Unlocking Marketing Mastery: Leverage the 80/20 Rule for Maximum Impact!

Throughout of our years of assisting numerous customers with their marketing efforts, one question continually pops up on a regular basis. "How do I get started on creating a markeeting plan for my company, and how do I determine where to focus my marketing efforts."

Well, the basic truth is that you are better off focusing your limited marketing budget on pursuing prospects who exhibit similar characteristics to your very best current and past customers.

Of course, just like our clients, we at mdi have struggled with trying to put together an effective marketing plan with a limited budget. We've found that using a variation of the 80/20 rule is a simple and effective method to compose an effective marketing plan and wisely allocated a limited marketing budget..

Basically, it is very likely that 80% of your revenue, comes from approximately 20% of your customers. Using this premise, we compile and sort our list of customers for the past two years from best to worst in terms of profit and revenue. From this sorted list, we can determine which customers generate around 80% of our earnings fro that tme period. More often than not, this usually correlates to about 20% of our customers. We then determine the key characteristics of these top 20% customers, looking at things such as type of industry, location, product and service interest, reason for buying etc. This information provides a good baseline for crafting our marketing plan with the main focus on seeking out and actively pursuing prospects with similar characteristics. Using this information, we would allocate around 60% to 80% of our marketing budget in two key areas:

1. Ongoing relationship building with that top 20% of our customer list, and

   
   

2. Seeking out customer prospects with demographic and psychographic characteristics similar to the top 20%

We then split the remaining of the revenue-sorted customer list into two groups, the top 60% and the lower 40%. Of course the bulk of the remaining marking budget would be primarily allocated to marketing and maintenance efforts for the top 60% of the remainder of the revenue-ranked customer list. Our marketing outreach efforts to seek out prospects with characteristics matching this top 60% are very selective.

Regarding budget allocaion between outreach efforts versus ongoing maintenance efforts with existing customers, the key factor to remember is that it is usually a lot less expensive to keep an existing customer than trying to bring in a new customer.

At least once a year we do review the entire customer list to determine any significant changes in profit and/or revenue status and the ranking of customers within each of the three broadly defined customer groups. Based on our findings, customers may be moved from one group to another.

In conclusion, we've found that this approach is not only simple and very effective, but also provides a good starting point for the development and management of our annual marketing plan. Our course, along with this approach, we perform regular reviews on the allocation of our marketing dollars to determine whether changes need to be made to improve effectiveness and return on investment.

For help with your marketing planning needs, just call us at (513) 563-4900 or email at info@marketdirectinc.com. You can also visit our website at marketdirectinc.com.