The 80/20 Rule of Business - The 'Pareto Principle'
Posted 4th May 2014 at 01:39 AM by markdawes
Eighty per cent of your business comes from only 20 per cent of your customer base and this is known as the 'Pareto Principle'.
In business, we all work hard to try to find new customers, as without them we wouldn't have a business. Yet what do we do once we have someone as a customer?
Bizarrely some companies start to ignore their needs or worse still, provide them with bad service. What is even worse is that when the customer complains, they are treated as a 'bad customer' and sometimes the company that has taken their money for a service or a product even fails to return their calls or get back to them.
This infuriates customers and the net result is that they will not come back again. Oh, and they will tell approximately eleven people how poor or how badly they were treated, which can have a massive negative effect on the business.
Look after the customers that you already have because they will always come back to you.
In addition they will also tell people about you, which can lead to people being referred to you from your own customers, which really is the best form of business.
Remember, when someone buys your product or uses your services they have chosen to invest not only in the product or service but also in you.
A satisfied customer who is well looked after is like a seam of gold that lies underground, which has been well mined. It has taken time and effort to find this rich source of income, so look after them.
The opposite is a customer who has not been looked after, and we've all met one or know one or have even been one. The first thing they will do is to tell others how badly they felt they had been treated or how shoddy your product or service was.
Now, you don't have to be a psychologist to work the rest out. If someone is thinking of using your service or buying your product but they get a bad review from someone they know and probably trust, then they are highly likely not to buy your product or use your service.
If the person who was disappointed then went on to use another provider, not only are they going to put your potential customer off, they are also going to refer them to someone else.
You can get a lot of repeat business from satisfied customers, which can also help you negotiate your costs with future potential clients, especially those who have bought cheap and who have been disappointed. These potential clients are more likely to pay more for a better quality of service, once they have been disappointed, because we socially accept that “better”, costs more.
In business, we all work hard to try to find new customers, as without them we wouldn't have a business. Yet what do we do once we have someone as a customer?
Bizarrely some companies start to ignore their needs or worse still, provide them with bad service. What is even worse is that when the customer complains, they are treated as a 'bad customer' and sometimes the company that has taken their money for a service or a product even fails to return their calls or get back to them.
This infuriates customers and the net result is that they will not come back again. Oh, and they will tell approximately eleven people how poor or how badly they were treated, which can have a massive negative effect on the business.
Look after the customers that you already have because they will always come back to you.
In addition they will also tell people about you, which can lead to people being referred to you from your own customers, which really is the best form of business.
Remember, when someone buys your product or uses your services they have chosen to invest not only in the product or service but also in you.
A satisfied customer who is well looked after is like a seam of gold that lies underground, which has been well mined. It has taken time and effort to find this rich source of income, so look after them.
The opposite is a customer who has not been looked after, and we've all met one or know one or have even been one. The first thing they will do is to tell others how badly they felt they had been treated or how shoddy your product or service was.
Now, you don't have to be a psychologist to work the rest out. If someone is thinking of using your service or buying your product but they get a bad review from someone they know and probably trust, then they are highly likely not to buy your product or use your service.
If the person who was disappointed then went on to use another provider, not only are they going to put your potential customer off, they are also going to refer them to someone else.
You can get a lot of repeat business from satisfied customers, which can also help you negotiate your costs with future potential clients, especially those who have bought cheap and who have been disappointed. These potential clients are more likely to pay more for a better quality of service, once they have been disappointed, because we socially accept that “better”, costs more.
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