The idea that 80 percent of your results come from just 20 percent of your work is quite amazing. If you get things right, you could end up doing a fifth of the work you are today, and making the same profit!
Of course, to get things right, you need to identify which is the 20 percent of your work that’s producing the results.
Let’s look at your products first. Which are the 20 percent that makes real money? Which are the also-rans? All the data is there on FBA Seller Central.
You might not want to stop offering the other products. For instance, if you sell boots, but you also have bootlaces that match, it may be quite important to your customers that you retain that product line. But you might not want to do any separate marketing for the bootlaces, for instance, or a lot of separate content for the product listings – your aim will be to reuse the videos and text that you use for the boot product pages, as much as possible.
But if you have a diverse portfolio and you’ve got some products that don’t complement your other products and don’t sell well, you can run down your stocks and close off that product line. You’ve just freed up time for something more profitable.
Next, look at your advertising and marketing. Again, you can get the information from Amazon for your PPC advertising. 80 percent of your clicks are probably coming from 20 percent of the keywords. So cut the other ads, and reinvest what you’ve saved in the 20 percent of really good keywords. That should really help your business improve.
You can also use the Pareto principle to look at what’s going wrong. You can bet that a small number of products are responsible for most of your bad reviews and returns. So again, using the data to find them is the first activity you need to carry out. Then you need to think about what to do about the problem.
If it looks like the product itself is the problem, it’s probably time you pruned it out of your portfolio. But the problem might be something else; customers expect your product to do something it isn’t designed to do, or the price is too high, or the latest batch of products has a quality issue. Whatever the issue is, at least if you’ve carried out the 80/20 analysis of your products, you will find it – and be able to focus on resolving it.
You can go further than this if you want to. For instance, why don’t you time the different activities you do in your office for the next week? How many minutes did you spend looking for a computer file because you couldn’t remember what you had called it or which directory it was in? How long did you spend dealing with quality issues? Or explaining what you wanted all over again because you didn’t put the right specifications in your email to your supplier?
And how long did you spend playing solitaire on your computer? (Admit it; everyone does!)
Of course, you can choose your strategy for applying the 80/20 rule. For most, it will be getting more business productivity out of the hours you work. But for others, it might be freeing up a bit more time for family or friends. What’s certain is that the 80/20 rule works! You just have to make a little effort to apply it.