by Laurier Mandin on May 8, 2019
Every product has them. Those low-hanging fruit who are interested, eager to buy, and generally low-maintenance. Your ideal, right-fit customers.
They’re at the heart of your product’s Pareto Principle. The idea is that 80% of a benefit comes from only 20% of contributors: for example 80% of your profits will probably come from 20% of all customers.
Most business owners—especially with service based companies—will tell you the Pareto Principle can be clearly seen in their sales stats. If you’re in business, you’ve probably experienced it too.
What’s even more fascinating: if all things are equal and you market a product in a purely conventional, non-selective way, about 80 percent of sales would come to you via 20 percent of your marketing budget and effort. There is a law of diminishing returns in everything we do, and nowhere more than in product marketing. And as I’ve seen many times, the inverse is often true when it comes to problems. 80% of your significant, profit-eating problems are likely rooted to only 20% of all customers. On a graph it’s like a pair of bell curves running in opposite directions.
I haven’t seen a good explanation of why this dynamic is so, but I believe it’s a matrix of human behavioural characteristics, logistics, timing, and overall fit with the product. Certain buyer types are horribly mis-aligned with any given product, others are so-so fits, and only a handful are ideally suited to it. That last group will be naturally predisposed to a positive experience. As you venture more and more deeply into the less ideal buyers, they become increasingly resistant to buy, have a harder time adopting, and encounter bigger issues in using the product.
In launching any new product, we should strive to push our targeting into a laser focus on ideal-fit customers—and beyond. If 80/20 is the natural curve (and the beginning of significant dropoff), imagine we focus on the top ten percent, and put everything we’ve got into targeting, nurturing and servicing those ideal-fit customers exceptionally well? And then, what happens if we take steps to deliberately disqualify and eliminate the bottom ten percent—the worst-fit customers who begrudgingly buy and would almost certainly be your biggest source of problems? We get your product’s 90/10 rule.
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