The 80/20 Principle

The book I read to research this post was The 80/20 Principal by Richard Koch which is an excellent book which I bought from amazon. Even though this book has been out for a while I noticed it was no1 on the Business & Finance Book Chart on Kindle a couple of weeks ago. What this book is about is that if you are a business typically 80% of what you sell will be bought by 20% of your customers. Sometimes it will be closer to a 70/30 principal but we see it over and over again in statistics. This is called Pareto's Principle and was first discovered in Mussolini's Italy where in the wake of the war it was forgotten. Then in the 50's an american rediscovered it but no one in american industry was interested. He then found a receptive audience in Japan and he spent a long time there doing lectures. When everyone was starting to ask why was Japanese industry doing so well he finally found a receptive audience in the west.
Basically what this means for business is you should make sure you please the 20% who buy most of your product. You should try and identify this 20% and maybe send them special offers to try and entice them to buy more. A lot of companies use a loyalty scheme where maybe they credit your account with points when you buy something and let you redeem that at a later stage. You should also tailor new products and services to and make sure they satisfy this 20%. Also a good idea is to check they are happy with your company. Something a lot of companies is why aren't the majority of customers buying more and then work on this. This is certainly an interesting book.