If you’re not familiar with 80/20 and its profound effects, prepare to have your mind blown. And if you are familiar with 80/20, you know you’ll find at least 80% of the content valuable (we’d like to think it’s closer to 100%).
In this episode, author Perry Marshall illuminates some of the concepts and principles behind his groundbreaking book, ‘80/20 Sales and Marketing.’ But not in the convoluted, super-geeky way you might think (although there’s the perfect amount of that peppered in). Rather in a refreshingly entertaining way through offbeat stories and tangible action steps to help you increase profitability and productivity in your business.
Fair warning…once you get this inside your head, you’ll never see the world the same again.
- How to fire money-draining clients with grace
- 80/20 concepts fit for a yellow belt, green belt…and blue
- Finding the 80/20 levers in your business
- Perry’s must-listen favorite 80/20 story
- How Mattress Mack got publicity for his business with a charitable act
- The cause and effect of a positive feedback loop
- What the law of attraction has to do with 80/20
- Practical ways to apply 80/20 to marketing
- The Starbucks Principle of the $2700 Espresso Machine
- Two mains reasons why people struggle with the 80/20 rule
- 80/20 will happen to you no matter what
- The weight of societal responsibility on entrepreneurs
- Got fired from his engineering job when he was 26 while his wife was 3 months pregnant.
- Ended up in sales, spiraling in credit card debt
- Best known for cracking the code on Google Adwords
- Figured out the secret sauce of 80/20.
Perry’s favorite 80/20 story
Vegas, gambling, strip clubs, and sawed-off shotguns ends up as highly relevant information.
“Everything you do in marketing is racking the shotgun.”
Deeper things you need to know about 80/20
- 80% of the response comes from 20% of the people
- 20% of the response comes from 80% of the people
- Keywords in a Google account – 5% of the keywords produce 95% of the traffic
- 95% produces 5% of the traffic.
“It’s always going on and it’s true everywhere.”
- It’s the cause and effect of a positive feedback loop.
“It’s not possible to look out your window and not see something that’s 80/20.”
A simple way to apply 80/20 to marketing:
You have to subtract. “Most of us, myself included, habitually want to say yes to everything…”
If your business has matured to any degree, you have clients who are losing you money.
Unless you’re doing it deliberately, you shouldn’t be doing it.”
The perks of cutting ties with a draining client:
- You give yourself a raise
- You lower your stress
- You lower the amount of work you have to do
- You open up an opportunity
- You subtract from the bad side of 80/20
“The effective stuff is 16x more powerful than the ineffective stuff.”
The Starbucks Principle of the $2700 Espresso Machine
If you have a Starbucks and every week 1000 people buy a $5 late, one of those 5K people will spend $2700 on an espresso machine.
“80/20 says there’s a law of attraction. In mathematics and science, it’s called an attractor.”
Using the 80/20 rule…
If you know how many people will buy one pair of shoes at Payless for $19.94, you can figure out how many people will spend $2K on a pair of pumps.
Why people struggle with 80/20 (#1)
Everyone’s taught to think about average.
The 20/120 Rule
- The top 20% of your customers, products or employees make 120% of your profits.
- The bottom 20% loses your profits and brings your 120 down to 100.
- Some stuff that makes you money pays for what the other stuff is losing.
Publicity done the right way
The story of kindhearted Mattress Mack and how he housed Houston hurricane victims, went viral, and cost an undisclosed amount of keynote speakers a gig.
Why people struggle with 80/20 (#2)
They’re indoctrinated with equality.
“The amount of time you spend on clients and projects and problems has almost no relationship to their actual profitability. Because you’re treating the world the way your first-grade schoolteacher trained you to treat them and you’re not thinking like an entrepreneur.”
“Entrepreneurs are students of reality…we cannot afford to live in some fantasy world.”
80/20 will happen to you no matter what.
If you’re strategic in working with 80/20, you’ll get a completely different result.
“For those that understand [80/20] …you can do with it what you want. But you can’t deny it. It’s kind of like denying gravity and jumping off a roof.”
A crazy story to tie it all together in a very odd way.
“About 5 years ago, I had 2 teenagers and they were starting to get an attitude. And the attitude was, ‘My latte’s too frothy.’ So I took them to Calcutta, India.”
“Principles work. Techniques are not guaranteed to work but principles do.”
Mentioned in this episode:
Order Perry’s book here >> 80/20 Sales And Marketing