You know about the 80/20 rule, right? It’s the guideline that 80% of your return comes from 20% of your investment. For example, 80% of your referrals come from 20% of the people in your network. 80% of your new business comes from 20% of your prospects. 80% of your new contacts come from 20% of the networking activities you engage in. And so on.
Like all such guidelines, this one is inexact, but helpful. If used correctly, it makes you stop and think. Where are most of your returns coming from? And where is most of your effort going?
Imagine how much less time and money you could spend on marketing if you could simply identify the 20% of your current efforts that are really the only ones that matter. You could let go of 80% of what you’re doing.
I can’t guarantee everyone can do this. Some of you are already pretty smart about how you market yourselves. But here are some places to look:
Where are your clients actually coming from?
You may think you know the answer to this question, but I find in many cases that people’s assumptions don’t match the data. Review every client you’ve worked with in the past two years and try to determine how that client entered your life. Make a list of not just the source of each client, but what you may have done (or made available) to produce clients from that source.For example, “Referred by Mary Smith. Met her for coffee last month,” or “Inquiry from my website. Signed up for my special report two weeks ago.” If you can’t uncover data like this about every new client, now is the time to start tracking it for the future.
Notice any patterns this analysis suggests, and strategize how you might reproduce these successes. Where could you find more referral sources like Mary Smith? Or what potential referral sources already in your network have you never met for coffee? If most of the new clients originating from your website are those that requested your special report, is that request form available on every page?
Where are your highest paying or lowest hassle clients coming from?
The quality of your clients can make as much difference to the success of your business as the quantity of them. Select the top 20% of your clients from the list you made above — either the ones that paid you the most or troubled you the least — and consider how you might acquire more clients like them.Notice not just the source of these top clients, but also what characteristics they might share. You might discover that your highest paying clients are those who themselves are in a higher income bracket. Or that the clients who give you the least trouble are the ones who have worked with professionals in your line of business before. These are valuable clues to where the majority of your marketing efforts should go.
What marketing approaches are costing you more money than they bring in?
When you can see exactly where your clients are coming from, you can also determine where you’re paying too much to get them. Common places for overspending are print and online directory listings, pay-per-click ads, search engine optimization fees, and multiple association memberships.Compare not just what you are spending on each potential source of clients to what revenue you received from it, but what profit you ultimately made. A $500 ad that brought you a $500 client has earned you nothing. And an ad that produces many inquiries but little paying business consumes time you could better use to produce income.
What are you currently doing that you haven’t gotten a single client from?
Some marketing techniques take time to pay off, but if you’ve been using a particular approach for several months and no clients have yet resulted, it’s time to reconsider. You probably need to either abandon this approach or fine-tune it.If you belong to a networking group that isn’t producing referrals for you, consider whether you should seek a different group that’s a better match for your target market, or stick with the group and start meeting its members for coffee. If you’ve been cold calling corporate prospects without results, you may need to drop cold calling and focus on referrals and introductions, or your telemarketing skills may need considerable improvement.
By making judicious use of the 80/20 rule, you can eliminate the least productive marketing activities you engage in and ramp up those that are more effective. You can also focus most of your marketing on the client sources and type of prospects that have worked well for you in the past. And that can put you in the 20% of entrepreneurs who have a successful business instead of in the 80% who don’t.