Richard Koch’s wild discovery that recession-proofs your business & profits
Customers are the lifeblood of any business… However, ALL customers are not equal.
The 80/20 principle gives credence to this idea. It confirms…
20% of your customers earn you 80% of your revenue.
And in your work life, 20% of the work you do creates 80% of your income.
Sadly, it also means 80% of the work you do doesn’t impact your bottom line…
Italian economist — Vilfredo Pareto discovered the 80/20 principle (aka. Pareto principle). And author of the book “The 80/20 Principle” — Richard Koch, has made it even more popular today.
About twice every year, I come across at least two books which I’m convinced the authors wrote just for me…
Last year, two books came into my life and caused a tectonic shift in my entire worldview.
Because of these books, I’ve adjusted my approach to many aspects of business and life.
The books are:
1) Richard Koch’s — The 80/20 Principle
2) Jay Abraham’s — Getting Everything You Can Out Of All You’ve Got
In the 80/20 book, Richard proved most things in life are subject to the 80/20 principle. And being unaware of this can keep you operating at gross inefficiency… and engaging in ineffective tasks.
On realising this, Richard approached implementing 80/20 into his life.
And his approach was simple:
“Less is more.”
He eliminated or delegated all low impact tasks he used to do. And focused only on high value/high leveraged opportunities.
This simple shift yielded astronomical results for him.
Richard went from his demanding six-figure a year job as a business consultant — working 60 hours a week… To grow his net worth to over $800 million and working less than 2 hours per day.
Viewing the world through the 80/20 spectrum can feel extreme and mind-boggling.
But, it can mean a lifetime of slavish hard work. Or an unfair advantage in your business and life…
Where you work less and earn more.
That’s not an offer any sane person will turn down.
And this brings me to Jay Abraham’s book — “Getting Everything You Can Out Of All You Got.”
In this book, Jay teaches there are only 3 ways to grow ANY business…
- Increase the number of customers
- Increase the transaction size
- Increase the purchasing frequency
This is the simplest explanation I’ve ever heard, on how to grow a business.
And Jay is a big proponent of the 80/20 thinking, even though he doesn’t call it that. Instead, he uses the term “high leverage points”.
If you’re not aware of who Jay Abraham is, Google him. He’s known by many as the $21.7 billion man, and the highest paid marketing consultant in the world.
Marketing principles Jay taught over 25 years ago are now standard practice across the Internet today…
Now, let’s get back to our conversation…
High leverage points in business are areas where you can derive mammoth sized returns for the lease amount of effort or cost…
You could consider them your “low-hanging-fruit” opportunities…
There are also areas with the potential for hyper growth and profits.
Smart entrepreneurs know to focus on their “low-hanging-fruit” opportunities… Especially, like today — when there are constraints in the economy…
Because it’s a sure way to keep your business going.
Unfortunately, most entrepreneurs do the opposite.
They focus on the hardest way to keep their businesses alive…
By pouring more money into pricey paid ads, to…
“Increase the number of their customers“
For instance, at the moment, lots of e-commerce store owners are experiencing a drop in their revenues… And the response by most of them has been to increase their advertising budget.
Some switched ad platforms, with the hope for better luck on the next one.
It’s gutsy. Bold. Proactive…
But…
It’s not 80/20 thinking.
Based on Jay Abraham’s teaching, the 80/20 thing to do would be to focus on their current customers. And look to serve them better by making them better offers, which will…
1.) Increase their transaction size & 2.) Increase their purchasing frequency.
This is a high leverage opportunity, because you can implement it in little time… And generate mammoth sized revenue and profits.
Also, you can execute all this at zero cost… without spending a dime on ads.
It’s also less work.
All you need are a series of well written, time-bound emails… and maybe a video or two which you can shoot using your smartphone…
Following 80/20 thinking… Here’s a quick 3-step summary of how you can achieve this… Grow your revenues and recession-proof your business…
Regardless of what Biden, Putin or China do next to shake up the economy.
Step 1: identify your best customers — i.e. the 20% who generate 80% of your business revenue.
Step 2: make a list of your bestselling and high margin products… Create exclusive irresistible deals — by bundling some of your products. Bundling instantly boosts your average transaction size or AOV…
Here’s how it works: Let’s say you sell a shoe and a bag for $10 each, when sold separately…
But in this case, you choose to bundle them together for an exclusive price of $15. It’s a more attractive deal, which more people will go for because of the $5 savings.
Step 3: Create an email launch sequence. Segment your list of best customers/buyers… And email your exclusive deals to this list. And remember to blow them away with great service.
This is 80/20 thinking in practice…
You do the work once and profit from it repeatedly... Because you can repeat this offer several times a year… by improving the offer each time you launch.
Now go do it and enjoy your windfall profits.
If you haven’t read the books I mentioned, I recommend ordering yourself a copy today.
That’s all for now,
Donald “less is more” Obii
P.S: BTW, if you’d like some help to implement the simple 80/20 email launch strategy I explained in this message… Or you’d like help with your email marketing or list management, shoot me an email (donald@cultofconversions.com) and let’s have a chat.
