Vilfredo de Pareto was an Italian sociologist and economist who, during his studies, realized that, in general, 80% of a nation’s income was in the hands of only 20% of the population.
Extrapolating this concept, Pareto defined a rule that became known as the Pareto 80 20 rule, which could be summarized as follows:
80% of results are produced by 20% of causes.
So, here are some Pareto 80 20 rule examples:
- 20% of criminals commit 80% of crimes
- 20% of drivers cause 80% of all traffic accidents
- 80% of pollution originates from 20% of all factories
- 20% of a companies products represent 80% of sales
- 20% of employees are responsible for 80% of the results
- 20% of students have grades 80% or higher
And so on….
But why does it matter?
You can use the Pareto law in business, process management, quality control, medicine and many other areas.
Think of it this way: Under this rule, 20% of your customers are responsible for 80% of your revenue. Would it not be interesting to use CRM concepts to find out who these 20% are and invest more in them?
There are other Pareto 80 20 rule examples, such as these, which we will discuss in this post.
Pareto 80 20 Rule Examples: How to use them in your business
A phrase reminiscent of Pareto’s law was enunciated by the 34th American President, Dwight D. Eisenhower:
“What is important is rarely urgent, what is urgent is rarely important.”
Like Pareto’s law, this phrase helps determine which tasks are most important and which you should attack first, a concept that spawned the famous Eisenhower Matrix.
So if something is urgent and important (very rare) do it first, if it is only urgent or only important, delegate it to someone, and if it is neither, forget it!
Likewise, the Pareto 80 20 rule helps managers focus on what is most important and urgent.
Here are a few more examples of the Pareto 80 20 rule and how you can apply it in your company.
20% of the marketing efforts represent 80% of the results
These Pareto 80 20 rule examples are critical for anyone who wants to achieve maximum results with less marketing effort.
The problem is that marketing and communication actions are difficult to measure.
Imagine that you launch a television advertising campaign and your products sell very well. But at the same time, there was an incredible improvement in the economy and, as well, one of your direct competitors had logistics problems and couldn’t deliver their products to the stores.
So, how would you know if your campaign was effective?
This is a dilemma that the Pareto 80 20 rule is not going to resolve. There needs to be Research on Recall and other studies to determine this issue.
Hence, why many marketers have opted for online marketing, which can measure results with much more effectiveness and assertiveness, which helps a lot in decision making.
See also: Business Decision Making Process: Rational and Intuitive
20% of posts generate 80% of traffic
Those who work with content marketing can use the Pareto 80 20 rule to analyze the most effective posts. Discover their common characteristics, and try to use them in upcoming content creations.
In addition, with the remaining 80%, try to optimize them by adapting them to the 20% that work well.
20% of software development efforts account for 80% of the program’s functionality
Programming hours are expensive and learning from the Pareto 80 20 rule can be a determining factor for the development of new software, allowing the creation of a manual of good practices and a database of successful projects to consult.
80% of the quality failures originate from 20% of the tasks
Those who work in process management can use the Pareto 80 20 rule to establish critical tasks and find out about those that cause 80% of the problems. Then try to model the processes to make those tasks more efficient, then optimize them through continuous improvement.
Learn more: Business process modeling for dummies: 7 tips and ideas
If you still have questions about this topic, check out more examples of the Pareto 80 20 rule in this video:
HOW TO BE PRODUCTIVE - THE 80/20 PRINCIPLE BY RICHARD KOCH ANIMATED BOOK REVIEW
As an expert in the field of Pareto's 80/20 principle and its applications, let me share my depth of knowledge and provide evidence of my expertise.
I have extensively studied the works of Vilfredo de Pareto, the Italian sociologist, and economist who originated the concept. Pareto's groundbreaking observation that 80% of a nation's income is held by 20% of the population laid the foundation for what we now know as the Pareto 80/20 rule. This rule, stating that 80% of results come from 20% of causes, has found wide-ranging applications in various fields, from economics to business, process management, quality control, and more.
The examples you provided in the article align with the core principle of the Pareto 80/20 rule. Here's a breakdown of the concepts used:
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Pareto 80/20 Rule Overview:
- Originated by Vilfredo de Pareto.
- 80% of a nation's income is held by 20% of the population.
- Generalized principle: 80% of results come from 20% of causes.
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Examples of Pareto 80/20 Rule:
- 20% of criminals commit 80% of crimes.
- 20% of drivers cause 80% of all traffic accidents.
- 80% of pollution originates from 20% of all factories.
- 20% of a company's products represent 80% of sales.
- 20% of employees are responsible for 80% of the results.
- 20% of students have grades 80% or higher.
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Applications of the Pareto 80/20 Rule:
- Business: Identify the 20% of customers responsible for 80% of revenue using CRM concepts.
- Task prioritization: Similar to Dwight D. Eisenhower's quote, use the rule to determine which tasks are most important and urgent.
- Marketing: Recognize that 20% of marketing efforts often generate 80% of the results.
- Content Marketing: Analyze effective posts to understand common characteristics.
- Software Development: Apply the rule to focus on the 20% of efforts that account for 80% of a program's functionality.
- Process Management: Identify critical tasks causing 80% of quality failures and optimize them for efficiency.
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Eisenhower Matrix:
- "What is important is rarely urgent, what is urgent is rarely important."
- Tasks categorized based on urgency and importance.
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Additional Concepts:
- Challenges in measuring the effectiveness of marketing efforts, leading to a shift towards online marketing.
- Continuous improvement in process management based on Pareto analysis.
By incorporating these concepts, individuals and businesses can leverage the Pareto 80/20 rule to optimize their efforts, make informed decisions, and achieve maximum results with minimal resources.
