The Pareto’s Law (also known as the 80/20 principle) is an economic theory espoused by a 19th century Italian economist, Vilfredo Pareto. The Pareto’s Law is a theory on the distribution of income. He states that 20% of the population earns 80% of the income. However, the Pareto’s law is not only limited to economics and business. You too, can apply it into your business and your life to achieve greater success. Here’s how.

Revenue

80% of your revenue comes from 20% of your customers. Take care of these 20% and reduce your contact with the other 80%. Identify the characteristics of the 20% of your customers and target your advertising towards these lot. Soon, you will increase the percentage of the customers who are generating more revenue for you.

Customer Service

80% of complaints come from 20% of your customers. These customers are probably the most demanding and making the most complaints, but giving you very little sales. Try as far as possible to stop these customers from buying from you. Here’s how you can do so. If you find customers are demanding more than what your company provides, simply say no to them and direct them to competitors who will be happy to obtain new customers.

Marketing

80% of your revenue comes from 20% of your advertizing campaign. Identify which advertising campaigns are successful in generating the most revenue. Cut down on advertizing in the other areas. In this way, you will find that your advertizing cost will dramatically reduce without making much difference to your sales.

Partners and Affiliates

20% of your affiliates are generating 80% of the income. Break all partnerships with affiliates which are not generating revenue for you and give your attention to those which are. You will find that you will spend less time doing things which will matter to your bottom line.

Products

80% of your revenue comes from 20% of your products. Identify which 20% of your products which are contributing to 80% of your revenue and concentrate on these. You need to improve on or eliminate the rest of the products. In this way, you are reducing inventory and other related costs for these unprofitable products.

Time Management

80% of your results come from 20% of your efforts and time. 80% of the time you spent in the office is probably doing things which are unimportant and does not contribute to your end-results at all. Identify those things which are important and do them first. Identify unimportant ones and eliminate them as far as possible.

Investment Portfolio

80% of your investment gains derive from 20% of your portfolio. Review your investment portfolio and identify which 20% of your stocks are generating 80% of you investment gains. Find out the reasons why these stocks have performed better than the rest, and continue to invest in these types of stocks. Eliminate the rest or move them to more lucrative and profitable ones.

Wardrobe

20% of the clothes in your wardrobe is worn 80% of the time. If you are aware of this, the next time you clear your wardrobe, you can be ruthless and discard clothes which you have not worn, but have stayed in your wardrobe for a long time. Give them away! You will also be aware that you have to be more careful when shopping because most of the things that you buy are often seldom or never worn. Live simply and you will enjoy more.

Being selective and doing less, may result in more. So, analyze your business and your life to ensure more efficient use of time and resources, and still generating the same, if not more revenue for your business.