The 80/20 Rule On Steroids – For Lead Generation Websites

June 22, 2010 on 4:23 pm | In Internet Marketing | 21 Comments

I’m sure you’re familiar with the 80/20 rule – the astonishingly elegant discovery that in a huge variety of scenarios, 20% of inputs result in 80% of outputs (more or less).

No doubt, you’ve also heard these familiar examples, such as:

20% of customers drive 80% of your profits

80% of sales come from 20% of your products

80% of your value is delivered in 20% of your time

Etc.

But what you may not know is that the 80/20 rule is “fractal” – meaning you can apply it infinitely. Let me give you an example, applied to your website:

20% of website visitors will drive 80% of opt-ins

20% of opt-ins will drive 80% of enquiries

20% of enquiries will drive 80% of sales

20% of sales will deliver 80% of profits

In the example above, 0.16% of website visitors drive 41% of profits.

What about in reality?

Well, in the case of Marketing Results, 1% of our database drives 90% of revenues.

The next 3% drive the remaining 10% of revenues, and the last 96% represents a cost.

So a lot of what I do from a marketing perspective is simply aimed at “finding the top 1%”.

If I can find twice as many of “the top 1%”, our business would double. (Actually resourcing for that growth is another story — more on that below).

What this means for you is – your marketing should be LASER-focused on the 20% that generate 80% of the results at EACH stage.

A business owner recently asked me, “what should I do about the 80% of website visitors who leave my website without enquiring or opting in?”

My answer: NOTHING – focus on what to do with the 20% who ARE taking action.

What should you do with the 80% of people who don’t open your emails?

NOTHING. They ain’t THAT interested. They ain’t buying.

Focus on having the critical conversations you need to have with people who ARE listening.

How about your marketing budget?

80% of your marketing budget should be spent on the top 20% of your database.

I would sooner send an elaborate direct mail package costing $30 to a red-hot prospect than spend 10c on a faxout to an unqualified suspect.

When we start working with a new client, one of the first things we do is pinpoint the critical leverage points that are the hidden drivers of their leads, sales and profits.

Because working on the WRONG parts of your marketing process is almost as bad as not working on anything at all.

On that note…

Due to overwhelming growth at Marketing Results over the last 6 months, we are not accepting any new clients until at least 1st September.

You are still welcome to enquire regarding your upcoming online marketing and lead generation projects. Just be aware that we are currently running a “waiting list” system, with the earliest new start date 1st September and a requirement of a nominal deposit to reserve your place for:

Web Design Projects
Pay Per Click (Google AdWords) Optimisation
Conversion Optimisation
Holistic Lead Generation Consulting and Implementation

21 Comments »

RSS feed for comments on this post. TrackBack URI

Very interesting article indeed. Heard about 80/20 rule but idea of applying it on every single step is new to me. But ofcourse this is the way to go with marketing if you can cut all the weight and only keep the good stuff…

I recently started only focusing on buyer keywords instead of the broader ones and my results have been doubled. _Most_ of the time these keywords are easier to target cause of less competion.

Thanks for sharing and keep it up!

Comment by Alex@Pferdehaftpflicht — June 23, 2010 #
You mentioned some great points here in your post. Like for example concentrating on prospective buyers or interest website visitors rather than spending time, effort and money on those that aren’t really interested. One should really have to know who, when, and the why of focusing on a certain thing.

Comment by Andrew @ Blogging Guide — June 23, 2010 #
I’m pretty new to IM, etc., but have applied the idea to keywords also – after a bit I get a feel of which keywords bring buyers, and focus on those keywords (and new related keywords).

I know it’s pretty silly basic stuff to the pros, but the 80/20 concept seems to apply for all skill levels.

Comment by Joe Tavel@ replacement carafe — June 23, 2010 #
I like this thinking. You can reverse this as well 80% of keywords give 20% of business and you can stack these to see that what is really important is conversion and attention to landing and conversion pages. Paid traffic is expensive and free traffic is becoming expensive in terms of time and labor involvedd So, it’s important not to waste what you have and to make sure that what you are getting is traffic that will convert into paying customers.

