Any business can apply multi-channel marketing, but cross-channel marketing is the ideal way to increase revenue and customer loyalty, especially when marketers apply the Pareto principle. Cross-channel marketing is more challenging than multi-channel marketing. Instead of focusing on disseminating a message via multiple channels, cross-channel marketing is customer focused. Companies must expend significant resources to capture adequate information about users and track their needs across all channels. Applying the Pareto principle cuts down the time needed to discover client needs while maximizing ROI.
The Pareto principle
Although originally not related to marketing, the Pareto principle stems from work by an Italian economist named Vilfredo Pareto, who discovered 80 percent of the land in Italy was owned by 20 percent of the population. Surveys he conducted confirmed other countries had a similar ratio. The economist even discovered 80 percent of his garden peas came from 20 percent of his pea pods.
Pareto did not actually come up with the principle, however. A business management consultant named Joseph M. Juran discovered 80 percent of quality control issues stemmed from the top 20 percent of problems. He named the principle after Pareto. Over time, people have expanded the principle to explain other business matters, such as:
- 80 percent of complaints stem from 20 percent of customers
- 80 percent of profits come from 20 percent of time spent
- 80 percent of sales are by 20 percent of sales staff
- 80 percent of sales are made from 20 percent of products
Perhaps the most relevant discovery for cross-channel marketing is knowing 20 percent of the customers are responsible for 80 percent of the profits. Knowing this, cross-channel marketers should focus their efforts on identifying and tracking those 20 percent.
The efficiency of the Pareto principle
Cross-channel marketing requires companies to track users across all channels, meaning each customer must have their own profile and sales staff must be able to match content to the customer. Taking the time to track all of a company’s customers is a waste of time and resources, according to the Pareto principle.
Only 20 percent of the customers possess exceptional brand loyalty. These one out of five customers are really the only people worth tracking because they produce most of the profits. Tracking the top 20 percent is a more realistic goal than tracking everyone as well. Once the top 20 percent is identified, sales staff can not only concentrate on marketing to them but they can also see who those people influence socially and push to expand their ideal customer base.
The Pareto principle and staffing
For the most effective cross-channel marketing, a company should identify their best salespeople and then expand. Cross-channel marketing relies on well-trained sales staff, especially in a call center. For example, a customer sees a product on TV or in a magazine he likes. He goes online to view the product on the company website, perhaps even scanning a QR code with his smartphone, before calling the company to ask questions. All of the data about what the customer wants is available. When he calls in, a salesperson has the chance to study the data and anticipate the customer’s needs, increasing the potential of a sale and the chance the customer will become part of the core 20 percent.
Companies can use sales figures
to find the most effective employees, but they should also look for people who display leadership qualities, are self starters and who influence others. These people will attract more high-quality workers, ensuring the sales staff comprises only the best employees. The remaining 80 percent should be retrained, reassigned or possibly let go.
Companies can even use the Pareto principle when recruiting workers by looking for the natural leaders at other companies. Often times, recent college graduates who have not yet had the chance to prove themselves with sales numbers or a customer service history can become part of the top 20 percent. They are highly educated and motivated to prove themselves.
Bridging the gap between marketing within channels and creating integrated customers takes significant effort. Narrowing down the targeted group with the Pareto principle simply makes sense. After brainstorming the best ways to accomplish this goal, companies can even use the principle to narrow down ideas as the top 20 percent are most likely to result in 80 percent of the results.
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