Acquisition and marketing / Lesson A04

The 80/20 principle in marketing: investigate where results come from

In marketing, the 80/20 principle means ranking activities by a useful outcome, such as suitable enquiries or customers won, and checking where results really come from and what they cost. The split is rarely exactly 80/20. It's a question, not a promise, so pull recent results apart before deciding where the next marketing dollar goes.

By the end, you should be able to

  • Build a simple Pareto-style review
  • Separate volume from suitable demand
  • Avoid confusing attribution with causation

Decide what result you mean

Clicks, enquiries, suitable conversations, accepted work and contribution answer different questions. A channel can lead on one and lose on another. Choose the decision first. If the question is where to invest the next marketing hour, a chart of lifetime website visits may be almost irrelevant.

A Pareto chart ranks categories by a measure such as frequency or cost and can show cumulative contribution. The chart does not require an exact 80/20 split. Nor does it tell you why the pattern exists. It makes the distribution visible so you can investigate it.

Worked example (illustrative): four acquisition routes

Consider these made-up figures over one comparable period:

Route All enquiries Suitable enquiries Acquired customers Direct campaign cost
Search 40 12 4 $1,200
Referrals 15 12 6 $300
Social 60 9 2 $600
Event 10 5 2 $800

Referrals produce 6 of 14 customers, about 43%, not 80%. Their recorded campaign cost per acquired customer is $50. But that excludes the relationship work behind the referrals. Before declaring them the cheapest route, estimate the time, partner effort and any fees involved. These numbers are fictional and not performance benchmarks.

Search may reach people you could not reach through existing relationships. The event may create opportunities with a longer buying cycle. Keep those differences visible rather than forcing every route into one simplistic league table.

Build the analysis honestly

Choose the period and use consistent definitions. Assign a primary source only when known. Keep multiple-touch and unknown-source notes. Rank the routes by the selected outcome and calculate each share of the total. Then compare effort and the quality of the resulting work.

Do not count the same customer twice in a total because they saw a video and later clicked an advertisement. You can record both interactions without pretending both independently caused the whole sale. Small samples should be reported as counts as well as rates.

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