April 28, 2014

Perry Marshall’s 80/20 Insights

I read a load of books last year, and the one that stands out is:

“80/20 Sales and Marketing: The Definitive Guide to Working Less and Making More” by Perry Marshall

I had many key takeaways:

The Value of Your Time is Not Equal.

If you spend an hour checking your Facebook account, then you were probably on under $1 per hour (and that’s being generous).

Cleaning your house, filling the car up, doing your weekly shop are all $10 per hour work. (You can pay someone $10 an hour to do this for you.)

If you crash an expensive car, then you just wrote off $50k in 5 seconds… equivalent of a massive (negative) hourly rate.

If you sit down and plan your day and decide NOT to do something that would take you down a cul-de-sac for weeks, then you’ve done $1k to $10k an hour work.

Perry’s advice is that if you’re averaging $50 per hour or over, then you should outsource $10 per hour work.

Deciding which road to take is likely your most valuable time spent.

(A quick way to work out your average hourly rate is to divide your annual salary by 2,000. Forty hours a week for fifty weeks in a year equates to 2,000 hours in the year.  So if you’re on $80k, then you’re ballpark $40 per hour.)


Not All Your Customers Are Equal

The 80/20 principle tells us that 80% of our revenue comes from 20% of our customers.

Or 80% of our traffic comes from 20% of our campaigns (although this is more likely 99/1 if your campaigns are anything like mine).

Perry’s worked out some nice rule of thumbs from the 80/20 curve.

The one I like is that one-fifth the people will spend four times the money.

So if I had 1,000 people on my list paying me $10 per month

Then 20% (200) will likely spend $40 per month.

And 20% of that 200 (40) will likely spend $160 per month.

And 8 will likely spend $640 per month.

And 2 will likely spend $2560 per month.

Mileage will vary obviously!

Here’s what that would mean:

Key takeaway: Give people a chance to spend more money with you!