Perry Marshall, Founder of Perry S. Marshall & Associates
Bill Ringle and Perry Marshall discuss the Pareto Principle – commonly known as the 80/20 Principle – and how small business leaders can use it to fill in the gaps for greater growth.
>>> Visit MyQuestforTheBest.com for complete show notes and more expert advice and inspiring stories to propel your small business growth.
Top Take-Aways from this Interview
- How the 80/20 principle can help companies weed out financial gaps in their business.
Using the Pareto principle as an Invisible Money Finder
Why it is that everyone pays attention to averages, even though they are ultimately irrelevant statistics.
When 20% of your sales people are outselling the other 80%, it’s time to get rid of the 80% and focus time and resources on the top sellers.
What it means to rack the shotgun.
Tweet-Ready Insights from this Episode
Read the Show Notes from this Episode
2:59 How Thomas Edison inspired Perry Marshall to be curious about his environment when he was young, much to the dismay of his parents.
4:29 Perry’s epiphany about the 80/20 principle - “It’s a universal law of cause and effect.”
5:29 “People are using this every single day to figure out what gaps exist in their business.”
6:56 The Invisible Money Finder - “If Starbucks has a thousand people a week who buy a five dollar latte, it’s pretty much guaranteed that one of those people will buy a $2700 espresso machine.”
7:34 “People in large numbers are extremely predictable. If they’re not doing what the formula predicts it means they’re doing something wrong.”
8:49 “The Pareto principle has only often been used as a rearview mirror.”
10:14 How to use the 80/20 principle as a metric to determine what is working fine versus what just isn’t.
11:30 “Everyone’s accustomed to averages.”
12:00 “The most interesting thing is, who are the most capable people in the science class, and how much science can they do.”
12:15 The 80/20 curve
12:59 “Average conceals the extremities.”
14:21 “If I’m selling a million dollars a month, one of my salespeople is going to sell half, one of them is going to sell 2 or 300 thousand, and the other 8 are going to sell the rest.”
15:02 When 20% of your sales people are outselling the other 80%, it’s time to get rid of the 80% and focus time and resources on the top sellers.
16:22 “It’s possible to defy the laws of nature, but look how much effort it takes you to do it.”
16:49 “Everything in business is all about outliers.”
17:02 “The first rule of 80/20 is deciding what you’re not going to do.”
18:21 Racking the shotgun, the story of John the gambler, - “The way you win more poker games is you need to find people who are going to lose.”
21:35 “Sales and marketing is not a convincing people process, it’s an elimination process.”
22:50 “A buyer is a buyer is a buyer.”
23:42 “Selling is harnessing natural processes to enable what already wants to happen, to already happen.”
25:45 80/20’s are everywhere, it’s just about knowing how to look for them.
28:04 “It’s probable that 3/5/10% of your customers are just bleeding money out of your bank account.”
28:16 “Most people just haven’t been given permission to just get rid of the customers.”
29:43 Why most people don’t actually know how to make a business better.
30:30 “There’s no rule that says you have to take these people’s money.”
32:25 How to fire someone gracefully.
34:37 “Maybe the reason that you’re struggling is that you’re carrying too heavy of a burden.”
34:52 “It is possible to get 70% of the work done with 30% of the people, it requires surgery to that, but it is possible.”
35:50 “Having the wrong person in a position is catastrophic.”
36:06 Lighting Round
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Endorsed by Forbes and INC Magazine, Perry Marshall helps his clients by integrating technology, sales, art and psychology. He founded the $5 million Evolution 2.0 Prize, which aims to solve the biggest mystery in biology.
His reinvention of the Pareto Principle is published in Harvard Business Review. NASA’s Jet Propulsion Labs at the California Institute of Technology use his 80/20 Curve as a productivity tool. His Google AdWords book, Ultimate Guide to Google AdWords, is the world’s best selling book on internet advertising.
He’s consulted in over 300 industries and served as a witness for marketing and Google AdWords litigation. Perry has a degree in Electrical Engineering and lives in Chicago.
For more about Perry Marshall, visit his website.