In 1906, Italian economist Vilfredo Pareto discovered 80 percent of the wealth was controlled by 20 percent of the people. From that, event planners and marketers have learned that 80 percent of the effects come from 20 percent of the causes. This phenomenon, known as the Pareto Principle, or the 80-20 rule, can be applied to increase your self-storage marketing program.
The 80-20 rule is not exact. Sometimes the inequality can be 70-30 or 90-10 or even 95-5. But this principle of inequality occurs enough to be used as a valid formula for marketing. For example:
- 80 percent of sales come from 20 percent of the customers
- 80 percent of profits come from 20 percent of the products
- 80 percent of the problems come from 20 percent of the customers
- 20 percent of customers have the potential to spend five times as much as they do currently
A relatively small amount of marketing effort creates the majority of output. For example, consider the following:
- 20 percent of marketing efforts produce 80 percent of the results
- 20 percent of tenants produce 80 percent of operating income
- 20 percent of time is producing 80 percent of results
- 20 percent of tenants are taking 80 percent of staff time
- 20 percent of storage tenants cause 80 percent of the problems
To apply this knowledge, identify the “20 percent factors” within your business and focus more resources on them. For example, it may take two hours and $250 to form an alliance with a real estate agent who brings you five new tenants per month as opposed to spending two hours and $250 on something else that only nets one tenant per month. By making your “20 percent” activities scalable you can eliminate a large chunk of your budget and time while achieving more.