The 80/20 Principle Revisited

All “Professional” marketing firms (and most successful business owners) know what the 80/20 Principle is. They use it in every aspect of their marketing campaigns and business operations. In business and marketing, the  simplest definition of the 80/20 principle is;  “80% of your sales come from 20% of your clients.” I won’t get into detail on the the 80/20 Principle here (you can get the book by Richard Koch from Amazon and I highly recommend you do if you are not familiar with it), but I want to point out an area of the 80/20 Principle overlooked by most affiliates and websites owners – how much you can actually apply to your marketing campaigns to improve conversions.

In Marketing you can drill-down on this as follows:

• Only 20% of your advertising attracts interested buyers
• Only 20% of those Interested buyers are likely to purchase (maybe a little less)
• Only 20% of your ads will be effective
• Only 20% of your effective ads will convert
• Only 20% of your landing pages will convert well
• 80% of most time spent on marketing is wasted – or is it wasted!

Yes, if you do not apply the 80/20 Principle to everything you do, at least 80% of your time spent on marketing produces no tangible results. A little unsettling, but very true. However, there is a way to reduce this waste, and do it quickly – which is more dollars in your pocket.

There are 3 primary components to online marketing:

#1 – Traffic
#2 – Conversions
#3 – Costs to acquire traffic & complete conversions

Items #1 & #2, ideally, should never cost you more than 20% of the commissions or net profit on any product you sell (the 80/20 Rule). I personally stick to this and drop any advertising method or ads that cost me more – or the affiliate program, if it just does not sell no matter what I do.

Google ads are a good example to show how the 80/20 Principle can be applied to any type of advertising you do. Google knows this and gives you all the tools you need to increase that 20%, and reduce the 80% waste.

• Only 20% of the good keywords you use are likely to receive clicks
• Only 20% of those keywords are likely to be converting keywords
• Only 20% of potential converting keywords are likely to convert into a sale
• Only 20% of your ads will attract serious interest
• Only 20% of those ads will attract converting customers
• Only 20% of your landing pages will convert the above traffic – and yes, all of the above should be directed to at least 3 different landing pages for testing.

The above translates into:

• Weed out the 80% of keywords that do not get clicks
• Then weed out the 80% of keywords that get clicks and do not convert
• Expand on the 20% of keywords that do convert
• Remove the 80% of ads that do not convert
• Split-Test the 20% of ads that attract potential customers to increase conversions
• After refining the above, Split-test the landing pages until at least 1 in 10 visitors convert

The above may sound like a lot of work, and it is, but without applying the 80/20 Principle to every aspect of your marketing efforts, you are missing numerous opportunities to increase sales and paying far to much for your advertising. The examples in the 2 lists above can be applied to most advertising campaigns using any type of advertising platform, such as PPC, PPV, PPA, Banner ads, FPA’s and many others – both online, and off.

What does this really mean?

You need micro manage of every level of your marketing plans and strategy. Every segment can be analyzed and improved using the 80/20 Principle. No matter what advertising or conversion techniques you use, they can be broken down into the 80/20 Principle. It requires testing,  more testing and detail tracking of every traffic source (you have to know what converts), but in the end…

…if you focus on the 20% that produces results, and do away with the 80% that does not, your profits will increase and advertising cost will come down – and we all want that.