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bookseller found his niche with the 80:20 rule
second-hand bookshop used to buy and sell any and every classification
It had no focus and as a result much of the proprietor’s stock remained
for years, taking up valuable shelf space.
he changed tack. He worked out what kinds of books people were buying
what kinds of books were staying on the shelves. The 80:20 rule applied.
had thousands of books in over 50 categories. But of those 50
than 10 accounted for almost all of his sales. He started to specialize
sourcing those books that suited his market and stopped stocking those
stock moves much faster and his till rings far more often.
was a simple 3-stage approach:
- Segment the books into categories.
- Match amount of stock held, by category,
against the sales made.
- Focus on the most profi table 20% of
the 80:20 rule on your business
bookshop proprietor used the 80:20 rule to analyze and rethink his
line. You can do the same with your product line, your customers, your
marketing activities, your sales staff and your time.
80:20 rule helps you group or segment customers, products or
activities. The bookseller’s
strategy was to focus on his best performing products; to develop his
analyzed his product line and then used 80:20 thinking to develop a
could take his business forward.
approach might be different. You might decide that you don’t want to
simply on your most profitable 20% of customers. You might instead
trying to convert your less profitable customers into more profitable
strategy you take will depend on your business’s key goals, the factors
determine the success of your business.
80:20 rule isn’t prescriptive. It simply helps you stand back and think
which of your products, customers, efforts and tasks really contribute
profits and end goals.