After you get done with this post, feel free to read The New Pareto's Principles For Internet Marketers about specific rules for using these principles to your advantage when it comes to internet marketing!
In cycling - as in every sport - everyone is looking for an advantage. I can't tell you how many 15-pound bikes I saw (with wheels worth more than my current car) that were owned by flabby doctors.
These guys realized that they did not have the time to work out like their riding companions did, so they were using what they did have - money - to buy themselves some speed.
It's called Pareto's Principle, or the 80-20 rule.
I first ran across Pareto's law in Tim Ferris' original book "The 4 Hour Workweek" (Which is definitely an inspiring read for sparking ideas - get it at the local library if you are cheap like me)
Basically, the rule was discovered by an Italian bean-counter that discovered that 20% of his pea shells provided 80% of his peas. Oh, and that 80% of Italy's land was owned by 20% of the Italians. (thanks, Wikipedia)
(Sound familiar?)
So we use it as a rule of thumb in business to say that 80% of your wealth is going to come from 20% of your "clients".
Take my websites for example. Until last month, 8 webpages - out of about 80 pages altogether - were my main money-earners.
Now this rule isn't entirely scientific, but there are countless examples of it working, and it teaches a few good points to any business-minded person:
A. You Need To Plant a Lot of Peas
You don't know which ones are going to be a success, and, unfortunately, a bunch of your ideas are going to be a flop. That's something I'm still having a hard time getting my head around.
This is something that our young friends just starting into careers of their own would do well to understand. For example, if I wanted to get promoted at my job, I would need to make sure that I was a gleaming, well-groomed individual (both as employee and as a person), and then begin to network as wide as I possibly could -- especially with management.
For example, when I started this internet enterprise, I was in LOVE with infobarrel. They had such a supportive community and the contests were so much fun. However, I soon learned that for my business goals they were not a good fit as my primary model. And so I shuffled on down the road and still send them a couple of nice articles each month.
In this industry, more is better. Spencer, at Niche Pursuits has a great article on how Niche Marketing is a numbers game. And that kid should know. He builds hundreds (ok, so more like 20-30) new websites a month to find his few winners.
Sow far and wide. Treat all of your contacts the same.
You don't know which one will be a winner, yet.
B. Replant Your Winners
If you follow the big pumpkin contests each year, you will find that these farmers hang onto the seeds of the biggest pumpkins they so that they can try to grow those into even bigger pumpkins.
Heredity aside, you can look at your contacts, or webpages (or peas) that are bringing in the most money, and then bend over backwards to make those select ones a success.
This is the more rewarding stage as we can see with my webpage that has made it to the #1 spot. This is where profits begin to build and can continue to build astronomically.
In a lot of industries, such as mutual fund management, this stage grows to the point of retirement, where a few clients are groomed into nice funds (with sizeable commissions) and little to no new business is needing to be sought.
Unfortunately, in the Internet marketing world, you will always need to be finding new business. Which is where I am at. I have a few pages that I may be able to push forward in the rankings, but right now I am a very sharp tower with a very narrow base. It's time for me to get "sowing" again which means more websites and more articles on those websites.
One quick caveat. While Pareto's principle is very important, it doesn't show the whole picture. Thanks to several new business factors, it is very likely that in industries such as internet marketing, a new metric needs to be used.
But that's the subject for another day.
Until next week remember two things:
Sow wide
Work your winners
Also Read: The New Pareto's Principles For Internet Marketers
In cycling - as in every sport - everyone is looking for an advantage. I can't tell you how many 15-pound bikes I saw (with wheels worth more than my current car) that were owned by flabby doctors.
 |
| Giant's TCR Advanced SL 0 $10,300 |
It's called Pareto's Principle, or the 80-20 rule.
I first ran across Pareto's law in Tim Ferris' original book "The 4 Hour Workweek" (Which is definitely an inspiring read for sparking ideas - get it at the local library if you are cheap like me)
Basically, the rule was discovered by an Italian bean-counter that discovered that 20% of his pea shells provided 80% of his peas. Oh, and that 80% of Italy's land was owned by 20% of the Italians. (thanks, Wikipedia)
(Sound familiar?)
So we use it as a rule of thumb in business to say that 80% of your wealth is going to come from 20% of your "clients".
Take my websites for example. Until last month, 8 webpages - out of about 80 pages altogether - were my main money-earners.
Now this rule isn't entirely scientific, but there are countless examples of it working, and it teaches a few good points to any business-minded person:
A. You Need To Plant a Lot of Peas
- Or build a lot of webpages
- Or hand out a lot of business cards
- Or network with a lot of managers
You don't know which ones are going to be a success, and, unfortunately, a bunch of your ideas are going to be a flop. That's something I'm still having a hard time getting my head around.
This is something that our young friends just starting into careers of their own would do well to understand. For example, if I wanted to get promoted at my job, I would need to make sure that I was a gleaming, well-groomed individual (both as employee and as a person), and then begin to network as wide as I possibly could -- especially with management.
 |
| Pareto's Mountain |
In this industry, more is better. Spencer, at Niche Pursuits has a great article on how Niche Marketing is a numbers game. And that kid should know. He builds hundreds (ok, so more like 20-30) new websites a month to find his few winners.
Sow far and wide. Treat all of your contacts the same.
You don't know which one will be a winner, yet.
B. Replant Your Winners
If you follow the big pumpkin contests each year, you will find that these farmers hang onto the seeds of the biggest pumpkins they so that they can try to grow those into even bigger pumpkins.
 |
| Small Pumpkins By Solyanka on Flickr |
This is the more rewarding stage as we can see with my webpage that has made it to the #1 spot. This is where profits begin to build and can continue to build astronomically.
In a lot of industries, such as mutual fund management, this stage grows to the point of retirement, where a few clients are groomed into nice funds (with sizeable commissions) and little to no new business is needing to be sought.
20% of your clients are going to make 80% of your profit.
Unfortunately, in the Internet marketing world, you will always need to be finding new business. Which is where I am at. I have a few pages that I may be able to push forward in the rankings, but right now I am a very sharp tower with a very narrow base. It's time for me to get "sowing" again which means more websites and more articles on those websites.
One quick caveat. While Pareto's principle is very important, it doesn't show the whole picture. Thanks to several new business factors, it is very likely that in industries such as internet marketing, a new metric needs to be used.
But that's the subject for another day.
Until next week remember two things:
Sow wide
Work your winners
Also Read: The New Pareto's Principles For Internet Marketers
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