Word up Wednesday – The Rule of 80/20

One of my favorite things I learned from all those economics classes I took in college was the Rule of 80/20.  More formally called Pareto’s Principle.

The 80/20 Rule means that in anything a few (20 percent) are vital and many(80 percent) are trivial.  I don’t love the word trivial when talking about customers or time – but so be it, the definition.

You can apply the 80/20 Rule to a lot of things – but the one example that always stuck with me was  –

80% of your business comes from 20% of your customers.  Or – conversely – 20% of your business comes from 80% of your customers.  

OK – so what does this mean?  It basically means that a large portion (80%)of your sales, repeat business and referrals comes from 20% of your customer base.  So in terms of customer cultivation, you should spend more time and energy focusing on attracting and keeping those 20%.

Further explanation states that the “trivial” other 80% of your customer base only provides you with 20% of your sales.

The word trivial here implies that those customers aren’t important and you shouldn’t focus on this group.  NOT SO!  You still need to do things to attack these people, just don’t spend all your time on it.

Here’s a little background on Pareto’s Principle – this article gives a good explanation of how the rule came about.

The question you should be asking is – how can this be applied to my current situation?

• Well, if you’re in business, it is easy to see who are your repeat customers and what products and services are they buying and using.  (If you’re not tracking your sales, or if you don’t know who your top customers are – please call and let me show you how, it’s really quite easy).   I would venture to say that 20% of your customers are repeat customers who keep coming back or referring their friends to  you.  Likewise – they are probably providing you with 80% of your total sales.

• Another way to apply this rule is – 20% of your services or products are providing 80% of your sales.  So concentrate on those.  Take me for example, most of my readers find me on Facebook.  One of my “fans” will like a blog or comment on a post and that will pop up in their news feed.  Their friends see it and check out my page and hopefully become a fan too.  Of the other ways I promote my blog – Twitter, LinkedIn, web searches and tagging my blogs, Facebook brings me the most attraction.  My strategy should be to open up more conversations on Facebook and try to get more “likes” on that page.  Twitter and LinkedIn are helpful, and I should still work on cultivating those contacts – but since those two have proven to not be as “lucrative”, I shouldn’t put the majority of my time into those outlets.

• Here’s one more – I’m a member of my son’s PTA at his school.  We use the 80/20 Rule all the time when we are trying to estimate how many families we should plan on coming to an event or participate in a fundraiser.  We figure that 20% of the school is most active and that gives us a rough number of how many to anticipate participating.

Sometimes the 80/20 Rule doesn’t work, but I still try to apply it.  Usually it works itself out, but it gives me a jumping off point when I’m trying to figure an estimate on something.

Give me a challenge  – give me a situation and I’ll apply the 80/20 Rule to it.   Be it laundry, cleaning house, running errands, cultivating customers, – – give me your best shot!  I’d love to see how we can apply this rule to other situations.

Happy Wednesday Everyone,

~Amy

 

 

 

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Word up Wednesday – The P Words

Have you ever noticed that many higher positions in a company all start with the letter P?

Take a look:

President: Top executive responsible for a firm’s overall operations and performance. He or she is the leader of the firm, serves as the main link between the board of directors (the board) and the firm’s various parts or levels, and is held solely responsible for the firm’s success or failure. One of the major duties of a President is to maintain and implement corporate policy, as established by the board. Also called CEO (Chief Executive Officer) or managing director, he or she may also be the chairman (or chairperson) of the board.

Principal: “One of the primary persons” — either the owner, proprietor, sole shareholder, director, president, managing partner and the like.

 

Partner: Individual who joins with other individuals (partners) in an arrangement (partnership) where gains and losses, risks and rewards, are shared among the partners.

 

Proprietor: Sole owner, or one of the owners.

 

Do you run your own small business?   What is your title?

Have a great Wednesday!