Comment by elderco — June 24, 2010 #
I agree with your calculation, but have one thing to add.
I suggest improving the message. On your landing page, you should reflect what you promised in the PPC ad. Then the visitor is not disappointed and leaves. Ad and LP should always match. By doing this you possibly can improve the ratio and quality of your opt-ins.

Comment by Blumenversand — June 25, 2010 #
I was intrigued by the 80/20 concept. I’ve just recently been looking into marketing and I found this post really helpful and gave me a new perspective on how to divide time and attention and resources.

Comment by hearing aid batteries — June 25, 2010 #
Wow! You’ve just given me a massive aha moment!

I really need to focuss on that 1% of people for my emails to maximize my results.

Cheers for the simple, but extremely powerful tip!

Gideon Shalwick

Comment by Gideon Shalwick — June 25, 2010 #
I’ve certainly seen that the 20% or less of on-line traffic turns into off-line engagement and sales. However, I also believe in Barnum’s line that a customer is born every minute so, I do what I can to be ready for those new customers as well.

Comment by John, Vancouver WA Homes — June 26, 2010 #
Interesting Post!!, well the point here is to focus on the percentage of visitors, who would be interested in buying my products or services, rather than having a general focus on each and every visitor, which is a waste of time. narrow down your focus towards those positive leads, well and good. But the point “80% of your marketing budget should be spent on the top 20% of your database” is contrary. How can you direct your marketing efforts towards your prospective leads only, when you do not know whom they them, but of course you can direct your marketing efforts towards your target audience, from that stage , you can narrow down your focus on the positive leads to convert them into sales. Any way enjoyed reading the post.

Comment by Kavin Paulson — July 5, 2010 #
Wow great post, i had no idea 20% of customers drive 80% profits. I thought it would have been a lot lower. Keep posting these awesome articles, i love them!

Thanks!

Comment by Charleston Fishing Charters — July 6, 2010 #
This is some fantastic information. I also had no idea that 20% of customers were the ones driving that 80% of profits. Those are some crazy numbers.

Comment by Private Commericial Mortgage — July 22, 2010 #
I was just having this conversation with a real estate agent about their marketing. This rule is true in many different avenues of life.

Comment by Darrell Walters — July 24, 2010 #
It always amazes me how Pareto’s Principle applies to almost all sectors of business and commerce. What’s more it’s a well timed reminder for me to focus on the 20 percent that matter. It’s the 20 percent of the things I do during the day that produce 80 percent of the results.

Comment by Teddy — July 27, 2010 #
Hi. I wasn’t aware of the 80/20 rule. It is really interesting what you can do with some mathematical knowledge Thanks for posting this blog. I enjoyed reading your blog.

Comment by ellipsis dive — August 20, 2010 #
“A business owner recently asked me, “what should I do about the 80% of website visitors who leave my website without enquiring or opting in?”

My answer: NOTHING – focus on what to do with the 20% who ARE taking action.”

Many people are not able to comprehend this. Your calculations are strange from some people’s point of view but are very true. Some people aren’t capable of realizing that they need to focus on that 20% that really counts instead of trying to work with that 80% that isn’t interested.

Comment by john — August 26, 2010 #
Great Article, thank you for opening my mind. It is amazing that 20% of customers drive 80% of profits. The part about the top 1% is very intriguing as well.

Comment by Maurice Jenkins — September 2, 2010 #
When you put it like that yes it makes sense, ive never heard of the 20/80 rule before. but it makes sense and i need to get cracking with the 1% lol

Comment by wooden gate — September 10, 2010 #
I first learn about 80/20 rule from Yaro Starak of Entrepreneurs Journey. This is a very good rule to follow, making use what is the best effective things to do at less time that will gain great results and a high ROI.

Comment by Eleazar — November 26, 2010 #
Hi there,

This is great advice. Really great advice. I think because it calls to mind the question about whether you’re spending your time effectively. Is this action going to bring business? Could I be more productive elsewhere etc. So really good.

Thanks!

Pete @ Pure FX

Comment by Currency Broker Pete — February 14, 2011 #
Are you using drupal on this blog or another platform?

Comment by Magenballon — September 12, 2011 #
This blog = WordPress.

Comment by Will Swayne — September 14, 2011 #