Forum Moderators: buckworks
The 80/20 Rule means that in anything a few (20 percent) are vital and many(80 percent) are trivial.
I always thought that the rule was just an excuse for ignoring 80% and focusing on the easy (but, according to the rule, critical) 20%. I reasoned that most firms need that last 20% of business to make a profit...to put it over the top. In the world of big corps, Pareto justifies corporate boxes at the sporting events for elite customers, while the masses receive a $2 calendar at Christmas as a "thank you."
In any event, I ran a study of the products we sell online. Top 10% accounted for 65% of our sales (and profits). Top 20% accounted for... [drum roll]...79%!
Pareto wins!
By the way, the bottom 20% of the things we sell online comprise less than 1/2% of our sales!
There are a lot of lessons here: Want to add revenue? Focus on selling more of your top few products...better descriptions, quantity discounts, put them "up front" etc.
If your site is too cluttered, consider dropping products on the bottom rung. You'll never miss 'em.
This is why some people use the scalability and economy of the web and websites to variously mix and match much the same products on multiple sites with differing emphasis/layout/nav/landing pages/etc.
It becomes possible, averaged over all the sites, to smooth (i've never seen it actually level) the curve...and raise revenue levels accordingly.
For example, among the things that we sell are specialized high power electrical connectors. If you look at the sales, about 85% are for 3 or 4 items.
Here is why the rule is broken - even though 85% of our sales are for 4 items, we would sell much LESS of those 4 items if we did not also carry the various parts and accessories for and to use with those 4 items. Most customers prefer one-stop shopping. That means that we not only sell the connectors, but tools, wire and other parts for them.
A while back we added about 20-30 small items to that line, and while only about 5% of our sales come from that, we also saw sales of the main items go up by almost 40%. Part of that was probably higher visibility for that type of product on the web, but I doubt very much that 40% was.
