BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The potency of 80/20 is that 20 percent of a group is responsible for 80 percent of the sales. So, if you can retain customers or make them more than one-timers, the chances of revenue earned is more. For example, 20 percent of repeat customers are responsible for 80 percent revenues.

Detailed explanation-2: -The Pareto Principle in business refers to the way 80 percent of a given business’s profit typically comes from a mere 20 percent of its clientele. Business owners who subscribe to the 80/20 rule know the best way to maximize results is to focus the most marketing effort on that top 20 percent.

Detailed explanation-3: -The Pareto principle was developed by Italian economist Vilfredo Pareto in 1896. Pareto observed that 80% of the land in Italy was owned by only 20% of the population. He also witnessed this happening with plants in his garden-20% of his plants were bearing 80% of the fruit.

Detailed explanation-4: -This is why this principle is also sometimes referred to as the “80/20 Rule”. Pareto did surveys in various other countries and found the exact same to be true. The Pareto Principle has been found to apply to many situations, including sales. For example, 80% of your sales come from only 20% of your customers.

Detailed explanation-5: -The rule is often used to point out that 80% of a company’s revenue is generated by 20% of its customers. Viewed in this way, it might be advantageous for a company to focus on the 20% of clients that are responsible for 80% of revenues and market specifically to them.