If you haven’t heard of the 80/20 Principle, it was originally developed by Italian economist Vilfredo Paredo, that simply states 80% of our results come from 20% of our activity. When you look at your productivity throughout your day, how much of it is truly productive? How many meetings are truly necessary? What relationships that you have created are truly beneficial to both your life and business? When we take a step back we will often be surprised at the results because we assume that all of our efforts lead to the same results, but it is actually the contrary. Only approximately 20% leads us to our goals.
The 80/20 Principle in Business Relationships
How many times have you been to a networking event that you have made an effort to connect with as many people as possible with very little results? When I first started networking I did this many times, but soon realized that it was not productive. Instead I made a point to connect with a much smaller number of people to build quality relationships. It was at this point things reached a turning point, as the people I began to be introduced to were of higher caliper with stronger relationships with their sphere of influence. I made it a point to focus on creating quality relationships that lead to creating connections for people that were beneficial for all parties. When I look back at the ratio, it comes down to around 20% of my network that I’m truly engaged with on a regular basis. Ask yourself, how big is your network and what percentage are you truly engaged with on a regular basis? Does it mirror the 80/20 principle?
How do I use the 80/20 principle in my business?
In any business you have to take a look and see where the greatest amount of business is coming from. For instance lets talk about referrals. If you are an active networker, you will realize that the majority of your referrals will come from certain industries, certain spheres of influence, etc. It is these groups that you should focus on the most as that is the simplest thing you can do to increase your business without making dramatic changes. As an example lets use an ice cream store that has only 3 flavors in the beginning, vanilla, chocolate and strawberry. Now supposed after a month of operating they realized that they were selling more chocolate than any other flavor and customers were providing feedback that they wanted more options with chocolate. The obvious choice would be to offer exactly what they are looking for, more variations of chocolate to increase your sales. In most businesses by narrowing our focus down to what is generating the most revenue, then asking our clients what they are wanting we can find the simplest ways of increasing our business utilizing the 80/20 principle. The more you keep the 80/20 principle in mind in business the greater the chances you will have of achieving the success you are looking for.