Pareto’s law has become very popular in recent years. This is because it can be used to improve team productivity. It is most often used in marketing and consumer loyalty programs. After all, the expenses associated with this operation are significantly lower than the cost of acquiring new customers.

However, this 80/20 approach can be applied to any area of daily life. And therein lies its greatest strength. So what is it, and in what circumstances can it be applied? Here are some answers.

What is Pareto’s Law?

Success can be hard to achieve. This is especially true for people who want to start their own business. Become your own boss? It’s an attractive idea! But in practice, two things can happen.

Some people want to do everything themselves. Not knowing how to delegate, for one reason or another, they usually end up being overwhelmed with work. They put in a lot of effort without achieving the desired results.
Others prefer to play the role of orchestra conductor. This is where Pareto’s Law – also known as the Law of Least Effort – comes in handy. Their mission is to impose a hierarchy, organize the functioning of their team and guide each individual in his or her responsibilities. In short, their aim is to enjoy life to the full, while still generating sales.

THE PARETO PRINCIPLE
The Pareto principle was born of the idea that 80% of our results come from 20% of our efforts. It’s a revolutionary method for entrepreneurs who want to achieve good results with minimum action and involvement. Pareto’s Law was originally developed by the Italian economist Vilfredo Pareto.

He observed that 20% of countries shared 80% of the world’s wealth. Similarly, 20% of a country’s inhabitants shared 80% of its resources and goods. His study was even carried out over different eras, and the principle was always right: from the Middle Ages to the 20th century, 20% of people always owned 80% of a state’s wealth. It’s a probability that gives rise to a theoretical basis applicable to all aspects of everyday life.

Pareto’s law quickly found its way into many fields. For example, it is common for 80% of a company’s sales to come from 20% of its customers. But it’s also common for 20% of consumers to cause 80% of a company’s problems. Similarly, 80% of our happiness is due to a very small number of activities or people we associate with. Magic? Not so much, if you think about it. It’s all a question of logic. And you can use it, whether in your professional or personal life.

PARETO’S LAW IN THE WORKPLACE
It goes without saying that Pareto’s Law is a powerful tool for improving business performance. That’s why so many managers today use it to optimize their management and quality control systems. To take full advantage of the 80/20 rule, however, you need to take a step back and make a few assessments within your organization.

The first step is to count the number of your customers and the percentage of sales they bring in. Remember the link between effort and results in Pareto’s Law. You’ll find that, sometimes, you spend too much time with customers who don’t actually contribute much to your company. But also that some of your customers trust your brand blindly. The vast majority of your profits come from them. That’s why it’s best to focus on them and redefine your “buyer persona” around their characteristics. By reorienting your target, you’ll certainly be able to achieve better results.

The second step will require you to look a little more closely at your actions. This is a particularly important element in Pareto’s law. Your advertising, answering your e-mails, sharing on social networks… How many of these operations take up the majority of your time, without making much difference? Here, we’re not just talking about money and material benefits, but also about reputation, brand image and everything else that can help you achieve your goals. You’ll see that some of your efforts are in vain and always will be. So wouldn’t it be better to focus on the actions that are particularly promising?
In fact, this little “study” will help you make better decisions.

PARETO’S LAW AND PROFITABILITY
Profitability is an essential part of business management. After all, every organization, whatever its size, aims to achieve positive returns. Even not-for-profit organizations always want to see tangible results. That’s precisely why you need to focus a little more on the link between your actions and your productivity.

This will surely enable you to evolve very quickly. You’ll be much more efficient than when you rush headlong into things without a second thought. Using Pareto’s Law, every effort you make will be a step closer to your goals. If you can identify the customers who bring you the most revenue, this will enable you to refine your target, and thus increase your sales.

