80/20: How to drive up sales with the new Golden Rule

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“Everyone is equal” – it’s a concept ingrained in Canadian society.  But here’s what you, as a business owner, need to understand: all customers are NOT equal.

You might have heard about the 80/20 rule before.  Essentially, it’s the concept that 20% of your customers bring in 80% of your sales.  Business owners tend to ignore this rule because they feel they should cater to everyone, and that’s understandable.  However, let me explain why this is working to your disadvantage.

80/20

Understanding 80/20

First, you really need to understand what the rule is all about.  Sure, the basis of it is Economics and  is proven through statistical analysis, but it’s something that speaks to all of us regardless of how good we are at statistics. The exact numbers aren’t the main focus here.  It comes down to realizing that a minority of your actions yield the majority of your rewards.  This doesn’t just apply to your business , but nearly everything else.  You can find plenty of examples in your life.

You probably spend most of your money on a few specific things, or maybe you spend the majority of your time with a certain few people.  The same concept applies to your business.  If you make a to-do list to follow, four out of the 20 things will be way more important than the other 16 items.  That’s not to say you should disregard the other 16 items, but you should acknowledge that your priority lies within the first four.

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Who are the 20%?

Therefore, as a business owner, your goal is to identify the 20% of your customers who are vital to your business’ success. Award-winning author, Perry Marshall, gives some tips in his book 80/20 Sales & Marketing on how to do just that:

-          Go through your customer list. This could be an email list, Facebook followers or even just a mental list of your most identifiable customers. Then, look for R-F-M: the customers who bought from you most Recently, the ones who bought more Frequently and the ones who spent the most Money.

-          Identify what category your customers fit into. Chances are your highly valued customers fit into a certain demographic. Some of the categories would be gender, race, age, education, marital status and income. This is important knowledge because it’ll allow you to get your message out to the people who will be most receptive to it.

-          Know your geography. It’s important to know where your most valued customers live. This can help you concentrate your marketing efforts.

-          Find your “Silent High-Volume Buyers.” These are basically customers who don’t come to your business often, but when they do, they spend a big amount every time. They usually go by unnoticed but you should definitely put in effort to build a relationship with them.

Asking the right questions

To help you gain the most out of those highly profitable 20%, ask yourself these questions:

-          How would I describe the typical recurring customer?

-          What are their characteristics?

-          How could I appeal to them more?

Once you do that, ask yourself questions about your business itself and how to appeal to those identified customers:

-          Which of my products sell the most? Why?

-          How could I apply that to my other products?

-           What do I need to make this happen?

It’s natural that you want to give your attention to everybody but not all of them are needed.  Focus on what brings in the most rewards and maximize on it.  Once you start putting your energy in what really matters, you’ll start seeing results.

Advanceit – Ask It Edition

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Employee Name: Andre Levine
Role:  Account Manager
Working at Advanceit for: 2 years

 Dre - Advanceit Edition

 

You don’t get to become Canada’s biggest alternative lender without some major talent working behind the scenes to make it happen. Here is a little insight on the employees who make it possible for Entrepreneurs to fund their dreams. Get to know the people behind over 15,000 success stories.

 

Question: What’s your role at Advanceit?

Answer: I’m an account manager. I basically deal with any issues that may occur once clients have received their initial funds.  So if a client has an issue or request, I’m the guy they speak to. I am also in charge of our French department, so I deal with all clients from the “Belle Province”.

 

 

Question: What is the “Advanceit Culture”?

Answer:  It’s very simple really, at Advanceit I’m Andre, I’m not employee #2299322, sitting at desk 112. This is where the company differs from the rest. I can honestly say that I enjoy working with the people I sit next to.  Also, unlike other companies, Advanceit actually promotes forward thinking and upper management will actually take the time to listen to any ideas you may have to improve the work environment. This is quite rewarding and honestly quite refreshing in this type of business.

 

Question: What’s your proudest client win?

 Answer: Without going into too much detail, my proudest client win was when a customer told me that she had never received service like ours from any financial institution. She went into detail explaining how if every financial institution treated their customers like this, businesses all across Canada would be doing much better overall. I knew that the service that my team and I provided this woman was a huge part in her positive experience and it felt great hearing that.  A few weeks later, I found out she referred two other clients to us!

 

Question: What drives you to come into work every day?

Answer:  Knowing that I am an essential piece to the engine that makes Advanceit go. Working with an amazing team who make the day fly by and honestly doesn’t make it seem like work.  The ever growing knowledge gained each day and the potential for growth is what drives me.

 

Question: What is the wildest thing that you have seen at Advanceit?

Answer:  There is never a dull day at Advanceit, no day is ever the same. On that note, I recall a day when I got to work with an X-Man and a witch all in the same day. It was probably the best Halloween “work day” that I ever went to. I must say, it is true that the camera adds ten pounds, because Wolverine did not look as buff as on the big screen. And I also learned that witches aren’t great with numbers.