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How a local bookseller found his niche with the 80:20 rule

A second-hand bookshop used to buy and sell any and every classification of book. It had no focus and as a result much of the proprietor’s stock remained unsold for years, taking up valuable shelf space.

So he changed tack. He worked out what kinds of books people were buying most and what kinds of books were staying on the shelves. The 80:20 rule applied.

He had thousands of books in over 50 categories. But of those 50 categories, less than 10 accounted for almost all of his sales. He started to specialize in sourcing those books that suited his market and stopped stocking those that didn’t.

Now stock moves much faster and his till rings far more often.

His was a simple 3-stage approach:

  1. Segment the books into categories.
  2. Match amount of stock held, by category, against the sales made.
  3. Focus on the most profi table 20% of categories.

Using the 80:20 rule on your business

The bookshop proprietor used the 80:20 rule to analyze and rethink his product line. You can do the same with your product line, your customers, your marketing activities, your sales staff and your time.

The 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 own niche.

He analyzed his product line and then used 80:20 thinking to develop a plan that could take his business forward.

Your approach might be different. You might decide that you don’t want to focus simply on your most profitable 20% of customers. You might instead focus on trying to convert your less profitable customers into more profitable customers

The strategy you take will depend on your business’s key goals, the factors that determine the success of your business.

The 80:20 rule isn’t prescriptive. It simply helps you stand back and think about which of your products, customers, efforts and tasks really contribute to your profits and end goals.

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