Top Market Strategy: Applying the 80/20 Rule is a valuable tool for entrepreneurs and business managers who need a practical way to improve profit by replicating their best customers. I speak from my experiences as a regional manager for a large national organization and as an entrepreneur. Throughout my years of selling and servicing insurance, the results were exactly as Dr. Kruger predicts in her book. In both the large and small businesses, 80% of our revenue and business profit came from the top 20% of our customers.
As a result, we decided to personally service the top 20% of our customers and to automate services with the bottom 80% of our customers. Since our sales force now services only the top 20% of their previous book of customers, we increased their sales commission from 20% to 25% to maintain their earning levels—and to motivate them to acquire highly profitable new customers. According to the 80/20 rule, we expect these new customers to be 16 times more profitable than their previous customers.
Before reading this book, I justified our stratified service approach with the 80/20 rule, but now I realize that this relationship between inputs and outputs is a universal law. What Dr. Kruger has done for any business is to lay out a detailed, ready-to-use process for growing highly profitable customers. This process starts by using simple statistical tools to understand the most profitable 20% of your customers. Then Dr. Kruger goes on to explain how to focus your marketing strategies on fulfilling their wants and needs and to grow more customers just like them.
Robert Iocco, CPA, CIC
President, Trust Point Insurance
Bristol, Virginia