The Pareto Principle, or 80/20 Rule, is a useful concept that can help you grow your massage practice, manage your resources, and prioritize your life. Putting this success strategy into action will help you get more clients and achieve your goals faster.
Also called the “law of the vital few”, the Pareto Principle states that roughly 80% of your results are attributed to 20% of your actions. Since this is really a practical rule of thumb and not an absolute law, the vital few may be 30%, 10% or even 2%. Things that aren’t part of this “vital few” are part of the “trivial many”.
Whatever the exact numbers are for your situation, it is important to identify what factors are responsible for producing the best outcomes.
Let’s look at where this concept came from, and then a few examples.
How the Pareto Principle was discovered
An Italian economist in the late 1800’s named Vilfredo Pareto was the first to write about this concept. He published papers on his observation that approximately 80% of the land and wealth in Italy at the time was held by about 20% of the people.
He also noticed other examples of this phenomenon. This included occurrences in nature, such as the fact that about 80% of the peas in his garden were found in about 20% of the pea pods.
Examples of the 80/20 Rule in action
The actual percentage may not be exactly 80% or 20%, but in most cases, the bulk of the results are attributed to the “vital few” causes or actions.
80% of your referred clients come from 20% of your client base.
80% of your massage practice revenue comes from about 20% of your clients.
20% of your marketing efforts could account for 80% of your clients.
20% of clothing in a wardrobe is worn about 80% of the time.
80% of your complaints and headaches will come from 20% of your clients.
Avoid wrong applications of this concept
It is important to note that the numbers in the 80/20 Rule don’t have to equal 100. It could be that 20 percent of your clients account for 50 percent of your revenue. Or 10 percent of your clients have referred 70 percent of your referral clients.
For example, currently the wealthiest 1% hold about half of the worlds wealth . Not exactly 80/20, but this is consistent with the law of the vital few.
Another example is a CMS study that showed 27.9 percent of Medicare expenditures are on beneficiaries’ last year of life. This small percentage of someone’s life requires the largest amount of resources.
Why the Pareto Principle is useful
This principle is useful primarily as a predictive tool. Keeping this concept in the back of your mind will make you aware that some actions you take contribute more to the growth of your massage practice than others. And some clients contribute more revenue, referrals, and job satisfaction than others.
If you are committed to building a thriving business, the 80/20 Rule will help you to avoid spending too much time or other resources on non-productive things. So it reduces the amount of resources you waste.
This concept is important for success because it helps you with one of the most important challenges an entrepreneur faces, which is FOCUS. Identify what’s most important for your business, and then you will recognize everything else as simply distractions.
Small and unimportant things tend to lead people further off course. Like when you finish 1 small task then another one pops up, like playing that whac-a-mole game. So focus on the most important thing to you at that time.
You can use this concept to prioritize the problems that need solving first, and which ones can wait. Once you know what is most important, make sure to remove any obstacles in these areas. It is easy to become fixated on solving something that really doesn’t matter.
How to put this concept into action
The Pareto Principle helps to remind us that not all activities produce the same results. But it doesn’t specify what that important 20% is that you should focus on.
The goal with using the 80/20 Rule is to maximize the powerful positive effect that the most important 20% contribute. But to do this you must first identify what has the greatest impact, and is helping you the most to move towards your goals. So no matter what situation you apply this concept to, you must first be able to identify all the inputs and measure the results.
Remember that the Pareto Principle is not an exact science or law of nature. It’s more like a general rule based on statistical distribution that can be observed in many situations.
The three best areas to apply the Pareto Principle to grow a massage practice are:
- Identify which clients contribute the most to the growth of your practice
- Reveal which items on your To Do list you should prioritize and which can be eliminated
- Determine which of your marketing efforts have the greatest impact and produce the best results
Note: Don’t eliminate diversification completely. It may be that your massage business serves several different niches and you make most of your revenue from one niche. It is good to nurture your primary source of business, but maintaining some diversity in your practice will keep things interesting and help you to keep learning.
