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80/20 Client Analysis (Pareto Principle for Business)

career · medium · 2 hours for initial analysis, then ongoing refinement

What is 80/20 Client Analysis (Pareto Principle for Business)?

Analyze your clients/customers and you'll likely find that 20% generate 80% of your revenue and satisfaction. Identify your top 20%, understand what makes them great, find more like them, and gradually replace or fire the bottom clients who drain energy for little return.

Is there evidence for it?

EVIDENCEstrong

How do you do 80/20 Client Analysis (Pareto Principle for Business)?

  1. 1.List all clients/customers with revenue, profit margin, and a 1-5 'enjoyment' rating
  2. 2.Identify the top 20% — what do they have in common? (industry, size, attitude, project type)
  3. 3.Create an 'ideal client profile' based on these patterns
  4. 4.For bottom 20%: raise prices, set boundaries, or refer them elsewhere — free up your capacity
  5. 5.Redirect freed capacity toward finding and serving more ideal clients

How long does it take?

2 hours for initial analysis, then ongoing refinement.

Is it hard to start?

medium.

Source: Vilfredo Pareto (principle); applied to business by Richard Koch, The 80/20 Principle (1997); Perry Marshall, 80/20 Sales and Marketing (2013)
career · business · strategy · clients · revenue
> find what fits you

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