For example:

You have an online travel agency:

You may find that 80% of the people visiting your site are families on a small budget, aged 25 to 35 on average;
And only 20% have a large budget, travel on an organized tour and are over 45.
Pareto’s Law encourages you to focus on the target that pays off! How can you do this? Tailor your discourse and offers to these people to attract more of them. However, it’s worth pointing out that this ratio doesn’t always have to be 80/20. It all depends on your business sector. It can be 90/10, 70/30, and so on. It’s for this reason that some specialists speak of the “Pareto principle” instead of the “law”. This approach can be modified to suit each situation. The important thing is simply to identify a qualified target and focus your actions on it.

PARETO’S PRINCIPLE AND PERSONAL LIFE
The Pareto principle is not exclusively reserved for professional or corporate life. You can apply it to every aspect of your daily life. Friendships, family, work, entertainment and even time management. If you do a little analysis of your current situation, you’ll surely see that 20% of your activities bring you 80% of your level of happiness. Likewise, 20% of the people you associate with are responsible for 80% of your problems… So re-evaluate everything that’s worth re-evaluating.

Applying Pareto’s Law to any area of your life can help you to question yourself and move forward. The ultimate goal, of course, is to be happier. Not bad for a simple productivity principle… During this time of reflection, ask yourself:

What activities in my day or week bring me the most joy?
How many people around me inspire, motivate and lift me up?
What actions have I taken recently that have made a big difference in my life?
In Pareto’s Law, it’s always useful to identify the things that nourish you, enthuse you, make you happy and bring you happiness. In short, anything that’s special and worth multiplying. Is it a sport? A group or solo activity? This can help you reproduce them. These questions will also help you identify the people to favor and the relationships to shun. If your answers are precise enough, they can lead you to your preferred path, the one that will make you more fulfilled.

HOW DO I USE A PARETO CHART?
Pareto’s law also presents a more concrete tool, a graph designed to highlight the relationship between cause and effect. The diagram is an effective way of analyzing the results of a study. More than just a mathematical idea, it can help you quickly visualize the factors that give you a certain result. More precisely, a result is the accumulation of several causes. For example, you have difficulty concentrating at work.

Your phone won’t stop ringing because of the notifications you receive from your social networks. In Pareto’s law, this is the first and most important cause.
Secondly, you have a conflicting relationship with one of your team members. This prevents you from refocusing every time he passes by.
Then there are the incessant conversations you have with your friend/colleague.
And then there are the coffee breaks that go on a little too long.
You add up all these factors, and you’ll see that the cumulative effect is that you’re not achieving your goals.

In the diagram, you must proceed in descending order. In the Pareto’s Law example we’ve just seen, start with the thing that takes up the most of your time and end with the thing that has the least impact on your productivity. Then add them up to 100%. However, you need to concentrate more on adding up to 80%. It’s in this area(s) that you need to take the most drastic action. In this process, you should certainly eliminate the first source of distraction.

SORTING WITH THE PARETO CHART
To be fully effective, you need to do some real data-gathering. For Pareto’s law, it’s also essential to break down causes and sort information. Only then will you be able to obtain accurate figures which you can then exploit. So really take your time. You’ll certainly need it to make well-considered decisions. Indeed, applying the Pareto principle will require you to make choices. That’s what this exercise is all about.

If 20% of your customers bring in 80% of your sales, for example, wouldn’t it make more sense to target your marketing campaigns at them? Use Pareto’s law to define what needs to be done. Don’t these consumers deserve a little more attention? Or should you redefine your offers?
Similarly, if only a small proportion of your actions are of real interest to your company, isn’t it time to organize yourself differently?
If certain people in your life bring you nothing but problems, wouldn’t it be better to distance yourself from them?

Finally, if you’re passionate about a particular activity, why not do it more often?
For Pareto’s Law to be truly effective, you’ll need to take action! Similarly, you shouldn’t hesitate to let go of certain people or destructive habits that undermine your day-to-day performance. So get rid of anything that’s dragging you down. Concentrate instead on what leads you towards your goals, what adds value to your daily life.