The 80/20 rule, which is commonly referred to as the “Pareto Principle,” after the European economist Vilfredo Pareto, is one of the most fundamental and impactful principles you can apply to your business.
The theory is quite simple: 80% of what you earn comes from 20% of your work. The other 20% of what you earn comes from the remaining 80% of your work.
To be fair, the principle is more of a rough guideline than a hard rule; it doesn’t necessarily have to be a hard 80/20 split. It may be 90/10; it may be 70/30. The basic point, however, remains: you are getting a significant share of your earnings from a small portion of your effort.
This principle applies to just about everything you can measure in your dry-cleaning operation. Walk-in business? You’ll likely find that roughly 80% of your total revenue from walk-ins comes from about a fifth of your total walk-in business. Customer order sizes? You’ll probably find that 20% of your customers represent 80% of your total income in this area.
The 80/20 principle is quite simple, but applying it to your dry-cleaning takes time, planning, and patience. However, with these simple suggestions, you can spend your time and efforts efficiently and increase your total revenues.
Find Which Services are Bringing in 80% of the Revenue
The first step of the process is research. To get the most from your efforts, you’ll have to understand what services are bringing the largest portion of the revenue. For example, you may discover that dry cleaning for suits is bringing the largest share of your income, or you may find that shoe repair is taking lots of time but bringing in a small portion.
Examine Your Individual Customers
You should also examine the customers you have that bring in the largest share of revenue. Is there a common trait? Do they all work in a certain district? Do they have similar occupations? Understanding the most productive customers will help you attract similar people in the future.
Eliminate (or Reduce) Wasteful Services
If you want to fully take advantage of the 80/20 rule, you’re going to have to reduce your current offerings. Now that you have completed research in your services, you should have an understanding of what services bring the best income and which services don’t. Choose a few that aren’t productive or efficient and eliminate them from your offerings.
Promote the Productive Services
On the other hand, you’ll also want to promote the services that are bringing in the best income. Using our suit-cleaning example, if you find that suits are great for business, promote this service with enhanced effort.
Target Productive Customers for Productive Services
Now tie the two together. If, for example, you found that a highly productive intersection of customer and service is suit-dry-cleaning for people in the financial district, then go to that area of town and promote your suit-cleaning services.
With the right approach and a commitment to planning, you can get outstanding production while maximizing your efforts! In the end, this will bring a more profitable dry-cleaning business.