The 90-10 Rule

You may have heard of the 80-20 rule, which states that 20% of your activities will result in 80% of your profits. Actually, it's a rule that applies everywhere-80% of your customer service complaints will come from 20% of your customers, and 80% of your productivity from 20% of your employees. In reality, however, the figures are more likely to hover about 90-10.For example, it's a sad truth that most entrepreneurs spend 90% of their time thinking about what they're going to sell, and 10% of their time thinking about the market they're going to sell to. This is a terrible mistake -- you need to turn that 90-10 ratio around. It's better to find a market full of people who need help with some problem, and then put together a product that addresses that problem in a satisfying way.How do you do that? By getting to know your market as well as you can. Put yourself in your prospect's shoes: try to understand where they live, where they work, their income, marital status, and what their biggest problems are. Even better, try to understand their perceptions of those problems, so you can give them the exact solution they want -- not necessarily what they need, or what you think they need. Try to step into the minds of your customers, see from a realistic perspective what they want to buy, and provide them with that product.Don't just put something together and decide it ought to be useful to a certain market. You might end up broke if you do that, especially if you let your love for the product blind you of the fact that no one wants it. Get to know the market intimately first, and everything will fall into place.


Here's a corollary of the 90-10 rule: most business people spend 90% of their time thinking about all the ways they're going to bring new customers into their business, and spend about 10% of their time thinking about ways to make more money from the existing customers they already have. Change that around. The lesson here is that the market comes first -- always -- and the best market is the market that's made up of people who have already done business with you. This is the secret behind all major successes.Customers are the life-blood of any business. They're the oil that keeps the whole thing running. Without oil, an engine is worthless; it'll wear down and melt down from the heat. The customers are you profits. It's safe to say that most businesses could double or even triple their profits right now by going back and working with their existing customers and developing more products and services specifically for them.Drawing in new customers is an important process, because you do have to replace those you lose to death, moves, changes in lifestyle, and other "leaks" that will gradually drain your existing customer base. But don't forget your existing customers. Create new and exciting offers for them, too -- or you'll just enlarge the holes in the bottom of your own bucket, and lose the loyal client base you've worked so hard to build.