15 Minutes

Financial, Relationship and Spiritual Growth. Personal Development. Leadership.

Increase Your Value by 52.5% In Less Than 1 Second

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pareto2I don’t remember exactly where I first heard of the Pareto Principle, a.k.a. the 80-20 rule. In fact I don’t even remember who Pareto was, possibly an economist (if only there were a convenient way to instantly look up information without having to leave my computer keyboard… oh, well).

The premise of the rule is this: you will get 80% of the effect from 20% of the cause. Or 80% of results come from 20% of the effort put in. This principle applies not just to your personal activity, priorities and time management, but also to large organizations and businesses.

pareto1Some examples of the principle in action:

  • 80% of your work will be completed in 20% of the total time spent (for those of you who procrastinate, it will be in the final 20% before deadline).
  • 80% of your satisfaction at work will come from 20% of your job duties.
  • If you own a business, 80% of your profits will come from 20% of your product line. And 80% of your sales will come from 20% of your salesmen.
  • In your church, 80% of the donations will come from 20% of the people.
  • In any book you read, 80% of the content will be found in 20% of the pages (the obvious exception being MY books which have incredibly valuable tips and information condensed into every single page including in the copyright information right next to the title page).

According to leadership expert John Maxwell this rule even applies to picnics.

  • 80% of the food will be consumed by 20% of the people. Also, 20% of the people will provide 80% of the food, but those two groups are never the same 20% people.

Usually when I talk about principles of success, I focus on the idea of slow, gradual growth, of changing our daily habits, of internalizing change and becoming rather than just behaving successful.

I’ve said many times that the idea of a quantum leap to success is largely a myth. Well, today I’m going to admit that I was wrong. Instant success is possible, and using Pareto’s Principle I will share a method that will instantly increase your profit, or relationship, or happiness, or whatever you choose to apply it to.

Stop spending time on the 80%.

End of seminar.

Well I suppose I could expound on that idea just to prove the point of Pareto’s Princple.

Legendary life insurance salesman, Frank Bettger, wrote a book called How I Raised Myself From Failure To Success in Selling (and by the way, no one ever asked him “What’s your book about?”). In Chapter 2, he carefully analyzed his records of 12 months of his daily activity (interviews, sales calls, and commissions). He came to the realization that when he took his total annual sales commissions divided by the total number of sales calls he made, his average phone call had a value of $2.80.

This realization had a major impact on his thinking, because it made him realize the value of his time, and the value of every phone call, regardless of whether the person bought or not.

Here’s what his records further revealed. 70% of his sales were made on the first interview. 23% were made on the second interview. However, he was spending roughly 50% of his time with prospects on the third interview or later. In other words, he was spending most of his time chasing 7% of his total sales.

So here’s what he did: if his prospect did not buy a policy from him after his second sales interview, he stopped calling them.

Whoa, that’s pretty drastic. What if that customer seemed like he was right on the verge of buying? Sure, there was a chance that the customer might buy. And that chance was 7%; he had the records to show it. Whereas a brand new customer that he was calling on for the first time had a 70% chance of buying.

That single decision increased the value of each call from $2.80 to $4.27. That’s an increase of 52.5%… in case you were wondering about the blog title.

pareto3Your time is valuable.

Your time is less valuable when you invest 80% of your activity into 20% of your results.

Spend your time on the valuable things first.

If you spend all of your creative energy in the 20% of activity that yields the 80% results, you would increase your productivity by four times (at least I think that’s what the chalkboard shows). Math only accounts for 20% of my GPA so I skipped it. In fact, it took me quite a while to figure out that increasing something from $2.80 to $4.27 is a 52.5% increase.

So I have two questions for you:

  1. How can you apply Pareto’s Principle to your life, and
  2. Which 80% of this blog was unnecessary?
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Author: Matt_S_Law

Matt S. Law is an author focusing on success principle and motivational books. He was born, raised and currently resides in Honolulu, Hawaii.

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