly realized that 20% of my marketing efforts were bringing in 80% of the traffic to my websites. So why does this matter?

Even though 20% of my marketing efforts were bringing in 80% of the traffic to my sites, I was still spending equal time on all my marketing efforts. The other 80% of my marketing efforts while still providing some traffic, didn’t warrant the amount of time I was spending on creating and maintaining those parts.

By freeing up time by removing those things that were bringing in the least amount of success I could then focus that time on new marketing opportunities! This easily makes up for the 20% loss by removing that extra 80% of effort on futile marketing strategies.

Want to know why this principle is even better than it might seem than just from what I said above?

You can continually practice this principle! This means, every couple months I can go back through my marketing efforts and again single out what 20% of my efforts are producing 80% of my results, thus freeing up more time once again!

The continuing practice of this principle can be applied to everything in your life. Whether it’s marketing, sales or your personal productivity. By doing so, you’ll quickly free up wasted time allowing more time for relaxation or working on things that will actually thrust your business forward!

So, if you’ve never heard of the Pareto principle, or if you have and haven’t ever applied it to your life or business, start today and you’ll quickly realize how powerful this little principle can be!

Let me know in the comments below how you’re using the Pareto principle and the effects you’re seeing from it!

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