~Amy

Word Up Wednesday – Pigeon Holed

Pigeon Holed technically means (n) –  one of a series of small, open compartments, as in a desk,cabinet, or the like, used for filing or sorting papers, letters,etc. www.dictionary.com  

I think over the years, the more common use has been the metaphoric meaning (v) sense of narrowly categorizing or deferring.  www.wikipedia.com  People refer to themselves as being “pigeon holed” when they are forced to do the same job over and over while not getting an opportunity to grow and expand their skills.

 

It is my opinion that the term pigeon holed has a negative connotation.  In a sense, you are being forced to do something that you don’t particularly want to do but seem to end up with the job “because you are so good at it”.  If you want to take the positive perspective, consider that you are an expert in this area and people come to you because they respect the job you do.

If you are feeling resentment in repeating a task, project or job you are probably feeling pigeon holed.  Likewise, if you are missing out on opportunities because you are assigned do the same jobs you’ve done in the past.  If other people never volunteer to do things because the job is undesirable and “you should do it, because you’ve done it before and you’re so good at it” – – you’re probably being pigeon holed.

Unless you don’t mind it, I’d fight hard to not get pigeon holed into things.  Personally, I tend to get bored quickly by repeating things over and over.  I am always looking for new opportunities and new ways to expand my skills.

The best way to not get pigeon holed is to say no when offered to repeat jobs.  Also, look for ways to expand  your skills and ask to use those new skills instead.  Finally, offer to train someone else to take over the particular task so you can move onto other duties.

This isn’t just limited to professional settings.  You can get pigeon holed into volunteering for the same jobs, running the same committees, even doing the same household chores  – – all because “you’re good at it”.

Have you ever felt pigeon holed?  Did you mind it?  Or did you resent it?  How did you get out of the situation?

Happy Wednesday!

~Amy

 

 

 

 

Word Up Wednesday – What’s your favorite internet acronym?

Do you use acronym’s?

I’m not talking about the ones you use for work like TPS Reports or NAVCOMSUBRON19 (my husband is retired Navy and we live with acronyms, this is a real one, I didn’t make it up).

I’m talking about the little ones that float around in texting and on Facebook?

TIL  – – “TIL” ….that is after I Googled it.

TIL – – Today I learned

The funny thing about acronyms and me is, I never remember to use them.

I think the only acronyms I use on a regular basis are

LOL

BTW

and I just started using:

IMO

 

 

 

I still like to keep the line separate and not use acronyms in my professional correspondence, even if the person I might be emailing is a close acquaintance.  For me, acronyms cross the line into super casual and I like to stick to using them on Facebook, Twitter or texting….that is – if I remember to use them.

What are you favorite acronyms?

TTYL!  My Dad uses this one all the time (and hey, I remembered it!)

~Amy

PS – click on that picture and it will take you to a blog about 25 Internet Acronyms a Parent Should Know 

Word Up Wednesday…Audit

EEEKK!!!  Just the sound of word makes people cringe.

But let’s look at it – – it isn’t really all that bad.

Audit – (n). an official examination and verification of accounts and records, especially of financial accounts.

 

 

 

 

 

 

 

 

While we typically think of audits as financial accounts there are actually many types of audits – – think:

•  safety
• efficiency
• electricity/energy
• insurance
• and I know a certain someone who happens to write this blog who does Time and Energy Audits.

I think audits are actually a good thing and should be done from time to time in different areas of your home or small business.  Audits keep people honest and in compliance with codes and laws (building codes, tax codes, etc).  Audits can also find ways to improve your “systems” and help you “trim the fat” and  become more efficient.  Which will most likely help you save time and money.

Think about an energy audit done on your home.  Here an energy expert will come and look at your insulation, sealants (around doors and windows) windows, etc. and help you find ways to keep the heat or the cold in (whichever you wish).

Audits can cost money though, but this is a case where an independent audit and the money spent to have one done can end up saving you money in the long run.

If you are curious about the Time and Energy Audit I conduct, let’s connect! (There is no charge for the call – and I’m really nice).

Have a great Wednesday!

~Amy