2001connections-article0011 The 80-20 rule is overused in the marketplace.

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2001connections-article0011
The 80-20 rule is overused in the marketplace.

The 80-20 rule, if I remember correctly, most commonly states that 80% of a store’s business originates from just 20% of its customers. In other words, the bulk of the customers are proportionally deemed to be of little or no value to the merchant. Or so it seems. This very same precept also boldly maintains that the remaining 80% of the clients account for a measly 20% of the vendor’s volume. Talk about lopsided reasoning. And what a suspiciously convenient numerical coincidence: 80-20 and 20-80. So easy to remember. Makes you wonder. Personally, I don't buy it.

[get the joke? buy it, retail commerce -- HA! HA! .......... oh, forget it]

   Apparently some retailers take this reasoning too far and quite literally. Much to their own detriment, because the supposed low-volume shoppers may provide an invisible but measurable benefit to the merchant. A customer will speak to other consumers and thus influence their decision about what to buy and from whom. Clients who feel slighted by a store just for not buying much there, will share their negative impressions and thus discourage other potential buyers from visiting that outlet.

Restaurant owners need to take note as well. A table full of hungry eaters ordering complete meals might seem more profitable than a single customer who drops in only for a cup of coffee. But it is perfectly possible that some of the big spenders may have visited your establishment based on a recommendation from a minimal-volume consumer who told them “Yeah, that place is all right. The folks there treat me nicely even though I only come in for a cup of coffee”. In fact, one-time low-volume shoppers may return at a later date to buy more, in addition to recommending a retail outlet to more consumers, based on a positive initial experience.
    Latest update along the lines of the above paragraph. My recent dining-out adventure proves a point. In early-mid January 2007, I dropped in to relax and drink coffee at a downtown table-service restaurant. Pleasant surprise. The price was a bit lower, compared to a self-service college-environment coffee shop which I visit regularly, slightly off downtown. And best of all, the waitress at the table-service restaurant brought me a free refill, which customarily only applies to a full meal. I had such positive impressions from my first visit to that place, I visited it a second time, in early February 2007, this time ordering a complete meal. And more happy news. I received multiple soft drink refills and coffee refills. Needless to say, I left a good tip, for good service.
    In conclusion, be careful about applying the 80-20 rule too rigidly in your business. Instead, why not concentrate on cultivating goodwill with all your customers, large and small.

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2001connections-article0011
The 80-20 rule is overused in the marketplace.

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