The Pareto Principle and Marketing Strategy
By Bob Wheatley
Forever and a day I’ve seen this concept play out in various categories from beverages to food, travel services to floor care and cleaning products, that 80% of your profits can routinely come from 20% of your customers who constitute the most engaged, heavy users in your business. Call them your best fans.
Yet routinely we focus our efforts, strategies and spending on casting a broad net. We try to be appealing to everyone because we keep telling ourselves that our brand and business not only deserves high household penetration, but “we can’t ignore the volume opportunities.” To be sure, but the 20% that’s mainlining your brand and paying attention to your messaging with a little help and “enabling” can become a more productive core of real-world ambassadors. People who can help spread the word effectively to those who are not as fully invested and who don’t buy as often.
Take cheese and pet food for example. Cheese is one of the most popular food categories in supermarkets. We like cheese, so it’s a big volume business. Yet a closer look reveals that consumers who are more emotionally engaged and devoted to cooking represent a “heavy user” profile that purchases more cheese products, more often and in many cases will go for higher priced items when they feel the value proposition is credible. So paying closer attention to this group of emotionally charged ‘kitchen commanders’ can yield incremental benefits in talk value and word of mouth, once they’re fully embraced, recognized and rewarded by the brands they love.
Or in pet food: a dynamic audience combination we refer to as indulgers and doters consists of a high percentage of higher income households who treat their animals like family members — and will even go as far as cutting back on some of their own discretionary purchases in order to keep Fido in tip top shape by feeding him a super-premium pet food diet. Industry statistics show this group continues to fuel an incredible growth track record in the emerging natural and organic segment – even though the tough economy has weighed in heavily in many segments to compel “trading down” behaviors.
Your call to action…
Think of it this way, your PR communications ROI outcomes will improve when communicating with an audience that’s really, genuinely paying attention. Those who have emotional, personal lifestyle connections to a brand are listening — first at the category level. A brand that works over time to mine relevance with this audience has the opportunity to build a unique relationship and bond. Conversely broad awareness tactics can perform as a “reminder mechanism” for the larger audience segments out there who may buy less often but who have ties to the franchise through their habit behaviors.
- 1. Consider for a moment the opportunities from investing more fully in courting your heavy users. What would you do differently? What efforts might you undertake to help create a community around these groups and empower them to interact with each other – especially important for home chefs and pet parents who want to share tips, ideas, experiences and insights with each other.
- 2. What rewards and recognition can you offer to your most devoted followers that surprise and delight – and thus are often the triggers to generating strong, credible and organic word-of-mouth communication.
- 3. What sponsored experiences can you create and deliver that bring your brand as close as possible to your best fans and allow them to interact with you and each other. In food this could include unique culinary experiences that reward your best customers with an opportunity to learn from the food heroes they respect like celebrity chefs. For pets it could be local dog park events and contests that allow pet parents to engage in shared experiences with their animal and with each other.
But wait there’s more…
Today, excellent blogger and thought leader Sonia Simone has an interesting post at Copyblogger that talks about the personal side of the Pareto Principle and how it impacts you and what you do. Her observations:
- “…Which means that 20% of your customers provide 80% of your revenue. 20% of the time you spend behind your computer provides 80% of your best work. And 20% of that great meal you had last night provided 80% of the pleasure. (It was the chocolate mousse cake, wasn’t it?)
- Because of the Pareto Principle, there’s always a “20%” you should be spending your time on. And in just about every discipline, it’s known as the fundamentals.”
Have you sat down to think about your day, your activities and to reflect on this idea – that 20% of your efforts will produce 80% of the great results and accomplishments you’re looking for? So what do the fundamentals look like for you? Maybe it’s a good idea to start by putting more energy and investment into courting your biggest fans…
