Larry BraunerAccording to Wikipedia, the 80/20 Rule or Pareto principle “states that, for many events, 80% of the effects come from 20% of the causes”.

The 80 and the 20 are not exact. The 80/20 Rule is what’s commonly known as a rule of thumb.

The 80 20 Rule is an abstract concept, but it’s important to understand it, so let me provide you with some concrete examples that I believe will help.

The 80/20 Rule and You

Approximately 80% of all income is paid to 20% of all people.

The highest paid people earn substantially more than the lowest paid ones. This is a phenomenon of which nearly all of us are acutely aware, and it often seems unfair.

However, 80% of all productivity comes from the efforts of 20% of all people. These 20% of people are the ones who:

  • have a good measure of internal motivation
  • have a high level of personal productivity
  • consistently invest in personal development
  • commit to their goals and focus their efforts
  • leverage their money and their time

Needless to say 80% of all people follow the 20% of all people who lead them.

While 80% of people spend their disposable income on what Robert Kiyosaki points to as worthless items which they think are assets, the 20% live frugally and spend as much as possible on income producing investments that pay them over and over again.

While 80% of people trade their time for money, the 20% use their time to develop businesses that leverage the time of the 80% employees — and also outsource and sub-contract to other businesses in order to gain even more leverage.

The 80% of people tend to take it easy or look for get rich schemes and shortcuts to success. They follow the path of least resistance, and they settle for much less than they really want.

Are you in the 80% or the 20%?

If you’re in the 80%, ask yourself what shift in thinking could transform you into one of the 20%.

The 80/20 Rule and Other People

If you’re in the 20%, then you need to apply the 80-20 Rule to the people around you:

  • 80% of your work is done by 20% or your workers. Spend 80% of your time developing your most productive workers.
  • So too in a direct or networking sales business: 80% of your results will come from 20% of your team. Spend 80% of your time developing your most productive team members.
  • 80% of your business comes from 20% of your clients or customers. Your time should be spent conducting business with your best clients. There are some business experts who would go as far as firing the 80% of unprofitable clients. That may not always be feasible. In many industries such as health care or telecom firing costly customers could result in a public relations nightmare.

The 80/20 Rule and Social Marketing

Here are some Internet and social media applications of the 80-20 principle:

  • 80% of all blogging is done by 20% of all bloggers
  • 80% of all blog comments are made by 20% of all blog readers
  • 80% of all online social networking is done by 20% of all online networkers
  • 80% of all networkers flock to 20% of all social networking sites
  • 80% of all traffic goes to 20% of all websites
  • 80% of all spam is generated by 20% of all spammers

You can add to the list when you comment on this post — assuming of course that you’re one of the 20% of all readers. :)

You Can’t Know Everything

Expertise is a valuable asset when it comes to personal branding. As an expert you can teach and mentor others and differentiate yourself from your competition.

To become a top expert in any field requires years of dedication. You still won’t know everything there is to know.

You can generally acquire more knowledge than 80% of all people with 20% of the effort it takes to become a top expert. This feat often takes much less than a year. To overtake and pass the remaining 20% of all people might take many years or even a lifetime.

I like to call this particular aspect of the Pareto principle The Law of Diminishing Returns. Beyond a certain point each successive increment of result will require more effort than the previous increment. It becomes harder and harder to justify additional time investments.

In this era of specialization you can read a few books on a subject and know more about a subject than nearly everybody else. That’s the kind of expertise I’m recommending — coupled of course with some practical hands-on experience.

Invest your time to acquire knowledge that your prospective clients or customers will appreciate.

When I was a teen I worked and struggled obsessively to become a top chess player, and I succeeded.

Nowadays I prefer to grasp multiple subjects and to seek synergies among them: many types of data analysis, search engine optimization, marketing, social networking, blogging, etc.

My broad base of knowledge — fused with solid logic, trusted intuition and other abilities and skills — fuels my overall critical thinking outside the box strategy.

