The Pareto Principle & Making Profits

By Alex

March 11, 2022

If you're not already familiar with the Pareto Principle - it goes something like this: 80% of the outcome comes from 20% of the input. 

In business terms, this means that 80% of your income comes from 20% of your clients.

80% of your sales come from 20% of your marketing.

So what you really need to drill down on here - is: Which bit of your marketing is actually working?

Social Media Has Over-Played Its Hand

Whilst I'm not really a user of Social Media anymore - I like to keep a casual eye on trends - well, if I'm brutally honest - I like to be proved right? πŸ˜‚ I mean, who's not with me on that one?

OK, so what I've seen this last week or so are the out-and-out telling-it-like-it-is from women with large Facebook groups saying that they've crunched the numbers and what they've found is:

They are spending 80% of their time (seriously! Not must their marketing time - but their actual every goddamn hour time!) fiddling with their Facebook Group - and yet - in one case, it accounted for only 13% of income.

Now... imagine what the income would be if 80% of that time were spent on the marketing activities which are currently driving the remaining 87% of income?

In its most simple mathematical form let's use these arbitrary numbers to calculate monthly income:

Number-crunching the Pareto Principle in Marketing

Theoretical Revenue = $5000/month 

13% of $5000 is $650 

87% of $5000 is $4350

So already you can see that there's a huge discrepancy between the effort put in vs. the financial wins.

Let's crunch a little further.

If we were to switch those efforts around and put 80% of our time into the marketing efforts which actually bring in the cash, what does that look like? 

If we quadruple the current 20% of time we're spending on those activities which are bringing in the biggest chunk of revenue - therefore taking it up to 80% of our time... we get a whopping...

$17400 !

Which is a MASSIVE increase in your profits just from putting your marketing efforts in the direction your ACTUAL clients are coming from.

The other side of the coin would be the reduction in time spent on the SM activities (divide by 4 to bring down to 20%) and those activities bring in just $162.50.

So... next question I hear you ask is - if you're not marketing on Social Media - where SHOULD you concentrate your marketing efforts?

Well... I'm gonna say - create your own CONTENT.

Content you OWN which will be indexed by search engines and allow your customers (the BEST customers) to do their due diligence and choose to work with you.

By putting content on SM - you're frankly just wasting your time - and you're not getting the financial success you would be were you to concentrate your efforts elsewhere.

To spend 80% of your working week to bring in just $650/month (then take away expenses...) is just fucking insane to be frank! 

And this is just another reason why Social Media is so toxic.

Online entrepreneurs believe they *have* to splatter themselves all over Social Media because everyone else is doing it.

But... seriously, how much actual real content and value are you able to deliver via the medium of Social Media?

Chit-chat does not demonstrate your expertise.

"Great engagement" - i.e., likes, thumbs-up, whatever on a post - RARELY comes through imparting wisdom, but more often than not something low-vibe and worth a "cheap like".

I do think it's worth having some skin in the game in terms of Social Media and you can do this by automating the shit out of it.

Grab yourself a good Social Media scheduling tool, fill the fucker up with links to YOUR content and let it run without you worrying about it, chasing it and wasting 80% of your time on it!

Ideally you want to take those GATHERERS and turn them into CONSUMERS by having them visit your website, opt-in to your freebie/newsletter so that you can build a relationship with them, SELL to them and show them what you're all about.

Writing a blog takes me around 20-30 minutes a day, but gives me long results and Google keep on working for me long after someone's thumb has scrolled past my IG post.

I don't give a damn about a like on an IG post - what matters to me is that the RIGHT people get on my list and get to know me and I do this by producing educational content on my blog week-in, week-out.

Leave a Comment... I'd love to hear your thoughts!

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About Alex Sheach

Alex is an expert strategist with a flair for expressive writing which connects with her audience and evokes emotion.

She believes in the power of harnessing the written word and using it to demonstrate expertise, confidence and clarity when marketing online businesses.

She's anti-BS, anti-fluff and embraces grown-assed methodology for growing an online business with authentic Sales & Marketing strategies.

Nae drama!