The 80/20 Rule Flaw

The 80/20 principle just came up in ProCopyClub and I think it might help anyone who’s not heard of it before to understand the principle and whether it’s useful in a business context.

Here’s the concept: 80% of everything we do is inefficient. Therefore we should look for the 20% that’s worthwhile and act on that (eg. 20 out of every 100 customers spend more than the remaining 80 – so only focus on the 20).

The problem is, it’s flawed from a marketing perspective (systems thinking shows why – more on that later).

Vilfredo Pareto came up with the principle by looking at distributions such as 80% of the land in Italy was owned by 20% of the population (Wikipedia). It was and is an observation of nature.

But humans are fidgety animals and like to play around with things. What if we could implement the 80/20 observation as a rule? What if we could improve on nature? What if we could make nature great again (we invented the word arrogant because we’re so good at it).

But here’s why using the 80/20 principle as a tool is flawed thinking. If we ignore the 80 customers who spend less, we’re sending out a message that we no longer care. We’re putting all our eggs in one basket. We fail to ask questions such as: Does market share matter? Do these people help spread influence? Would the 20% have bought if we’d not attracted those other 80 customers in the first place?

So can we use the 80/20 rule in marketing and business? Yes. By understanding that the 80% of everything we do may not seem as effective as the 20% but it STILL has a purpose. That is Systems Thinking (it doesn’t mean we can’t improve the 80%, just that we must never ignore it).

For example, sleep seems highly inefficient, yet nature has spent half a billion years working on it. Some animals sleep for months, others, like us, for 8 hours. It’s necessary. It’s part of the system.

If we apply the 80/20 rule to a sales funnel and only concentrate on improving 20% of the funnel (or worse, remove the other 80%, or even worse, make the other 80% the same as the 20%) we ruin the funnel.

A 10x conversion increase on the front end does not necessarily increase the whole funnel (it can make it worse by reducing the quality, increasing refunds, and tarnishing our reputation).

It’s the same with copy. If you decide that only 20% of your copy is working, be absolutely certain that it can work on its own before ditching the other 80%.

Things work in steps. Each step has an effect on the following step. Make a change to one step without working out what the consequences are for the rest of the steps and you get failure.

Everything in the universe is connected and affects everything else. Climate change is real for the most obvious of reasons: killing trees and burning fossil fuels affects the carbon sink, and that in turn affects the atmosphere. 100% of our thinking matters, not 20%.


80/20, Business, Pareto

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