You Can’t Do Everything

Like it or not we can’t follow up on every idea or opportunity that presents itself. The Law of Diminishing Returns guarantees that. Therefore we must make value judgments and set priorities every day.

Fortunately the 80/20 Rule is on our side.

80% of all benefit accrues to us by accomplishing 20% of everything on our plate. Each day we ought to focus on a half dozen high priority agenda items that will move our businesses and our lives forward.

If only we did that consistently each and every day our lives would be filled with accomplishments and satisfaction.

Nobody however is perfect. We all have bad days. Yet, the 20% group prioritizes and moves forward with much greater focus and consistency than the 80% group.

Please don’t underestimate the power of the 80/20 Rule and the enormous potential of a modest 20 percent.

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39 Responses to “The 80/20 Rule”

  1. Jeffrey D. on September 28th, 2008 9:44 pm

    Larry,

    Brilliant! My head is still spinning from reading it. It makes a lot of great sense when you put it all together. Terrific post!

    -Jeff

  2. Strategic Marketing on September 28th, 2008 10:28 pm

    Larry,

    Great explanation and examples of the 80/20 rule.

    The trouble is that some business owners don’t keep good enough records to know what comprises the 20% that produces the most results.

    Warmly,

    Linda P. Morton

  3. Andrea on September 28th, 2008 10:35 pm

    Larry,

    Actually, I’m in the choir with this thesis. I, too, am hoping to get into more rarified air of the 20%.

    (I’ll give you a Digg or Stumble if you visit me either at eHow.com or Home and Living Examiner at Examiner.com.)

    Cheers,

    Andrea

  4. Val on September 28th, 2008 11:05 pm

    Larry,

    Your break down of the 80/20 is awesome! I will need to examine it a few more times to ensure that I digest it well….so that I can convert to the 20%.

    Deep,

    Val

  5. Robin on September 29th, 2008 12:09 am

    Larry….this is brilliant!

    If people were to notice, this rule carries over to all of the aspects of our lives. Think about it, even in marriages and friendships!

    The trick is not to waste time on the 80% of the people and concentrate on the 20%!…They are the “producers” of any business.

    Kudos!!!
    Robin

  6. Marvin Krazy Crawford on September 29th, 2008 5:23 am

    Simply AWESOME Larry,

    I have been a minumum-producing motivational speaker however, it is articles such as yours (if implemented) that will make all of the difference!

    Thank you so very very much!

  7. Pamela on September 29th, 2008 9:00 am

    I couldn’t agree more Larry! This is something I have had to “learn” and in my experience I have summed it up for me…The more “I DO”, the more “I DOO DOO” all over what I am trying to accomplish!

    Blessings! PAM

  8. Matt Geib on September 29th, 2008 11:31 am

    WOW Larry!

    You really “NAILED IT”!!

    This is a very POWERFUL article!!

    Very well laid out and presented…a Truth I have known for a long time and yet the way you present this truth really makes it SHINE out as a beacon to all of us who wish to improve our lives.

    Great thing is all of us have a choice and we can start today no matter our age, environment, financial station currently….

    WE(I) can DECIDE TO be in the 20% or continue to do as WE(I) have always done and follow the Herd mentality of the 80%.

    No matter there will always be the LEADERS, the Columbuses, Edisons, Marconis…WHO SEE things differently and ACT and thus succeed.

    Thank you for sharing!!

    I intend to pass this along!!

    You are a brilliant writer!

    Matt

  9. TeasasTips on September 29th, 2008 12:35 pm

    I live by the 80/20 rule..especially in network marketing…you can expect 20% of your downline to generate 80% of your income.

  10. Christine on September 29th, 2008 12:48 pm

    Thanks, Larry, for this great information! You are so right that it applies to all groups… I was just thinking about how few people volunteer - I’m sure that it’s the 20% of a community that volunteer and 20% of those do most of the work in that group.

