The New Pareto Principle: It’s Not The 20%, It’s The 1%

80% of the RESULTS come from 20% of the WORK.

You may have heard that and wondered what EXACTLY it means, and how to use it to better yourself or your business. Well, we’re going to talk about that and take it one step further. I think it’s a great start and all, but focusing on 1% is a much easier task.

Focusing on 1% might also be better and more efficient as well:

The original rule is known as the ‘Pareto principle’ and represents the idea that in life, quite a lot of the time, 80% of the RESULTS of EFFECTS come from 20% of the ACTIONS or CAUSES. This can also be expressed like this:

  • 20% of the sales calls you do make 80% of the profits in that month
  • 20% of your audience give you 80% of your revenue
  • 20% of your time produces 80% of your results
  • 20% of your time in the gym gives you 80% of your body results
  • And so on.

The basic idea is that a small percentage of something usually makes a much BIGGER percentage in terms of results. There’s always that one small area that makes up for everything else, or to put it another way, there is always one area that’s more IMPORTANT.

The new pareto principle

One area that gives you the most bang for your buck, so to speak. When we’re talking about ‘results’ here, this can mean in any area of your life. Any area where you put something IN and want to get something OUT. The new pareto principle could apply to:

  • Relationships
  • Business and making money
  • Fitness and exercise
  • Time management and setting priorities
  • And many other areas of life as well.

So as we go on, just think about it like that. It can apply to anything you want! The basic principle that 20% of SOMETHING usually gives back 80% of the same thing is universal. We’ll use the example of sales calls, just to illustrate what I’m going to say here.

Let’s say you’ve got a business man who spends 8 hours a day making sales phone calls. He’s trying to grow his business and understands that in order to grow the business, he needs more money. In order to get more money, he needs to SELL. This is good, and there’s nothing wrong with that.

Now, in order to sell more, he spends most of his day, 7-8 hours in fact, CALLING people and trying to sell. This method works for our example man, and he makes a few sales per day.

What’s interesting, though, is that out of every 100 people he calls, only 20 will actually become a sale for him and make him money (I understand this is quite a high percentage, but this is an example!). So out of every 100 people, e makes 20 sales.

Out of that 20 sales, 2 of them are the most VALUABLE.

Now normally, the pareto principle would say that he should focus on just getting to THOSE 20 people who are going to become sales. Now of course, there’s no way of him KNOWING in advance which 20 people are going to be the people that buy from him.

So first, we need a way of TRACKING things so he can focus on getting to those 20 people. Hopefully this makes sense so far. We’re trying to find out WHAT it is about those 20 people that makes them buy from him.

Does he call them at a particular time? Maybe people buy more in the mornings on a Wednesday? How would we know? We need to TRACK it. We need a way of being able to look back over an average month and say:

‘Ah YES! It’s clear that Wednesday seems to be the day that MOST people buy from us. Let’s spend more time calling people on Wednesdays and then spend the other days doing other tasks’. Why waste time calling people on the other days if MOST of your money is made on Wednesday?

Hopefully the logic here is clear. So let’s talk about the main thing we need here, tracking.

You need to track which activities get the most results

You need to track which activities get the MOST results. Yes I did just write that twice. It’s probably one of the most important sentences in the post.

Sticking with our example of a salesman making calls, we need to log each call and put a date next to it! Write in a diary if there’s nothing else available, but just write it SOMEWHERE. Write which days you’re calling on, and make a note next to each sale you make so you can see it later.

This means that over a month you can look back. You can see which days you made the most sales. Once you know that, then look at how much better those particular days are. You might find that it’s only when you call nearer the weekend that most people buy.

You might find that it’s every weekday but only in the EVENINGS that people buy. Once you know WHAT specifically it is that’s generating the most sales for you, you can do MORE of that and less of everything else.

The same thing is true with my other website I run. One particular blog post brings in 80% or MORE of the website traffic. And there are hundreds of articles! So when I want to get a message in front of most of my audience, or try something new, I’ll edit THAT post first!

The advanced pareto principle: focus on the 1%!

So the original pareto principle says that there are always certain activities that bring in most of the results. I’m going to suggest that we take it a step or two further than just the 20%.

I’m going to now suggest that we focus only on the top 1% or less of your activities that brings in the most results. So out of that 20%, let’s find the ONE thing or the 1% that you should focus on, that will make the rest of your life easier.

This can be easier said than done, but the actual thing you need to do in order to target that 1% is fairly easy. Let’s say you’re focusing on sales, TRACK everything, and figure out the most profitable time to call, the most profitable type of PERSON to call, and the most profitable sales pitch.

Now once you know those things, just keep doing more and more of those things! It’s simple but not easy. Tracking this sort of stuff can be hard and it takes time like any good split test. But, what happens when you focus on the most important and most effective activity over time, is you constantly improve and get more and more results faster.

It doesn’t matter what you’re applying this to! Maybe it’s a relationship you’re trying to save, and you find that by just talking to your partner, you become closer…

So in that case, just make time to talk every day and all those other things will seem less annoying and become less of an issue. If you’re trying to improve at your drum practice, focus on the one thing you find the most difficult, and everything else you try will feel easy in comparison.

This new pareto principle is loosely based on the ideas shared in the book; The One Thing by Gary W. Keller. You should definitely read that book by the way, and apply the ideas you learn!