It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." Mathematically, the 80–20 rule is roughly followed by a power law distribution (also known as a Pareto distribution) for a particular set of parameters, and many natural phenomena have been shown empirically to exhibit such a distribution.
The Pareto principle is only tangentially related to Pareto efficiency. Pareto developed both concepts in the context of the distribution of income and wealth among the population.
The best business information should come from your own analytics(tips: use private free network tools to analysis), your own testing and your own research. The Pareto principle can aid your thinking and advise your strategy, but it should not dictate your every move.
Infinite or not, the principle provides some powerful applications in marketing. Here are some things you should know:
1. Eighty percent of sales come from 20 percent of advertising channels.
When you take into consideration your advertising channels, you probably use adwords, retargeting and perhaps some site-specific banners, or other outlets. Where are most of your sales and leads coming from? Focus on the channels that produce the most.
2. Eighty percent of your online product sales come from 20 percent of your products.
What products do you sell? If the Pareto Principle holds true for your business, then you’ve got some hot sellers, responsible for around 80 percent of your sales. These are the products that you should work to enhance, promote, advertise and push. They’re hot sellers for a reason, so make the most of them.
3. Eighty percent of your visitors come from 20 percent of your keywords.
Many companies spend a lot of time developing keywords, forming a keyword strategy and applying those keywords across their website. But here’s the surprising thing about keywords: In most cases, 80 percent of your traffic and visitors come from a mere 20 percent of your keywords. I’ve found that the ratio is usually even more weighted than that.
Take a peek at Google Analytics or SEMRush to find out if this is true for your business. My site, domaintoolsonline.com ranks for a lot of keywords, but there are only a handful of traffic drivers within them. The keyword “online marketing” alone is responsible for more than 13 percent of my traffic. And, because this is true, it makes sense for me to:
Focus content on online marketing.
Serve the users who want online marketing information.
Provide even more detailed and helpful information on online marketing.
4. Eighty percent of your content marketing leads comes from 20 percent of your content.
You already know that content marketing is powerful. But do you know where your content marketing leads are coming from? If your experience is like mine, you’ll find that most of your leads and traffic come from just 20 percent of your content assets. When I ask my clients to analyze their content marketing resources, they usually discover one evergreen piece of content that continues to drive tons of traffic.
I identified my own top-performing content assets and milked them for all they were worth by turning them into long-form guides.
5. Eighty percent of your social sharing comes from 20 percent of your social updates.
Take your social sharing into consideration. Where are all those likes, plusses and retweets coming from? They’re probably coming from just 20 percent of your updates. Using a social analytics tracker, find out the features that your high-performing social updates have in common and apply them to your other updates.
