The 80/20 Rule Applied to Professional Services Marketing

Note: This was originally published on October 11, 2010.

Pareto’s Principle states that 80% of the effects come from the 20% of causes. I don’t necessarily agree that this exact ratio is true 100% of the time, but the principle is sound. Let’s see how this works in marketing.

In affiliate marketing campaigns, many professional marketers describe something known as the power curve. There is usually a small group of affiliates, or sometimes just one affiliate, driving the bulk of the conversions (sales, clicks, or whatever the intended goal is). Professional marketers in other mediums report similar effects that illustrate Pareto’s principle – 60 to 90% of conversions from 10 to 30% of the resources expended (advertising spending, or other resources).

In marketing professional services, it is well worth analyzing results to determine what tactics are most effective. Unfortunately I often see companies focusing their efforts on the inverse of Pareto’s ratio: spending 80% or more of their resources on campaigns that produce 20% or less of the desired result.

In tough times, such as the current economic crisis, marketing budgets are often the first to go. By analyzing the results of your marketing efforts, it may be possible to reduce marketing spending, but still increase results. Look for the techniques that require less resources but produce high returns. Eliminate what isn’t producing results and put more resources into what is working. This may mean cutting out things like the ubiquitous but ineffective full-color brochure your firm has produced annually, or canceling sponsorship of an event that has failed to produce a single client.

It is easy to fall into habit in our jobs. But tough times call for clarity of thought and decisive action – not rote memory and an atitude of, “this is what we’ve always done.” What may have worked in the past may not be effective now. Do what works and provides tangible results. Analyze results. Rinse. Repeat.