Register free!

The Green Industry's Resource Center



Reply
 
Thread Tools   Display Modes
  #1  
Old 05-19-2004, 11:40 PM
Team Gopher's Avatar
Team Gopher Team Gopher is offline
LawnSite Platinum Member
 
Join Date: Jul 2003
Location: -
Posts: 4,045
80/20 Rule, Fire a customer?

The 80/20 rule states that 20% of your customers account for 80% of your hassles. Try as you might, you just won't be able to please all of your customers.
Before you 'fire a customer' remember to talk with the customer and find what's bugging them.

Read more here.


You can read more about this 80/20 rule in The Guerrilla Marketing Handbook by Jay Levinson & Seth Godin.
Reply With Quote
  #2  
Old 05-20-2004, 12:05 AM
Turf Medic Turf Medic is offline
LawnSite Bronze Member
 
Join Date: Apr 2003
Location: Lincoln NE
Posts: 1,073
This theory has been tossed about the business world for many years.

You will make 80% of your profit from 20% of your customers.

If you run a sales organization 80% of your sales will come from 20% of your sales people.

In customer service 80% of your problems will come from 20% of your customers.

The problem with this theory is that people will get the idea they can just fire the bad 20% of the customers, sounds like a good idea. But the 80/20 rule will still be in effect. Example if you start out with 100 customers and decide to cull the 20% that are causing 80% of the hassles. Now you have 80 customers but you will soon find that you are back to the 80/20 ratio. But now instead of having 20 customers causing you 80% of your promlems and 80 customers causing you 20% of your hassles. You will have 16 customers causing 80% of the hassles and 64 customers causing 20% of the hassles. You can 80/20 theory yourself clear out of business.


The best thing that you can do with this information is to use it to learn where to place your attention.

Understand that the 20% customers that make you the most money also deserve the most attention. Understand that the 20% that cause you the 80% of the problems, deserve just enough attention to keep them as a customer. Don't let problem customers eat up all of your attention, don't dwell on the issue, quickly fix the problem, then move on. Get back to the people that make you money.
Reply With Quote
  #3  
Old 05-20-2004, 10:25 AM
Hawkeye5's Avatar
Hawkeye5 Hawkeye5 is offline
LawnSite Senior Member
 
Join Date: May 2002
Location: Hendersonville, TN
Posts: 295
Actually, what is called the 80/20 rule is Pareto's Law. Named after the 19th century Italian political economist Valfrato Pareto. The law is concerned with the disproportionate distribution of significant items.
Reply With Quote
  #4  
Old 05-23-2004, 11:56 PM
nuchdig nuchdig is offline
LawnSite Member
 
Join Date: Nov 2003
Location: oh
Posts: 43
There's always a few that spoil the party. I keep a full schedule and weed out the jerks whenever possible (meaning after a number of new accounts make it possible to easily lose a bad account). I work too hard for a buck and don't have any patience for that "20%". However, they are not fired until they are replaced.
Reply With Quote
  #5  
Old 05-24-2004, 01:12 AM
Woody82986's Avatar
Woody82986 Woody82986 is online now
LawnSite Bronze Member
 
Join Date: Jun 2003
Location: DFW, TX
Posts: 1,925
I try to drop my owrst or least profitable account after every four new accounts I get. This helps keep things flowing smoothly and I get less and less stressed about things until one of those new accounts winds up being a pain in my side...
Reply With Quote
  #6  
Old 05-27-2004, 12:13 AM
tiedeman's Avatar
tiedeman tiedeman is offline
LawnSite Fanatic
 
Join Date: Jan 2003
Location: earth
Posts: 8,753
Quote:
Originally posted by Turf Medic
This theory has been tossed about the business world for many years.

You will make 80% of your profit from 20% of your customers.
that is what I have always known it as, and to me it holds true
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump





Powered by vBulletin® Version 3.8.6
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Copyright ©1998 - 2012, LawnSite.comô - Moose River Media
All times are GMT -4. The time now is 03:03 PM.

Page generated in 0.08260 seconds with 7 queries