Pareto Must Have Been a Golfer!

After making careers out of all my passions: Business Growth, Branding, Marketing and golf, I’ve come to notice a lot of gob-smacking parallels between them. Whether you’re taking a crucial golf shot or an important business decision the same principles that make us winners in sport are the same ones that can help us win in business.

The first winning principle you need to know

Pareto must have played golf because his 80:20 principle finds a natural application in my favourite sport. After coaching hundreds of students in their golf swing throughout the years I can assure that 80% of your success is in the way your swing is set up, the fundamentals. In fact the great Jack Nicklaus says that he believes it is closer to 90%.

Here’s the math for the winning principle – this comes directly from my book “You Can’t See Your Back Swing”:

Eighty percent of your score is influenced by 20 percent of your clubs: driver, wedge and putter. According to the traditional scoring, a round of golf that is played to par on a par 72 course takes 72 shots. So if you reach every green in regulation, one for a par three, two for a par 4 and three for a par five, that leaves two putts for every green. And as golf is played over 18 holes, if you multiply 18 by 2, you will come up with 36 putts, which is exactly 50% of the 72 strokes a scratch golfer should shoot.

Then factor in the probability that you will not hit every green in regulation, that’s where your wedges shine and get you up and down for par. That will come out to at least 80% of your strokes and that folks is why you must focus on the short game as a winning principle.

Why 20% of your customers deserve better

The 80:20 rule applies finds a good home in the business world too, especially in the area of getting winning numbers. In the majority of companies you will find that 80 per cent of your sales results come from 20 per cent of your customers. And in the current economic climate we have to make sure that we are taking care of the 20 per cent more than ever. All customers are not created equal and we have to make sure to not treat them equally. There’s a valuable, profitable elite group and we must look carefully at the way we serve them if we want to keep them. Our advertising, marketing, communications, promotions, public relations and customer service should all be biased towards our best customers.

Find out who your Twentypercenters are

To look after your top 20 per cent better first you have to find out who they are. The easiest way to do that is by listing your customers in order of sales value, let’s say one to 1,000. The chances are that you will find that the top 1% proportionally deliver greater sales than any other group, I call them group A. The next 4%, group B will deliver significant numbers and the top sales will be rounded out by the next 15% of your customers. This group of 20% will probably account for about 80% of your sales.

These are your Twentypercenters!

Pareto’s Principle is at the heart of Customer Relationship Management of course. If you’ve heard me speak at business events, meeting and conferences anywhere in the world, you may know I talk about this a lot as a way to build your brand. You can email me and get yourself a copy of my white paper that goes into more depth on CRM. Meanwhile, find the Twentypercenters in your game and in your business to start hitting some real numbers.