Top Market Strategy
Applying the 80/20 Rule
By: Elizabeth Rush Kruger
Published: July 23, 2011
Format: Paperback, 150 pages
ISBN-10: 1606493108
ISBN-13: 978-1606493106
Publisher: Business Expert Press
"The 80/20 rule summarizes a universal law that predicts the relationship of inputs to outputs - and even governs the impact of customers on your business profit", writes speaker, educator, marketing consultant, and software developer Elizabeth Rush Kruger, in her concise and very hands on book Top Market Strategy: Applying the 80/20 Rule. The author describes how the most profitable 20 percent of a firm's customers generate 80 percent of the company's profits, and shares strategies for replacing the customers in the bottom 20 percent of customers with those with the characteristics of those of the top 80 percent.
Elizabeth Rush Kruger recognizes that not all customers generate the same amount of revenue or profits for the business. As with almost every endeavor, 20 percent of the people produce 80 percent of the results. Using this axiom as a guide, the author proposes that companies target more customers, with similar traits and purchasing habit,s to the most profitable 20 percent of existing customers. Instead of seeking just any customer, Elizabeth Rush Kruger provides strategies and tactics for locating, attracting, and retaining customers similar to the existing top 20 percent. The author points out that quadrupling the best customers will also result in a quadrupling of profits.
Elizabeth Rush Kruger (photo left) understands that not everyone is aware of the power of the Pareto Distribution that holds that 20 percent of inputs results in 80 percent of the outputs. With this principle in hand, Elizabeth Rush Kruger describes how business decision makers can forecast their most important customers prior to the purchasing event. To increase the level of profitability, the authors recommends replacement of the bottom 20 percent of the customer base with customers who behave like the top 20 percent of that base.
To find and attract the ideal top market customer, Elizabeth Rush Kruger presents the following best practices:
* Understand the Pareto distribution and how it works
* Segment existing customers by profitability
* Interview and survey diverse customers
* Define the profitability segments
* Distinguish the top market segment
* Create marketing strategies based on the research
* Quadruple overall customer profitability
For me, the power of the book is how Elizabeth Rush Kruger utilizes the Pareto Distribution Principle as a guide to increasing total customer profitability. The author takes the bold step of recommending that the existing customer base be examined, segmented by profitability, and that the most profitable 20 percent of customers be replicated throughout the entire customer list. Elizabeth Rush Kruger provides the very practical and results oriented tools, worksheets, and graphics to guide the reader toward a deeper understanding of which customers are creating the most profit for the firm. The author also shares some powerful and effective market segmentation tools in the book's useful appendix.
I highly recommend the practical and company profit boosting book Top Market Strategy: Applying the 80/20 Rule by Elizabeth Rush Kruger, to anyone seeking an engaging and useful guide to transforming a moribund customer base into one bursting with profitability. This book will renew and revitalize the profitability of any size of company.
No comments:
Post a Comment