Do More With Less By Applying Pareto's Law Of Income Distrution In Your Integrated Client Database

Back in the 1800's there was an economist slash sociologist named Pareto. He published quite a controversial paper which claimed that 80% of the wealth in society controlled by just 20% of the overall population. Across history, diverse cultures and even economical structures the result was always the same, a very small group of people controlled the lions share of wealth.

In modern times this principle is more commonly known as the 80/20 rule and it is applicable to more than income distribution. For example 80% of your results will come from just 20% of your efforts. Typically you wear 20% of your wardrobe 80% of the time. And in commerce 80% of your income can be traced back to just 20% of your clients.

By using the Pareto's Law of Income Distribution together with integrated CRM software you have the opportunity to be more strategic in your business.

Common sense dictates that if 80% of your income comes from such a small group of clients you should make sure you know who they are. You can achieve this with an Integrated Client Database. This is CRM software that includes accounting capabilities. You can run reports to spot customers who are providing a large share of your income and take steps to ensure they continue to do business with you. Send them special invites, exclusive offers and regular courtesy calls. These clients are the whole basis of your business. Your Integrated Client Database will not only tell who they are, it will give you the tools to treat them like kings.

While you should dedicate extra time and effort to your very best customers (the top 20%) this doesn't mean you should dump your mid level clients (the other 80%). Instead use your CRM software to essentially put these clients on autopilot. Your integrated client database can put these clients on autopilot through automated email notifications, direct mail campaigns and follow up calls. If you use a manual ordering system, try to move these clients to an automatic payment structure. This will decrease your workload and unlock time to spend loving your high value clients or trying to find more top level customers.

Finally the 80/20 rule also works in reverse. Just as 80% of your income comes from 20% of your client base, 80% of your headaches can be traced back to a very small group of clients. And these difficult clients are rarely your high value clients. If you really want to reduce your workload, identify these problem clients and consider dropping them. Most small businesses will know who these clients are immediately but in larger businesses it might not be so clear. Use your integrated client database to crack down on the clients that are causing problems, taking up staff time and generating the most delays. Quite a few CRM software packages have time tracking that show you how much time your staff invest in each client. This gives you the opportunity to asses how much profit is derived from each customer and the confidence to sack clients who are a drain on your resources.

By using the 80/20 rule together with CRM software you can boost company profits with your existing resources. By finding out what each client is actually worth you can assign the bulk of your efforts to looking after your top customers and acquiring additional high value clients. You can move the other 80% of mid level customers on to autopilot, using CRM software features like automatic ordering to reduce the man hours required to process each order. And finally you can easily identify problem clients, assess whether they cost your organization more than they are actually worth and take appropriate action.