Pareto's Law
10th August 2005
"Our client base is a huge and untapped source of business. It's ridiculous that it does not get the attention it deserves. We just don't seem to have the time or know-how to turn on the tap."
Senior Partner, Major Leeds Law Firm
Typically over 80% of your business will come from 20% of existing clients – what about the other 80%?
In the late 1800s, Vilfredo Pareto, an economist, established that 80% of the land in Italy was owned by 20% of the population. This was the first example of a socio-economic law (Pareto's 80:20 Law) that soon appeared to have universal scope.
Pareto’s law, in its generalized business form, states that 80 % of the objectives (sales) are achieved with 20 % of the means (clients). Modern CRM (Customer Relationship Management) techniques are geared around finding out how to achieve the 80% by identifying and profiling the 20%.
The Pareto Law is obviously a simple rough approximation, however it does emphasize the need to focus your marketing activities in an intelligent manner.
The problem is that for a firm to find 100% of the 20% they have to make a conscious decision to invest in serious record keeping, reporting and communication systems and many simply don’t. Some because they don’t know how to and others because they don’t recognise that Pareto’s Law exists and is alive, well and living within their business.
However a business that does recognise the benefits of such an investment in marketing systems can reap significant rewards. For example, they can skim the most profitable elements of their market, generate large profits while reducing costs and then expand into another market segment or to another geographic area.
Despite the fact that the vast majority of business comes from existing clients many law firms spend a disproportionate amount of time and money trying to win new business, whilst ignoring those people they already know.
A significant amount of time and money is spent by such firms on indirect marketing campaigns, such as advertising and the production of promotional products such as calendars and wall charts, when compared with the more direct and focused marketing programmes based on the firm’s existing client base.
The application of modern IT is helping to solve this traditional problem in many of the more enlightened legal practices. Such lawyers can now implement a variety of marketing systems such as The Liberate Contact Marketing module from my own company Linetime.
Software like Liberate enables the firm to maximise the information it already has and to communicate quickly and easily with selected individuals or groups of clients in a wide variety of ways.
Not only does the system enable intelligent use of all existing client data, it also enables the user to import data from external contact lists for use in proactive and direct business development campaigns.
Integrated software modules like Liberate Contact Marketing can be easily tailored to meet the specific needs of any organisation and like all good software tends to be designed to be easy to use by non-technical personnel.
In the case of Liberate, by using an English language query you can now intelligently interrogate all the data held in your marketing database and hence segment the client base as part of a niche marketing strategy.
For example you could segment your client database and hence target clients according to…
One factor that often prevents firms from being able to maximise the potential of their existing client base is the inability to easily access previously entered information. The solution to this is to choose a contact marketing system that is totally integrated with all your other software applications so that client information is never lost and only needs to be input once.
You also need to be able to quickly and easily search client information and identify areas of interest appropriate to them as well as specifying a wide range of additional criteria. This might include, for example, the amount billed each year, size and type of organisation or information on personal interests and hobbies.
The more you know about your clients, the more services you can sell to them providing that; a) you can access the information easily, and b) you can communicate with the client in the way that is best suited to him or her.
This means that the Contact Marketing system you choose must also enable you to compose a message and send it via the post, email, fax or SMS text at the touch of a button and more importantly from your desk top.
The result of investing in a modern CRM system such as Liberate Contact Marketing is not only being able to identify precisely who you wish to target, but also being able to simply "point and click" to merge this list in order to prepare a targeted mailing. In addition, such a system will allow you to collate and record all responses, appointments, future actions and new business won, via the system’s Response Monitor. It will therefore be possible to review the cost effectiveness of every marketing initiative with your existing clients and contacts. Furthermore you can mail clients either ‘en-mass’ or individually, either electronically or by post with whatever it is you wish to communicate. It may be a press release concerning your business, or an invitation to a golf day or the launch of a new service.
Whatever the campaign Liberate Contact Marketing will enable you to design and deliver it quickly and easily to its maximise effect.
Tony Klejnow - Managing Director Linetime Limited Moorfield Close Leeds LS19 7YA Tel: 0113 250 0020 E: info@linetime.co.uk W: www.linetime.co.uk