  11. Blake Hill on September 29th, 2008 1:46 pm

    Hey Larry,

    WOW! Great stuff.

    You hear a lot about the 80/20 rule in sales, business, etc., but usually not explained so well or so detailed, especially with regard to Internet and network marketing.

    Thanks.

    Blake

    PS When our PREMLM Ning site goes live Oct 1st, I would really love for you to post it with your other stuff.

  12. Silvia Richardson on September 29th, 2008 1:50 pm

    Brilliant - Will reread it, as there is a lot of info in it.

    Thanks for taking the time writing this interesting - well spoken blog.

  13. Randy Kemp on September 29th, 2008 1:51 pm

    Larry:

    Thanks for sharing. 80/20 has been solid in Six Sigma for a long time, but has applications across the board.

    Randy

  14. SK WONG on September 29th, 2008 4:13 pm

    The fact is that most people are confused with which is the 80% that is the result, and which is the 20% that gave the result.

    If you cannot measure, you cannot manage.

  15. Paris E. Tompkins on September 29th, 2008 5:30 pm

    Dear Larry,

    Thanks for the information.

    I am sure that you have helped a lot of lights go on for many people…including me.

    Paris

  16. Ginger on September 29th, 2008 5:55 pm

    Thank you, Larry, for another fantastic post!

  17. Jeffrey D. on September 29th, 2008 7:27 pm

    Could this be the reason for Ann Sieg calling her company 80/20 Marketing? Hmmm……

  18. Debbie Morgan on September 29th, 2008 9:04 pm

    Hi Larry!

    Thanks for another great article.

    Is it possible to be in the 20% in some areas of one’s life and the 80% in others?

    Can we be in the 20% in all areas of our lives?

    Just thinking out loud : )

    Thanks,
    Deb

  19. Trace Cohen on October 1st, 2008 4:46 pm

    Wow, I dont think I’ve ever read an article that applied the 80/20 Rule so well to business and personal branding. There is so much information in this article that I need to read it again!

    This just proves how hard you have to work in order to stand out.

  20. Larry Brauner on October 1st, 2008 9:53 pm

    Great question Deb, “Is it possible to be in the 20% in some areas of one’s life and the 80% in others?”

    When it comes to many things I’m in the 20%, but when it comes to many others such as museum going, eating out, watching sports… I’m in the 80%…

    And nobody can be in the 20% or 80% of everything.

    The application of The 20/80 Rule is arbitrary. For example we can say that 80% of all good is done by 20% of all good-doers, but we can also say that 80% of all evil is done by 20% of all evil-doersl

    So, we cannot say that 80% of all 20% groups are made up of 20% of all people. Everybody belongs to both 20% and 80% groups.

    I want to thank everybody who commented and especially all the readers who gave me such kind and generous feedback.

  21. Josh on October 2nd, 2008 4:32 pm

    I live by the 80/20 rule and can attest to how true it is. I know for a fact 20% of my customer provide 80% of the revenue.

  22. Joe Manausa - Tallahassee Real Estate on October 11th, 2008 7:04 pm

    Years ago, when pulling real estate market reports, I figured I would test the 80/20 rule. I have always heard that 20% of the agents do 80% of the business.

    My market is Tallahassee, which quite often is a great microcosm of the national real estate industry. Our average sales price is typically close to the national average, and our market typically moves up or down in parallel to the national real estate market. So I figured we would be able to validate the 80/20 rule as well.

    Much to my amazement, the results of my study showed that the 80/20 rule was not true in Tallahassee. Every so often, I try the test again, only to reaffirm the initial findings. Somebody made this up! While my study in Tallahassee does not represent enough evidence to refute a national study, I suspect that a national study cannot be found. If so, send it my way. You can follow the link in my name to see my local study.

  23. Larry Brauner on October 11th, 2008 7:20 pm

    Hi Joe,

    As far as I’m concerned, the 80/20 Rule is a concept and not an exact relationship.

