Use the 80/20 principle PROACTIVELY increase your revenue by 10% - 200%
27Oct 2017

Use the 80/20 principle PROACTIVELY increase your revenue by 10% – 200%

Use the 80/20 principle PROACTIVELY increase your revenue by 10% – 200%

The Pareto Principle or the 80/20 rule was developed back in the 1880s by an Italian/French man and it applies today. Use the 80/20 principle PROACTIVELY increase your revenue by 10% – 200%

Examples of the 80/20 principle are:

  • 80% of your revenue comes from 20% of your customers
  • 80% of your revenue comes from 20% of your product line
  • 80% of your output comes from 20% of your employees
  • 80% of your problems come from 20% of your customers
  • 80% of your employee problems come from 20% of the employees

Knowing that 80% of your revenue comes from 20% of your customers

Ask yourself a question. Who are the top 20% of your customers? It might be a surprise that some customers that were in the top a few ago may not even be on your current list. There is an open opportunity to visit them and discover why they left and invite them to return.

Once the top 20% or “80/20 Customer Gold Program”TM customers are determined then a methodical program can be designed to build relationships with key people within the organization.

What company roles or positions would you want to build a relationship with? Chief Executive Officer (CEOs), executive officers, purchasing agent, accounts payable, project director, sales department, etc. Now strategically have a corresponding department person in your company build a relationship with them. How do you find out what these people like or enjoy? Meet or talk with them to get to know them better. This process will build a proactive vs. reactive customer relationship.

The benefits of this “80/20 Customer Gold Program”TM are significant:

Synergistic Buys: Most customers only purchase about 5%-20% of the products or SKUs a company produces. When you build proactive relationships, the customer can be introduced to other products that may benefit them but they currently do not purchase. Thus synergistic buys are possible to grow the business.

Hot Leads: Your top customers are aware of other companies that may need your products but they may have never been asked. As you meet with and grow the personal relationships, they will be willing to provide people they know that may use your products. Thus another way to grow the business.

Increase the Pain of Change – Retention: With a reactive customer service, a typical customer will tolerate about a 10% rise in prices or drop in quality. But with a proactive relationship, this level of pain tolerance goes up to about 40%. Thus you could have a 30% higher price before they would seek another vendor.

A methodical strategic development of a proactive customer service can yield large revenue growth from your existing customer base. The “80/20 Customer Gold Program TM” works. The author has used it many times to increase revenue performance by 110% to 300%.  

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Learn more about Business Valuation Principles by Dale S Richards https://successbiznow.com/books/business-valuation-principles-by-dale-richards/

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ABOUT DALE S. RICHARDS:

Preview Dales presentations: Watch Dale In Action Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 25+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, a Vistage International CEO-Board Chair in Utah and a World and Vistage International Speaker. Visit www.successbiznow.com to learn more about Dale and business valuation services.

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