Income Acceleration Group Coaching Program. Copyright © 2013 Expert Elevation. All Rights Reserved. ExpertElevation.com  

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The  Pareto  Principle  How  it  can  help  you  grow  your  income    

exponentially  by  attracting  more  Ideal  Clients    The  Pareto  Principal  was  named  after  the  Italian  economist  Wilfredo  Pareto,  who,  in  1896,  found  that  80%  of  the  land  in  Italy  was  owned  by  20%  of  the  population.      The  odds  are  you’ve  heard  of  this,  better  known  as  the  80/20  rule.      

The  80/20  rules  states  that  for  many  things  roughly    80%  of  the  effects  come  from  20%  of  the  causes.  

 The  80/20  rule  applies  to  many  things  in  business  and  in  life.    For  example,  20%  of  your  time  produces  80%  of  your  results.  This  also  means  that  20%  of  your  customers  will  bring  you  80%  of  your  sales.      Unfortunately,  many  business  owners  are  not  conscious  of  the  80/20  rule  and  end  up,  unknowingly,  wasting  their  time,  resources  and  energy  marketing  to  the  wrong  customers.    It  is  a  natural  response  to  want  to  please  ‘everyone’,  and  it  feels  intuitively  wrong  to  ignore  people.      While  networking  and  marketing  it  feels  like  you  should  be  shouting  out  your  message  everywhere  and  to  everyone,  but  this  strategy  goes  against  the  80/20  rule.    All  customers  are  not  created  equal.  Some  will  earn  you  large  profits,  some  will  bring  you  a  small  amount  of  revenue  and  some  will  make  you  lose  money  and  will  waste  your  time.    Your  key  business  strategy  should  be  to  focus  on  the  20%  of  customers  that  bring  you  the  80%  of  your  revenue.    Now  think:  if  your  ideal  clients  represent  80%  of  your  income  and  they  are  only  equivalent  to  20%  of  the  total  customers  you  have  then  you  could  grow  your  business  a  lot  by  increasing  the  number  of  ideal  clients  you  have.    What  would  happen  if  100%  of  these  customers  were  ideal  clients?    

For  this  example  let’s  say  you  have  100  clients  that  give  you  $10,000  of  income  per  month.      

 

Income Acceleration Group Coaching Program. Copyright © 2013 Expert Elevation. All Rights Reserved. ExpertElevation.com  

2  Of  the  100  clients,  only  20  clients  represent  your  ideal  clients  and  those  people  provide  80%  of  your  total  income.      So  the  amount  of  money  they  bring  to  your  business  is:  $10,000  *  80%  =  $8,000  per  month.    This  means  that  your  20  ideal  clients  give  you  $8,000  a  month,  while  the  other  80  people  only  give  you  only  $2,000.    

 Now  let’s  take  a  look  at  how  much  more  you  would  earn  if  all  your  clients  were  ideal  clients.        

If  20  ideal  clients  bring  in  $8,000  month,  which  means  each  client  is  worth  $400  month.    (20  x  $400  =  $8,000)    Then  80  ideal  clients  would  earn  you    =  $32,000  month  (80  x  $400  =  $32,000)  

 So  you  could  go  from  earning  $  10,000  a  month  to  $  40,000  a  month  by  attracting  only  ideal  clients.      Now  I’ll  acknowledge  that  it  would  be  difficult  to  have  100%  of  your  clients  be  ideal  clients  but  think  of  the  benefit  of  attracting  more  than  you  are  now.        Here  are  some  tips  for  how  to  analyze  your  customer  list  to  create  a  list  of  Ideal  Clients:    These  lists  can  include  your  email  distribution  list,  past  customers,  or  even  Facebook  followers.    

1. Analyze  your  sales  data  for  your  past  customers  and  apply  the  R-­‐F-­‐M  rule:  Make  a  list  the  customers  on  your  list  who:  

a. purchased  most  Recently,    b. purchased  more  Frequently,  and    c. spent  the  most  Money.    

 These  people  compose  a  large  chunk  of  the  20%.  You  should  continue  to  focus  your  marketing  efforts  directed  at  these  particular  customers.  

 2. Research  the  geographic  location  of  your  most  frequent  customers.    Use  your  point  of  

sale  system  to  determine  where  they  live.    

 

Income Acceleration Group Coaching Program. Copyright © 2013 Expert Elevation. All Rights Reserved. ExpertElevation.com  

3  Plot  these  customers  on  a  map  to  get  a  good  visualization  of  the  location  of  customer  groupings  throughout  your  neighborhood,  city,  country,  etc.    You  will  start  to  notice  trends  in  the  locations.  

 Using  this  data,  you  can  target  your  marketing  on  these  certain  locations.  For  example,  Facebook  can  target  ads  at  people  who  live  in  certain  locations.      You  can  also  select  people  in  your  own  contact  list  that  live  in  certain  locations  and  send  out  email  or  mail  communication  to  them.  

 3. Determine  your  customer’s  niche  or  demographic.  

 You  will  find  that  your  most  frequent  customers  will  fit  into  a  certain  demographic.      E.g.  Married  women,  age  35  –  45,  with  2  kids,  and  a  part-­‐time  job.  

 Keep  an  open  mind  when  determining  what  this  particular  demographic  is.  You  can  redirect  your  marketing  campaigns  at  that  particular  demographic.    

 4. Break-­‐up  with  non-­‐productive  leads.    

 There  will  always  be  that  small  percentage  of  customers  who  demand  your  time  and  resources  and  ultimately  put  you  in  the  red.    

 Whether  they  have  made  a  small  purchase  in  the  past  or  said  they  would  purchase  from  you  in  the  future,  some  people  just  aren’t  worth  the  effort.  Politely  tell  these  people  that  you  think  they  would  be  best  contacting  someone  else  who  can  help  them.  

 5. Identify  your  spontaneous  big-­‐purchase  buyers.  

 Opposite  to  the  non-­‐productive  leads,  the  spontaneous  big-­‐purchase  buyer  will  appear  from  nowhere  and  make  a  large  purchase.    You  may  not  hear  from  them  for  a  few  months  but  then  they  will  be  back  for  more.  

 These  are  the  customers  you  should  focus  on.    Focus  your  energy  building  a  relationship  with  these  people,  not  the  people  who  tie  up  your  phone  lines  and  email  inbox  but  never  buy  anything.  

 As  you  start  to  focus  your  efforts  on  the  most  lucrative  leads,  using  the  tips  above,  you  will  find  the  profile  of  your  list  will  resemble  your  ideal  customer  more  and  more.  As  this  happens  your  marketing  will  become  more  effective  and  your  sales  will  grow  exponentially.