Clients Keep The Lights On! – Customer Service and the Pareto Principle. Wait, what?
If you are wondering (or had to Google) what the Pareto Principle is, don’t feel alone. Like most, you probably know it, but not by its proper name. We are talking about the 80/20 rule.
How does the 80/20 rule apply to customer service?
The origination of the 80/20 rule comes from an early 20th century observation by Vilfredo Pareto from the pea pod growth in his garden. He noticed 80% of his healthy pea pods were produced by 20% of the pea plants.
Reasoning goes, in order to get the best possible results from his garden, Pareto would apply all his energy to the top producing pods by fertilizing, nurturing, and protecting these plants for optimum growth and production, and do some pruning and uprooting of unhealthy plants.
So, how do pea pods and pea plants have anything to do with customer service?
The easiest way to explain this rule and applying it to customer service is to think of it his way: Most businesses realize a top 20% client base who ‘keep the lights on’. While they are the smallest portion of your clients, they produce the largest portion of revenue – they are your best clients. The bottom 80% are ‘so-so’ or worse. These are the clients who are demanding, don’t pay their bills on time – you know the type. The concern is, most business owners do not understand this principle and focus too much on the ‘so-so’ hoping for improvement.
The point of the Pareto Rule is by nurturing the top ‘pods’, your clients, your business will naturally yield the best results.
I know in my business I want all of my clients to have the attributes of my best clients. It is inefficient for me to spin my wheels maintaining those who are ‘so-so’. If I put 100% effort into my top clients, then my best clients will receive my best service. By spreading all of my efforts equally among all my client base (even those who are ‘so-so’), no one is getting my best service. In fact, by doing this, the so-so clients pull all of my energy and leave very little for the rest.
If you pick the top 20% of your clients and ‘fertilize, nurture, and protect’ them with 100% of your best customer service, they will stick with you; they will give you a bigger portion of their business; and, they will refer you to other clients who, hopefully, are their top 20%. Once you have those referrals, and they tell two friends, who tell two friends, and so on, and so on, your business will grow exponentially – and, you’ll have the best of the best clients.
Now I’m sure you see where I’m going. Please do not let your top 20% clients take care of themselves while you put most of your energy into the so-so 80%. Work diligently to increase the ratio of your best clients. If you think about it, with this theory, you don’t have to stop at 100%. In fact, you’ll find, through time, you are well over 100% better than you were when you started.
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