Let’s start off by explaining Pareto’s 80/20 principle before we explore how it relates to online business software

Way back in the 1800′s there was this controversial economist/sociologist by the name of Vilfredo Pareto. He claimed that in society 80% of the wealth is controlled by just 20% of the population. He used this mathematical formula to show that this grossly uneven wealth distribution is not random but that it follows the exact same pattern throughout history, across different cultures and varied economical structures.

But it doesn’t end there Pareto’s law or the 80/20 principle can be seen in a multitude of other arenas. For example in his garden Pareto noticed that 80% of his peas were produced by only 20% of the plants. Most people wear 20% of their clothing 80% of the time. And finally if you apply this theory to business you’ll find that 80% of your income comes from just 20% of your customers.

Take a second to ponder this point. If 80% of your income comes from just 20% of your clients what would happen if you lost even a few of those high value customers?

In fact in many businesses this formula is amplified, 90/10 or even 90/5. Meaning that the revenue, essentially the foundation of your business, could be built on a few select clients. Do you know who the high value clients are in your business? And if you knew exactly who they were, would you take steps to look after them better?

This is where online business software enters the picture. By using an integrated database solution you can identify who your high value clients are in minutes. This gives you the opportunity to show them a little extra attention. Invite them to events, give them special exclusive offers and any other small personal touches you can think of to enhance your relationship.

I once worked with a client who sold high end antique furniture he imported from Europe. For his very best clients he held events where his highest value customers could come, sip champagne and view the new shipment before anyone else even got the chance to bid on the items. These clients got first choice, they also got to network with other furniture collectors and in the end it was a nice night out. He sold a lot of furniture at these parties but it was more than that. He created an experience for his clients, cementing their relationship with his company and making these customers very loyal.

If you have the right business software you can easily determine which 20% of clients are providing 80% of your income. What you’ll need is online business software that includes customer relationship management and accounting. With business software like this you can run reports that tell you which clients over a defined period of time 3,6 or 12 month period have made the highest value orders or have done the most repeat transactions.
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