Top Market Strategy: Applying the 80/20 Rule

The 80/20 rule summarizes the universal Pareto distribution of inputs to outputs. Thus, any business can expect the most profitable 20% of its customers to generate 80% of its profits. The 80/20 rule predicts that profits quadruple by replacing less profitable customers with more profitable customers. To achieve this result, distinguish the top 20% of your customers, delight them and similar prospects with a top market strategy, and discourage less profitable customers with stratified policies.