Pareto Analysis

I was reminded the other day of one of my favourite analyses – the humble Pareto Analysis. Also known as the 80/20 rule, when applied to business it suggests that 80% of your result comes from 20% of your effort. And it is remarkable how often that holds true.

So, if you feel like you have a mountain to climb or you are drowning in work, perhaps now is a good time to step back and think – is 80% of my revenue* coming from 20% of my customers?

If it is, you might find that you have more time, less stress and more money if you just focus on that 20%. Just a thought.

*TIP: If you measure customer profitability, apply the analysis at that level instead.