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By Neil Anuskiewicz

The Pareto Principle (also known as the 80/20 rule) states that we get about 80 percent of results from 20 percent of our efforts; conversely, we get 20 percent of our results from the other 80 percent of our efforts. Of course, these numbers are not precise but merely a rule of thumb. The key is to do more of the 20 percent that gets results and less of the other 80 percent that does not get good results. Easier said than done.

How can we better apply the Pareto Principle in our business life? One obvious application is for us to focus our energy on what we do best, while simultaneously leveraging the efforts of other firms who are doing what they do best. We already naturally do that to some extent. If we are in sales, we generally do not do the accounting for our firm too. If we are an accountant, we do not design the software we use.

How can this concept be extended beyond the simple division of labor, and help us maximize revenue and profits? The key is to continue to do what you do best, while simultaneously leveraging what other firms do best. If you are a Web designer then continue to focus on designing. If you want to expand into other product or service lines, do not try to re-invent the wheel. Instead, find a good firm to partner with, and resell their services under your brand. They do the work; you reap the profits.

For example, a Web designer might enter a relationship with a firm that develops permission-based email marketing services. In the interest of full disclosure, I should mention that I work for EZ Publishing, the creator of the StreamSend email marketing service. This means that I can engage in shameless promotion, while at the same time help you by illustrating the Pareto Principle using an example I know very well.

The key to all this is to find an extension of your business that is a natural fit. If you are an accountant you do not want to extend your services to include pizza delivery. You would only expand your business in ways that make sense to you, and that enable you to build on what you already do well. Whatever you choose should also enable you to leverage your current client base. That is, it should be a service that your current clients are likely to want. You can find out what your clients want by talking with them, and even conducting formal surveys.

We find that Web designers often find synergy in reselling permission-based email marketing services because it fits the criteria outlined above. They have a client base for who they have designed websites, and for who email marketing is an appealing marketing tool.

Web designers mostly do project work which is great, though they often earn limited monthly recurring revenue. Reselling email marketing offers them an opportunity to earn more recurring revenue and more revenue per client.

Web design firms usually offer value-added services on top of the email marketing services, such as designing graphics and HTML email templates. Email marketing services typically serve as a foundation for these value-added services.

Firms that specialize in marketing services and consulting often resell the permission-based email marketing services along with marketing consulting, design, copywriting, and production. Often email marketing is just one component of an overall marketing plan — though the marketing firm often also sells email marketing services as a standalone, self-service product to earn passive recurring revenue.

The next step toward expanding your business in this way is to do some research on what your clients want. Then pick a service you want to sell and find a good partner in that sector. Try some experimentation, as not all reselling efforts will work well or fit with your business model. Do not be afraid to jettison reselling arrangements that do not work well after a reasonable time. Try something else.

For more on the Pareto Principle (80-20 rule), I recommend Richard Koch’s The 80/20 Principle: The Secret to Success by Achieving More with Less or his other books on the topic. He explains how the 80-20 rule works, and how you can use it to achieve more both in your business and personal life. It really does work.

Neil Anuskiewicz is the Director of Business Development for EZ Publishing.
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