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80 20 Rule Relationship – Pareto Principle

by @reagan No Comments

The Pareto principle is one of the simplest ways to improve your business results and your thinking. It simply states that 80% of your results, comes from 20% of your effort. Our 80% of your outcomes come from 20% of the inputs.

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In other words, 80% of your sales, will come from 20% of your customers. Or 80% of your overall costs will come from 20% of what you buy. 80% of your time online will come from just 20% of the actions you take online. 80% of new customers will come from 20% of your advertising effort.

‘For many events, roughly 80% of the effects come from 20% of the causes’ – Vilfredo Pareto

Who invented the Pareto Principle

Developed originally by Vilfredo Pareto, he identified in Italy in the early 1900’s that 80% of the wealth (land) was controlled by 20% of the population. And today, 82% of all wealth is still owned by 20% of the population.

But what about website traffic? Well, 80% of users to your website will come from a web search.

Some more examples:

When investing, its been shown that 80% of the returns come from 20% of the investments made. And, unfortunately, on the other side, 80% of the losses come from 20% of investments as well.

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Before you go …

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