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	In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth. He found that 20% of the people owned 80% of the wealth. Later that century, Dr. Joseph M. Juran, expanding on Pareto’s work, recognized a principle which he termed: ‘the vital few and trivial many’. Using a manufacturing model he found that 80% of problems were caused by 20% of the defects. Not long after, the concept was applied to the science of management and more specifically, customer relationship management. We’ve learned, for example, that 20% of customers are responsible for 80% of revenue. Additionally, 80% of customer service resources are consumed by 20% of customers. Granted, we’re not talking about exactly 80% - 20% but the concept is surprisingly on-target and eminently useful. As luck would have it, this 80/20 distribution is by no means random, and that being the case, able to be identified, targeted and managed. Consider the implications: If a greater share of your sales and marketing resources could be focused on that vital 20% of best customers and away from the less valuable ones, your organization’s bottom line would see significant improvement. It should also be clear that attempting to look at your customer base ‘as-a-whole’ or ‘on average’ favors exactly the wrong (80%) part of your customer base. Let’s say, for example, that your marketing department decides to develop a new campaign. At some point they even go to the trouble and expense of presenting their concepts to a focus group. More than likely the basis of their communication platform has been derived from the customer universe as a whole. That being the case, it would be disproportionately based upon the less desirable 80%. And what about our focus group? Assuming they are more or less randomly selected from the customer base, the odds of getting even one member from our best customer segment (that elusive 20%) is in the neighborhood of 50:1. Even your marketing department's best efforts to optimize communications to your prime customers are being sabotaged from the outset. Why not simply focus on the top 20% of spenders? Unfortunately, that solution is no better. There is a naturally occurring and frustratingly complex distribution within any population group — ignore it at your peril. Fortunately, we can identify and model your customer distribution and make it work to our advantage. The sooner your organization embraces the science behind marketing the sooner you'll be able to reap its rewards. <back>

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth. He found that 20% of the people owned 80% of the wealth. Later that century, Dr. Joseph M. Juran, expanding on Pareto’s work, recognized a principle which he termed: ‘the vital few and trivial many’. Using a manufacturing model he found that 80% of problems were caused by 20% of the defects. Not long after, the concept was applied to the science of management and more specifically, customer relationship management.

We’ve learned, for example, that 20% of customers are responsible for 80% of revenue. Additionally, 80% of customer service resources are consumed by 20% of customers. Granted, we’re not talking about exactly 80% - 20% but the concept is surprisingly on-target and eminently useful. As luck would have it, this 80/20 distribution is by no means random, and that being the case, able to be identified, targeted and managed.

Consider the implications: If a greater share of your sales and marketing resources could be focused on that vital 20% of best customers and away from the less valuable ones, your organization’s bottom line would see significant improvement. It should also be clear that attempting to look at your customer base ‘as-a-whole’ or ‘on average’ favors exactly the wrong (80%) part of your customer base.

Let’s say, for example, that your marketing department decides to develop a new campaign. At some point they even go to the trouble and expense of presenting their concepts to a focus group. More than likely the basis of their communication platform has been derived from the customer universe as a whole. That being the case, it would be disproportionately based upon the less desirable 80%. And what about our focus group? Assuming they are more or less randomly selected from the customer base, the odds of getting even one member from our best customer segment (that elusive 20%) is in the neighborhood of 50:1. Even your marketing department's best efforts to optimize communications to your prime customers are being sabotaged from the outset.

Why not simply focus on the top 20% of spenders? Unfortunately, that solution is no better. There is a naturally occurring and frustratingly complex distribution within any population group — ignore it at your peril. Fortunately, we can identify and model your customer distribution and make it work to our advantage. The sooner your organization embraces the science behind marketing the sooner you'll be able to reap its rewards.

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