Identify which clients are most important to your business
In businesses that produce products, some products contribute more to the overall business success. These products could have a high profit margin and be responsible for a big percentage of the business’s revenue.
Or their customer could love the product so much that it increases brand awareness and brand loyalty.
But in a service business such as a massage therapy practice, there is likely a small group of clients that contribute the most toward the growth of your practice.
These Key Clients in a massage practice are the “vital few” that Pareto referred to. Work hard to retain these clients. Do whatever you need to do to keep these key clients happy. They are the ones that you make sure you can always fit into your schedule.
These are also part of your Ideal Client group. Often these allies become brand advocates that end up referring more people like themselves.
Study these clients so that you can bring in more like them. Make sure to create a client persona on these clients.
Create a system in your practice to track how much revenue and referrals that each client brings in. Also keep track of how you attracted them in the first place.
These key clients are the people you survey when considering adding new products or services. Or if you are looking into changing your availability schedule or prices, make sure that these key clients will be happy with these changes.
Pareto and time management
Perhaps one of the most common applications of the Pareto Principle is in time management. It can increase your productivity, efficiency and effectiveness.
Almost every To Do list contains things really aren’t that important. They may be “urgent”, and you may be fixated on them, but they don’t really move you towards your most important goals. This busy work just wastes time and distracts you from your top priorities. So be sure to differentiate between what is urgent and what is important.
Examine your “to do” list every day. If you have 10 things on there, then it is likely that 1 or 2 of your tasks are the most important. Just accomplishing these couple of tasks could make your whole day feel like a success.
Using the 80/20 rule can help you cross the less important things off your list. This makes more room for working on what is most important to your practice. Using this principle should reduce stress from feeling overwhelmed.
Always do your most important tasks first. It may feel good to cross off smaller items from your list, but only your most important tasks will progress you towards your goals.
There is a “noble art of leaving things undone”. Procrastination is usually considered a negative quality. But there is such a thing as good procrastination. This includes putting off doing unimportant things that waste your time and energy.
Besides the noble art of getting things done, there is the noble art of leaving things undone. The wisdom of life consists in the elimination of non-essentials.Lin Yutang, The Importance of Living
Spend a few days tracking what you are actually doing with your time. Every hour write down what you are doing (in just a few words). This will help you identify how you are wasting time on low-value tasks that can be done less frequently, outsourced, or even eliminated.
Apply the Pareto Principle to marketing
Marketing a small business requires time, energy and money. So it is important to know which of your campaigns produce the best results, and which are just wasting your resources.
Out of 10 strategies you use to attract new clients, you will find 1 or 2 that are the most effective. There are many ways to measure the effectiveness of your marketing:
- Use coupon codes to track which marketing campaigns brought in the most clients
- Survey your clients to find out how they found you. Develop this pathway so even more can find you
- Install Google Analytics on your website to learn more about visitors to your site so that you can meet their needs better
- Perform return on investment (ROI) analysis to determine which campaigns produce the best results compared to costs
- If you offer multiple spa services, determine which ones are the most profitable and popular with your clientele
Once you determine your most effective strategies, keep repeating them until you get the results you want. Discontinue any strategies that performed poorly. You can go back later to explore if there is anything you can change to improve your failed strategies.
Use the 80/20 Rule to reduce negative results
Negative aspects of running a business such as stress and risk can be limited by applying this rule.
You could estimate that about 80% of your risk would not result in significant consequences. You can bounce back relatively easily from these. So focus your risk mitigation strategies on the 20% of your problems with the worst potential consequences.
These are the risks that you want to take extra precautions against. For the massage therapist, buying liability insurance is an easy way to mitigate risk from a lawsuit. Whereas buying insurance to protect inexpensive equipment is not as important. Other simple strategies to reduce major risk include forming an LLC and purchasing an umbrella insurance policy.
Applying the Pareto Principle correctly will help you focus your efforts on things that are most important to you and your practice. You must first determine your desired goals and then do more of the things that propel you towards them.