Improve Your Productivity with the 80-20 Rule

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Have you heard of the Pareto principle? If you haven’t, you’re missing out on a key business idea and may be working inefficiently for little gain. This is a principle mentioned in Timothy Ferris’ popular book, 4-Hour Work Week and is extremely relevant in online business and in Internet entrepreneurship.

The Pareto principle states that for many events, 80% of the effects come from only 20% of the causes.

So what does that mean for you, the Internet entrepreneur, SEO, or affiliate marketer? Let’s look at some examples of how this rule applies to your online business.

• 80% of your site’s link value comes from just 20% of the sites that link to you.
• 80% of your consulting revenue comes from only 20% of your clients.
• 80% of your affiliate marketing revenue comes from 20% of the programs you endorse.
• 80% of your advertising revenue comes from 20% of your advertisers list.
• 80% of your site’s organic search engine traffic comes from 20% of the total number of your keywords.
• 80% of the networking benefits you receive come from only 20% of your contacts.

Get the point? As you browse through the above list of examples, you may notice a few that you completely agree with and have experienced yourself. This goes to show that there are vital factors in every business that cannot be ignored and actually need more attention than others. You need to identify what these are and streamline your processes to capitalize and make the most use of your time and energy. Below we’ll go into how you can identify the 20% and maximize the 80%. Efficiency is what we’re striving for here.

The 20% - Identification

In anything that you do, there is the 20% that will give you the greatest return. Using the ‘keywords driving traffic to your site’ example, it is true that a small pool of keywords will drive the majority of organic search traffic to your site. How are you going to take advantage of this? You need to first identify these keywords and know what they are. Use an analytics package to determine which keywords are driving 80% of your organic traffic. In most cases, the number of keywords will be close to 20% of total keywords. (Google Analytics works fine for this.)

The 80% - Maximization

Next, now that we have knowledge of what exactly the 20% contains, we want to maximize the results of this group. For instance in networking, spend more time with your 20% group to maximize results. Give more attention to your clients that spend the most money. Provide extra benefits and exposure for your top advertisers. You get the point. Going back to the organic keywords example, use the top 20% of your keywords to optimize your site for the search engines. Buy some PPC ads with those keywords and anything else you can do to maximize your return. Focusing on the 20% will actually make your 80% even bigger.

You can do so much more in less time by focusing on what works. Sure, sometimes you may want to venture out and see what other options you may have. This is what the identification stage is for. Just never forget this principle and always pay attention to the vital few that provide the most return.

How are you applying the Pareto principle to your business? Where do you see it most in your operations? I’d love to hear from you so please leave a comment below.