Planning for 2016 Using the 80/20 Rule

I am at my most ‘thoughtful’ or even whimsical period during this time of the year.  Since I manage a couple of retail website (selling mostly gourmet foods), Thanksgiving through the end of the year is usually the busiest time for me.  And this year was no exception!

But now, orders have slowed down, the days are shorter and colder (making me stay home more!), and I have time to reflect on last year and my plans for the coming year.

For me, it is very helpful to go through the previous year to evaluate what worked and what did not.  For example, what customers are buying regularly and which ones are just taking up my time.  I use the 80/20 rule to help me:

Here is a system to help put this principle in black and white.
Separate your customers into three groups by their sales and buying habits:

Group A – your top 20%
Group B — middle 60%
Group C — bottom 20%

  1. Group A are your best and most profitable customers.  They need your best time, resources, and follow up.  Contact these customers at least every month.  If you are unable to visit them monthly, touch bases with them by phone or email.  Using the 80/20 principle, 80% of your business and sales will come from this group of customers and they need to be your top priority.
  2. Group B are your customers that add a significant amount to your income, but don’t need your time or services as often.  Call on these buyers every two or three months.
  3. Group C are the customers you need to review more closely.  Can you find a way to increase sales with this group thus moving them to Group B?  If not, you will need to decide if it is a good use of your time to visit these stores.  Many of this group may need to be dropped to make room for more profitable buyers.

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