When 20% Is Only 8%

If your business is realizing only 40% of its potential, you’d have to say changes are in order. Unfortunately that is the pace that most US businesses are capturing their ideal customers, according to a reading of the Harvard Business Review and a 19th century Italian economist Vilfredo Pareto.

Preto’s Law boils down to the observation that 20% of the effort produces 80% of the results. It works in most situations. In business the rule of thumb is 80% of the sales and profits come from 20% of your customers. It’s pretty much true. If you average that across all US businesses it should be close to fact. So, why does the Harvard Business Review report that on average only 8% of customers in US businesses are long-standing customers. It should be closer to 20%! That means on average US business are only capturing 40% of their ideals! There is work to be done!