Top Market Strategy: Applying the 80/20 Rule
- 41m
- Elizabeth Rush Kruger
- Business Expert Press
- 2011
Virtually every business seeks to increase its profit, but few business leaders realize that a universal law governs profit from customers. You may be applying the 80/20 rule to sales, quality control, investing, or production, without realizing that this rule summarizes the Pareto distribution of inputs to outputs. The 80/20 rule predicts that the top 20% of inputs generate 80% of the outputs, balanced by the bottom 80% of inputs generating 20% of the outputs. Recently mathematicians confirmed that the Pareto distribution is universal and as valid as the normal bell-shaped distribution. This universal law predicts that when customers are segmented by their profitability, the top 20% generate 80% of your profit from customers -- four times more than expected whereas the bottom 80% generate 20% of your profit from customers -- one-fourth as much as expected. This means that customers in your top market segment generate 16 times more profit than customers in your bottom market segment. Hence, when you replace customers in your bottom market segment with new customers in the top market segment, your profit from customers will quadruple. The steps for achieving this amazing result are segmenting your customers by their profitability, distinguishing the top 20% of your customers from others, identifying prospects with these traits, creating a top market strategy, and converting these prospects into highly profitable new customers. The purpose of this book is to show you exactly how to implement a top market strategy in your business, and thereby, achieve the predicted increase in your profit from customers.
In this Book
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Top Market Strategy—Applying the 80/20 Rule
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Foreword
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Preface
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Essentials of Marketing
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Decisions About Customer Surveys
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The Pareto Distribution
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Applications of the 80/20 Rule
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Segmentation by Profit from Customers
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Steps of Profitability Segmentation
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Interview Diverse Customers
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Create the Customer Survey
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Survey Customers and Analyze Responses
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Define the Profitability Segments
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Distinguish the Top Market Segment
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Evaluate and Target the Top Market Segment
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Create Research-Driven Marketing Strategies
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Quadruple Profit From Customers
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Report on Overall JetSpray Customers
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Report on JetSpray’s Top Market Segment
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How to Analyze Overall Customers
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How to Segment Customers by Profitability
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How to Profile a Target Market
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Data Worksheet in Microsoft Excel
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Notes
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References