    A look at your data suggests that about 28% of the results come from about 72% of the agents. Conversely, 72% of the results come from 28% of the people.

    So in your area instead of an 80-20 rule or 90-10 it’s 78-22. That’s fine.

    It still serves as an illustration that a solid majority of effects tend to come from a minority of causes.

  24. DebKessler on October 12th, 2008 6:52 pm

    Dearest Larry,

    Of all the 20% givers I know, you are ranking high on the top.

    I am blessed and have been encouraged by your reaching out and assisting me to look at my business and my website with a hard review. Thank you for having the guts to tell the truth.

    I am a new follower and I look forward to your thoughts and wisdom of the philosophies of marketing.

  25. SEMbyDesign on October 24th, 2008 9:03 am

    Larry,

    This is inspirational.

    I want to be in the 20% with whatever I do. I never thought about the 80/20 Rule applying to all areas of my life, but this has somewhat of a spiritual aspect to it as well.

    Search Engine Marketing in Omaha

  26. Michael Mosby on November 1st, 2008 11:16 pm

    Great article. I will put it on my site!

    Its so true I see it everyday.

    Today I went and installed a piece of glass window, small one foot by one foot, and a storm door. How 80/20? Well people I did it for, 3 grown men, one plumber, one a painting contractor, and one school teacher with masters degree, and they had to hire me. I was the 20 per cent of the deal.

    All the education and time in the trades and they only know what they where taught — never had to be versatile at all.

    I have been in the Building and Real Estate Industry over 35 years and never think I know enough — always have to learn and for the most part that’s where I make up for the others I employ and work with.

    If I was not the 20% of the equation, it would never get done. So you are OH SO right.

    Thanks

  27. Larry Brauner on February 3rd, 2009 9:46 pm

    Now that I’m a big fan of Twitter, I need to add that 80% of all tweets are tweeted by 20% of all tweeps.

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  29. Brandi Heinz on May 17th, 2009 6:48 pm

    This is a great article! I came across it researching the 80/20 rule and social media - perfection, definitely linking back to this! Thanks!

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  32. Debby Bruck on August 1st, 2010 12:48 pm

    Dear Larry ~ I love this blog and feel on a personal level we must prioritize because “We Want To Do It All,” but know that is impossible. You are familiar with the Super-Mom Syndrome, or the business guru who spreads them self too thin, then collapses under stress.

    Now, I will be aware during my day of how this 80/20 rule applies and see if I can leverage some of that 20% to get 80% more done. LOL

    Your advice is awesome and I’ve Re-Tweeted your blog.
    blessings, Debby

  33. Larry Brauner on August 1st, 2010 2:40 pm

    Thank you very much Debby. Related to this is an important law, that of diminishing returns. Even when we engage in optimal activities, it’s possible to go too far with our efforts.

  34. Lee on August 1st, 2010 7:24 pm

    I love the 80/20 analogy and your point of focusing too much time one thing. Sometimes a singular direct focus is appropriate, but as I’m reading and learning, it is important to figure out how to apply all the tools one can learn and how to best adapt those to their specific marketing needs.

  35. What’s the face of your brand? « JessicaRandazza on September 24th, 2010 5:29 pm

    […] 1. How we communicate. Are we engaging? Responsive? Do we provide valuable/unique insight? Do we curate or aggregate great content? Are we adhering to the 80/20 rule? […]

  36. Robbie Schlosser on November 30th, 2010 12:35 pm

    Thanks for this brief article loaded with brilliant insights! Perhaps among the <20% of all blogs that truly illuminate the world. Re-reading all the diverse examples of how you apply this 80/20 “rule of thumb” will inspire me (and many others, I’m sure) to continually take stock of where we are and where we’re going.

  37. Larry Brauner on November 30th, 2010 12:45 pm

    Thank you Robbie. I’ve written hundreds of articles. Many are out of date, but others, such as this one, should remain relevant for a long time.

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