If you have a lot of activities to do in the day and don't know where to start, the Pareto Principle, also known as the 80/20 Rule, can help you.
This principle is used in various sectors and companies to help determine the priority tasks that generate the greatest impact in order to increase productivity and profits.
In marketing, it has become an extremely important tool for better management of time and resources in the sector's strategies and actions.
What is the Pareto Principle?
The Pareto Principle, also known as the 80/20 rule, is a theory that states that around 80% of the effects are generated by only 20% of the causes. For example:
- 80% of turnover comes from 20% of customers;
- 80% of complaints are made by 20% of users;
- 80% of sales come from 20% of products;
- 20% of salespeople earn 80% of commissions;
- 80% of your conversions are generated by the efforts of 20% of your pages;
- 20% of your dedication to work is responsible for 80% of your performance.
The Pareto Principle is based on these premises. It may seem very strange, if you haven't come across this rule before.
However, it is one of the most frequent and used relationships, whether in business or personal life, when we analyze the pattern between cause and effect.
In Pareto Adsfor example, in the Keyword Monitor area, we bring up the last 30 days' history of the account's main keywords and use the Pareto Principle to select the 20% of words that represent 80% of the account's performance.
Inspired by the Pareto Principle, we seek to highlight the proportion that 80% of the results are generated by just 20% of the causes.
By automating repetitive processes and recovering lost time, we want people to focus on the 20% of effort that generates the 80% of results.
How did the Pareto Principle come about?
The Pareto Principle is actually a very old concept that began in 1896 with the studies of Italian sociologist and economist Vilfredo Pareto.
He sought to find a proportionality between cause and effect in the context of Italian inequality at the time.
And among many discoveries, Pareto realized that there was a recurring cause and effect relationship, first observed in his garden, as just 20% of the pods produced around 80% of the peas.
At the end of the study, in 1906, he published an article reporting that 80% of the country's land belonged to just 20% of the population.
The logic behind the Pareto Principle has been applied to a number of situations and has regularly been successful. Starting in economics, it has migrated to other fields such as science, computing, sport, health, security and many others.
However, it wasn't until 1940 that the principle was formally recognized with the studies of business consultant Joseph Moses Juran, who went on to implement the theory within the corporate environment.
How to Apply the 80/20 Rule in Marketing?
It's not hard to imagine a situation in which more than 80% of the results of Facebook Ads come from one or two ads, because it's quite common.
And this frequent relationship shows us that digital marketing is also hostage to the Pareto Principle, and that its application becomes indispensable in order to maximize results and promote actions with more focus on those that bring the greatest return.
The concept applies to various marketing management situations, including digital marketing. With the huge variety of social networks and content dissemination channels that exist today, establishing the 80-20 Rule on a daily basis is essential.
Otherwise, you run the risk of putting too much effort into something that won't pay off, while what needs more attention will mistakenly take a back seat.
In this context, the Pareto Principle can be expressed in data such as:
- 80% of online sales are also related to 20% of the products available;
- 80% of your visitors come from 20% of your keywords;
- 80% of traffic is generated by 20% of posts;
- 80% of leads are generated by 20% of the content published;
- 80% of engagement is generated by 20% of the audience.
However, it is important to stress that the Pareto Principle will only be an effective tool if it is accompanied by an action plan.
So, given the concept that 80% of results come from 20% of efforts, identify what is actually working and see how you can boost it by eliminating what isn't contributing to conversions.
Adopting this theory in content marketing strategies, the first step would be to identify the channels that generate the most results - websites, blogs or social networks - and focus your content production on the platforms that generate the most engagement or leads.
The same goes for the production of advertising content. The choice of formats, themes and keywords for articles, posts and videos should preferably be aligned with the specific interests of the 20% of your audience that generates the most results for the company.
In business, the Pareto Principle aims to help manage resources as intelligently as possible, concentrating the efforts and time of managers and employees on key points and a large part of investments (both financial and time) on the 20% responsible for the 80% of results.
However, it must be stressed that the Pareto Principle is not an exact science and does not work with an indisputable relationship.
In other words, the percentage doesn't have to be exactly 80% and 20%, but they serve as a parameter for decision-making, because the basic teaching is that a small part of the causes has an extremely large effect.
How to Apply the Pareto Principle in Marketing
According to Richard Koch, a British management consultant, the Pareto Principle can - and should - be used by every intelligent person in their daily life, and by every organization, social group and form of society.
It's a concept that helps individuals and groups achieve much more with much less effort.
When we conceptualize the Pareto Principle with the 80/20 ratio, we mean, in practice, that sometimes the greatest number of problems come to little harm, because they are irrelevant, trivial.
And the smaller number of accumulated problems can lead to greater losses, adopted with little life. However, care must be taken when applying them. Check out our tips!
Understand the company's reality
In addition to what we discussed earlier about the Pareto Principle not being an exact science, the theory works with trends and forecasts, which is why the 80/20 ratio won't always provide the clarity needed for decision-making.
As this is a relatively simple tool, it is important that it is backed up by real, applicable information from your own project or business. Make sure you always apply the technique to your reality.
Know your audience
Knowing your audience well is fundamental to any business and any successful application of management tools.
Bearing in mind that 20% of your audience are the ones who generate the most results for the company, it is essential to know who these 20% are and how to improve their engagement with the brand.
Therefore, the Pareto Principle helps us to review processes and strategies to optimize the management of time and resources, unnecessary activities and actions.
Understanding Market Variability
Even if we're aware that our 20% of effort generates 80% of the results, that doesn't mean that the first 80% should necessarily be neglected.
That's why it's important not to make a decision based on just one tool, but to analyze other factors as well.
A customer base, for example, can hide silent high-volume buyers who, for some particular reason, only buy at long intervals, resulting in market seasonality.
Count on the expertise of Pareto expertise to optimize your marketing. Over 15,000 customers in 84 countries have used our software. free demo of the platform.
Learn More About Marketing in the Pareto Community
As you can see, the Pareto Principle is an extremely effective tool with its applications in business and, above all, in marketing. However, it can also be applied in personal life.
Quickly, imagine that you have ten tasks to do in your day and that if you only did two of them, you would get 80% of the expected result.
The most common thing to happen is to leave the two tasks last because they are more difficult. With this in mind, the Pareto Principle is to start with the activities that bring the most results.
Pareto, like the Pareto Principle, wants to contribute to your professional and personal development.
Faced with the mission of "Rehumanizing People and Robotizing Processes", we also want to have an impact on your training and teach you that 20% of the content that equals 80% of professional success.
That's why we invite you to get to know the Pareto Communityan education platform that contributes to professional qualification in both soft and hard skills.
In Comunidade, you'll find a variety of series to accelerate your professional life, such as Leadership, Business, Marketing, Sales, Mental Health and others.
New episodes are released every week and what's more, the content is available in Podcast format so you can watch it wherever you want. Enjoy 30 days free!
