The 80/20 rule of website marketing says that 20% of your products or clients will produce 80% of your income. So if you promote each product equally, you’ll spend 80% of your time and money promoting products and services which only earn you 20% of your income—which sounds like wasted effort.
How Jack Welsh, CEO Of GE, Fixed His 80/20 Problem
When Jack Welsh became CEO of General Electric, the iconic company founded by Thomas Edison (inventor of the light bulb and record player), he found the business floundering in over two dozen different markets.
Some divisions of GE were in the money-making 20 percent. They were leading their industry.
Other divisions were treading water, earning barely enough to support themselves or actually costing GE money to run. They were the 80% which sucked resources away from GE’s more successful endeavors.
Welsh realized that GE would fade away if it kept wasting time on unproductive divisions, so he made a simple rule: GE would sell off or close any division which wasn’t number one or number two in its industry.
Soon GE’s divisions were all winners, and nobody had to worry that time spent marketing one division was wasted because it could’ve have been spent marketing a more effective division. When everything you have is top-notch, you never feel like you’re wasting time promoting it.
Here’s how you can apply Welsh’s system to your product or service business:
Do You Run A Product Business?
If you want to escape the 80/20 rule of marketing in your product-based business, consider selling the rights to a under-performing product to a competitor of yours. Not only will they pay you for the opportunity, but they’ll often spend their own money to market it—which is better than having them spend money to compete with you on your top-earning products.
Do You Have A Service Business?
Escaping the 80/20 rule of website marketing is even easier for your service business than for a product business. All you need to do is fire your least-profitable 80% of clients.
I know firing clients sounds scary, but these are usually the clients which are a poor fit for you. They waste your time; they take you from your passion; they hold back your progress.
Firing your worst clients will give you an immediate boost in time and resources which you can use to find new clients who are a better fit for your business.
But maybe you’re still too new to your business to consider selling off products or firing clients. What you need is a way to market effectively without worrying about the 80/20 rule.
Do You Have A Money Making Blog?
To turn the 80/20 rule on it’s ass, you need to do one or more of the following:
- Concentrate on your top performing websites and get rid of under performing sites like the Jack Welsh example.
- Choose your website promotion by what works for you, not what others say is the latest and greatest thing. Of course try new things but never continue to travel down to a dead end.
- Try to promote affiliate products that have recurring commissions. That way you can sell a product once and get paid over and over.
- Create the content that converts and performs the best.
- Remove the content that is pulling your blog down. You will be left with top money making content and less wasted time.
Use The Jay Abraham Formula To Kill The 80/20 Rule Forever
Although wasting time marketing the wrong products or services is a real concern, what you probably need most is an easy way to determine how to improve your website business. For that, I highly recommend Jay Abraham’s technique for growing businesses.
Abraham separates out the three ingredients of success in every business: the number of clients, the number of sales per client per year, and the average net income of each sale.
Multiply each number by the other and it should equal your total income. For example, 100 clients times 5 sales per client times a $100 average net sale profit equals $50,000 of income.
By itself, these numbers mean very little, but by combining them together, you can see how to create drastic improvements in your business without worrying about the 80/20 rule of website marketing.
Let’s use the example above and say you grow each number by a mere 20 percent. You get 20 extra clients this year, each client makes 1 extra purchase, and each purchase increases your profit by just $20. Those are all small improvements you can accomplish with a reasonable amount of work—but combine them together and your business has gone from $50,000 in annual income to $86,400.
After you boost your business so much with so little extra effort, you won’t be so worried about the 80/20 rule of website marketing.
How The 80/20 Rule Of Website Marketing Can Help You
Thomas Watson, the CEO of IBM when it was building 90% of all the computers in the world, once said: “if you want to succeed, double your failure rate.”
One reason most of your marketing time is spent on products or websites which don’t perform well is because you tried something new. And if you hadn’t tried something new, you probably wouldn’t have those top-performing 20 percent products.
Nothing annoys me more than people who criticize failure without realizing that failure is necessary for success. Are you really wasting your time marketing a new product even though it isn’t profitable yet? I spent a few years on my first website until I finally worked how to monetize a website. I am just lucky I rode out the failures.
Even existing under-performing products and websites can sometimes suddenly find a market. You’ve probably heard of cases where minor products or websites get mentioned on major shows and become overnight successes despite months or years of failures.
Although I don’t suggest that you base your marketing on what amounts to a lottery ticket, I do think the fact that you’re thinking about the 80/20 rule of website marketing means you’ve probably accomplished more than most people who gave up at the first failure.
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