What’s the 80/20 rule of marketing?

You may have heard of the 80/20 rule [aka the Pareto principle]: approximately 80% of outcomes are usually generated by 20% of inputs. 

In marketing, this cause-and-effect rule suggests that a significant portion of a company’s results or profits comes from a small fraction of its customers, products, or efforts. So, how does knowing and embracing this rule help your bottom line? 

Exploring the 80/20 rule allows you to identify your most valuable customers. When you look closely at your customer base to identify the top 20% of customers who contribute the majority of your revenue, you’ll then be able to focus your marketing efforts and resources on understanding and meeting these key customers’ needs. These efforts yield stronger chances of retaining and converting these folks into loyal customers and brand ambassadors, who are also likely to generate positive word-of-mouth and referrals.

The 80/20 rule also helps your marketing team allocate resources more effectively. Identify the 20% of products, services, or marketing channels that generate the most revenue, and ensure your efforts are concentrated on areas geared to yield the highest impact. [BAM] When you identify your top-performing products or services, you’ll also be able to focus on enhancing or expanding more potent offerings—improving product features, refining marketing strategies, or introducing variations that cater specifically to the needs and preferences of your most valuable customers.

Everyone wants to reduce costs. By identifying and minimizing (or eliminating altogether) efforts that produce minimal results, and focusing on key areas that drive revenue, your marketing efforts become more efficient, with resources directed toward activities with a higher probability of success. That’s the 80/20 rule in practice!

The 80/20 rule applied to social media makes an impact, too

You already know that social media is about building relationships with your audience. [For more inspiration on this, see: Why You Should Be Conversing with Your Audience]. Apply the 80/20 rule by spending 80% of your social media efforts on engaging and interacting with your audience to build a loyal community, increase brand advocacy, and encourage social sharing. Consider regularly responding to comments, messages, and mentions, asking questions, conducting polls, and sharing user-generated content for more authentic community building in this space. 

Create high-quality, engaging content that resonates with your most valuable customers. You’ll also want to identify the top 20% of posts, platforms, or campaigns generating the most engagement (like informative, interactive posts and entertaining videos), traffic, and conversions to guide your decision-making process, social media strategy, and investment in areas offering the greatest impact.

The 80/20 rule can guide your approach to influencer marketing. Identify the top 20% of influencers in your industry who have a highly engaged and relevant audience, and partner with them to generate more meaningful results with folks who are already active in this social media space. Building strong relationships with a select few influencers can lead you to long-term collaborations and brand advocacy.

Knowing—and using—the 80/20 rule can help you grow

Applying the 80/20 rule to your social media advertising and metrics efforts enables you to focus your budget and time on the 20% of ads delivering the best results. Continuously monitor and analyze to identify patterns, trends, and opportunities for the top-performing ads, and then allocate more resources to optimize your advertising spend and increase your ROI. 

And when you apply the 80/20 rule to analyze market dynamics and competitive landscapes, you’ll more readily identify the top 20% of your competitors who dominate the market. Equipped with strategic insights, you’ll be able to adjust for more competitive advantages within your industry, too.

By understanding and leveraging the 80/20 rule, you’ll attend to the most impactful aspects of your strategy, allocate resources effectively, and ultimately achieve better results. When you streamline your efforts, identify key areas of success and build stronger relationships with your audience, you’ll boost your social media presence and be better positioned to optimize overall marketing activities and strategy, increase profitability, and achieve sustainable growth.