The CMO's Guide to the Pareto Principle: Leveraging the 80/20 Marketing Rule

The concept sheds light on the known fact that not everything is balanced.

However, when we talk about the principle in terms of marketing, it points towards the famous saying "less is more", meaning if you can achieve something great by taking a shortcut, then why would you take the long route?

The history of the Pareto principle

The principle was introduced and named after a famous economist, Vilfredo Pareto, who noticed something rather unusual in Italy. He connected the 80/20 with the population and wealth present in Italy.

He stated that about 80% of land, wealth and riches were owned by 20% of the population.

Later, he studied numerous other countries and concluded that this is a very common distribution around the world.

The principle was applied to taxation as well. In 2000 and 2006, 20% of earners paid about 80% of Federal taxes.

How does the Pareto principle work?

The principle applies to numerous areas like the tech industry, marketing, agriculture, human resources, management, education, etc.

The principle is especially effective in time management, as it allows you to get things done in a tight timeframe so you remain on track.

For example, if someone goes shopping for new clothes, they can map out the store they want to visit, the colors they want to buy and then get the job done. In essence, 20% of the effort goes into planning the whole shopping trip and80% got done.

People fail because they lose focus on the 20%, which could prove more fruitful than trying to make 80% work.

Why would anyone want to put maximum (80%) effort only for a 20% result when they can do the complete opposite?

That's how the principle works in every aspect of life.

Applying the Pareto principle In your marketing strategy

As a marketer, how can you leverage this principle to enjoy fruitful results? The answer is simple; focus on doing what matters the most.

Let's look at an example.You're about to create a marketing strategy to promote the yearly sale hosted by your brand.

First off, what are the goals you want to achieve from this campaign? Some goals might include:

• Gain more customers
• Increase your sales and ROI
• Create brand awareness
• Establish brand recognition
• Generate more leads
• Develop brand loyalty
• Retain existing customers
• Enhance your digital presence
• Grow your market share
• Expand into another market

(Notice howthere are ten goals; now you’ll see which two goals will help you eventually achieve all your goals.)

Now that you have your goals in mind, the next step is to focus on which goals are the most important.

It would appear that the most important goals would be to increase your sales and maximize your customer base. These two goals will assist in achieving all the others.

When you make new sales, you'll deliver high-end products that will create brand loyalty and create awareness about your brand. The awareness will help customers see that your products are authentic, which will make you a favorite for them.

Likewise, attracting more customers through engaging in new types of content creation like interactive content, explainer video production, landing pages etc. will boost your ROI, generate leads and stand out in the competition.

Again, all this comes down to how powerful your marketing strategy is, but this is how you can apply 20% effort to get 80% results.

The pros of the Pareto principle

One of the core advantages of the Pareto principle is that less effort is needed to achieve fruitful results.

Apart from that, you can also use the concept to figure out any issues in your marketing strategy. For example, using analytical tools, you can assess if your web design is why your marketing efforts are falling short.

Your website and app play a vital role in your marketing efforts. If they're not working, then all your effort goes in vain.

Focus on fixing the issues so that even 20% of your marketing efforts go a long way (80% in this case).

The cons of the Pareto principle

For all its great advantages, the Pareto principle also has its drawbacks.

The most significant drawback is that the 80/20 rule isn't set in stone. Remember, Vilfredo Pareto only initiated the concept because that was Italy's situation; however, the main essence was that the distribution is unfair.

The concept is merely an observation, and you shouldn't really depend on it; instead, work around it. For example, the calculation can change between 50/50, 70/30, 60/40, etc.

Final thoughts

Just remember, the Pareto principle is a mere observation, not a law, and it can be modified in any way you like.

Focusing on one major goal will change your life and help you grow. When you understand the goal, finding the right answers will become easier.