The 80-20 Rule Increased My Income by 207% in 18 Months

Here is a true story of how I used the 80-20 Rule (also known as the 'Pareto Principle') to increase by internet business income by 207% in just over 18 months.

I discovered the 80-20 Rule in Richard Koch's international best selling book, "The 80/20 Principle". It states that a minority of causes, inputs, or effort usually lead to the majority of results, outputs or rewards.

This means 80% of sales or profits come from 20% of products or customers. But don't take the 80/20 figure literally. The percentages don't even have to add up to 100%. You could have 95% of profits come from 15% of customers or 65% of sales come from 5% of products. It merely implies that a small cause/input/effort causes a disproportionately large result/output/reward.

Vilfredo Pareto's Discovery

The Pareto Principle was discovered in 1897 by Italian economist Vilfredo Pareto. His discovery has been called many names, including the Pareto Principle, the Pareto Law, Pareto's Law, the 80/20 Rule, the Principle of Least Effort, and the Principle of Imbalance.

So what did Vilfredo Pareto discover?

He happened to be looking at patterns of wealth and income in 19th century England. He found that most income and wealth went to a minority of the people in his sample. Pareto's other finding, one that really excited him, was that this pattern of imbalance was repeated consistently whenever he looked at data referring to different time periods or countries.

I applied the 80-20 Rule to my own business and discovered that 70.7% of sales came from 17% of products. As a result of this new found knowledge, I refocused the majority of my promotional efforts and budget on those top selling products.

Sales Increased 71.6%

The results were dramatic: within 4 months sales from the top selling products increased by 91.7%, and overall sales increased by 71.6%.

I have applied the 80-20 Rule to my business ever since. I am so thankful I picked up a copy of Richard Koch's excellent book, "The 80/20 Principle". I rate it amongst one of the most influential books of my life.

You don't need to read Richard's book to understand the 80-20 Rule and apply it to your business. But if you do read it, you will have a better understanding of how you can apply it to different areas of your business, your career, and even your life.

This article was not meant to be a review. But to give you an idea of how highly I rate the The 80/20 Principle, I give it a score of 9 out of 10.

Michael Wong is the editor of Mike's Marketing Tools and author of Michael Wong Academy: learn how to make money online for free. Since 1998 Michael has founded two internet companies, sold a website to a SoftBank funded start-up, wrote and self-published one of the first ebooks on search engine optimization, and delivered millions of dollars in revenue for numerous clients on a pay-per-performance basis.

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