As a small business owner, growing your business is a top priority. It’s always been that way, but the circumstances of the past year have challenged everyone – even savvy entrepreneurs. The stakes are high and the unknown factors are daunting. We get it.
To cut through the clutter, we’d like to introduce you to the Pareto Principle.
“The Pareto Principle, or “80/20 Rule” as it is frequently called today, is an incredible tool for growing your business,” says serial entrepreneur Dave Lavinsky in this Forbes magazine. This principle has stood the test of time for more than a century.
In short, 80% of your results come from 20% of your efforts.
The 80/20 Rule has been proven effective across many industries and in improving health and relationships, too!
When applied to sales, you’ll find that 80% of your sales are coming from the top 20% of your customers. When you figure out qualities common to those top customers and their experience with your company, you can prioritize getting more customers like them to drive exponential growth. Or you can take your chances, cast a very wide net and see what happens.
Many of today’s major ecommerce websites have used Vilfredo Pareto’s 80/20 Rule to increase traffic, sales, order values and other key performance indicators. But every type of business can use it – from professional services like law, engineering or accounting firms to beauty salons, restaurants and medical practices.
If this is new to you, don’t worry.
Small businesses can get started with free tools like Google Analytics that provide data about your site.
To get started, we recommend working with three reports:
- Audience Overview: a snapshot of everyone who has visited your site on a daily, weekly or monthly basis.
- Acquisition> All Traffic> Channels: see how your visitors got to your site (via an online ad, social media, a search engine, another site, an email etc.) When you’re ready, you can take a deeper dive and look at conversion (customers who purchased), revenue and engagement metrics, as well.
- Behavior > Site Content > Landing Pages: tells you what pages are the most popular with visitors and what ones are the least popular. What do the most popular pages have in common? What is holding their attention? How can you apply that insight? Likewise, never overlook the least popular pages – you can investigate to see if there’s a technical or some other issue. On the other hand, if it’s a topic your visitors have no interest in, that’s a terrific lesson to learn.
These are just some of the many ways to get important information to help you make better decisions, including where to concentrate your efforts.
With most small business owners working days, nights and weekends, how you allocate your time is paramount.
Have you ever applied the 80/20 Rule? What’s your story? What other tools have helped you know where to invest your time and effort?
