Have you ever stopped to figure out how much each of your customers is worth? I just finished reading this book while I was at my brother’s house and wanted to give you a little insight into something called the “80/20 rule.” Some of you may have heard of this concept and some may know of it by its other name: Pareto’s Law.
This rules can be applied in several different aspects relevant to entrepreneurs and business managers (anonymous source on Wikipedia).
For example:
• 80% of a company’s profits come from 20% of its customers
• 80% of a company’s complaints come from 20% of its customers
• 80% of a company’s profits come from 20% of the time its staff spend
• 80% of a company’s sales come from 20% of its products
• 80% of a company’s sales are made by 20% of its sales staff
Therefore, many businesses have an easy access to dramatic improvements in profitability by focusing on the most effective areas and eliminating, ignoring, automating, delegating or retraining the rest.
You also get this software which is included with the book:
• Slash time-wasters (page 117)
• Locate invisible profit centers in your business (page 31)
• Advertise to hyper-responsive buyers and avoid tire-kickers (page 93)
• Gain coveted positions on search engines (page 70)
• Differentiate yourself from rivals (page 67)
• Gain esteem in your marketplace (page 154)
Perry has a calculator that’s free for everyone to use and see how much your business is worth. Go here to see all the free tools but definitely try out the calculator to find where your business stands:
As an example, if each fan on your Facebook fan page was worth $5, how much should you be earning each month? You might be surprised at how much money you are leaving on the table and how much you should really be earning each month.
Try to think of your business in terms of a football, baseball, hockey or basketball game. Where do you like to sit in the stadium? Or, another good questions is: where can you AFFORD to sit?
As for me, nosebleeds it is. There are the nosebleeds, infield, outfield, suites, etc. And, of course, as everyone knows, those primo seats can with a primo pricetag. You could spend anywhere from $20 to $20K (suites).
As someone who worked in corporate America where the company had a suite and we were given tickets at various time to the games, I can tell you from experience that the suite is the place to be.
But, that being said, it really doesn’t matter where you sit because we all see the same game no matter where our seat happes to be. What IS different is that everyone values the game at a different price so some are willing to fork over more moola than others.
The game requires you to buy tickets and most likely when you get there the cost doesn’t stop there. You ARE going to want something to eat, to drink, souvenirs, etc. etc. etc. You could walk away spending $200 even in the nosebleed seats!
And, on top of that, there are those who go to sports bars, sit at home, or go to a friend’s home to watch the games. And guess what? They are eating food and drink too! So the situation is a win-win all the way around and its tentacles stretch far beyond the stadium. How much does this make each of these fans worth?
Look at your business and the items you have for sale. Which of those items have the highest conversions? Think about this: as the price gets lower, the conversion gets higher. As the price gets higher, the conversion gets lower.
Are your customers willing to spend $3 or $3K? That is what you need to figure out for your business.
Take a look at Perry’s book and then look at the calculator and see how much your buyer is worth! You can figure out where you need improvements.
