One of my luxuries as an ex-pat living in Russia is receiving my copy of The Week. It contains all the important material from the UK newspapers condensed down into one magazine. One section I usually skip over are the obituaries, but this week one of them caught my eye. Joseph Juran, the father of the Pareto principle or 80-20 rule passed away at the age of 103. This post is my tribute to him.

The Pareto principle states that 80% of effects stem from 20% of causes. It was named by Juran after Vilfredo Pareto, a 19th century Italian economist who noted that 20% of the population held 80% of the wealth. Juran used this in his work to explain how 80% of production errors were made by 20% of the workers but he expanding this principle to many other business areas.

I was introduced to the principle by my accountant. He explained to me that 80% of my income as a business was coming from 20% of my clients. I’d never thought about it in that way before. I soon learned to spend more attention on that 20%!

The value of the rule is that focuses your attention on the 20% that matters. Each day at work, 20% of our daily activities will bring 80% of our results. Identify and focus on those things, as attention to them will produce the largest effect in your business. When your back is against the wall and time is running low, remind yourself of the 20%. If something gets pushed down the to-do list, you better make sure it’s not a 20% activity.

OK, I hear you. Enough theory, lets have some practical examples of this. Here are some areas I think about in relation to the 20-80 rule.

• Domain Portfolios. 20% of your domain portfolio will bring 80% of your income. Actually the ratio is more extreme that this but the principle is the same. Know which domains are your top earners and spend time optimising the advert matching and landing page structure. Keep these successful domains or niches in mind when making new purchases.
• Software submission. 20% or less of the sites will bring in 80% of your traffic. Use PromoSoft to submit your PAD files to 850 software sites but deal with the highest traffic sites by hand. Make sure you are using all the features they are offering you, your time is well spent improving your listing here.
• Customer Care. Identify the top customers and reward them. For e-commerce sites, think about a reward scheme or gift voucher. These people make the big purchases or repeat-buys, look after them!
• Affiliate Marketing. 20% of your sites will be bringing in the bulk of your money. If you have outstanding jobs or tasks that will make these better, get them actioned now! Hours spent here will bring in the greatest rewards.
• Advertising. Make sure you know which publishers are bringing in the most conversions for you. Refine the adverts for the users of those sites and increase your monthly spend with them.
• Optimising Sites. When you first take on a site, you can find hundreds of errors and issues that are preventing conversions. Try to work out what issues are in the key 20% group and immediately prioritise them.

It’s important not to get too stuck on 80-20 as a figure. It can as easily be 95-5 or 70-30. The concept remains the same. You’re identifying what is important and focusing there to achieve the greatest effect. Consider your work and business and how this principle can be applied. If you want to share some thoughts below, feel free!

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