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Location Based Marketing and the 80/20 Rule of Business – Guest post via @GreggVM

Guest Post by: Gregg @GreggVM works as a business consultant, freelance writer and TriOut Sales Manager/Advisor. Gregg writes at

In 1906 and Italian economist named Vilfredo Pareto came up with a formula to describe the inequality in the distribution of wealth throughout his country. He found that 80% of the wealth was concentrated in the pockets of 20% of the people.

In the late 1940’s, Joseph Juran, a Quality Measurement guy, stated a principle that he called “the vital few and the trivial many”. He had found that 20% of the defects caused 80% of the problems. A few problems, those 20%, are vital and many, those 80%, are trivial.

Over the years the discovery of both men came to be applied, and appeared to hold true, for many areas in business and in life. Those discoveries came to be called the Pareto Principle, likely because it sounded so much better than the Juran Principle. It’s also come to be known as the 80/20 Rule of Buisness.

If you didn’t run across it in business classes, or while you were making your business “bones”, you’ve likely heard it mentioned in a number of places. 20% of your stock takes up 80% of your space. 80% of your stock comes from 20% of your suppliers. And the big one, 20% of your customers account for 80% of your revenue generation.

Small businesses, especially those in brick and mortar, seem to have a hard time buying into the principle sometimes. The value of the principle, whether you buy into the exact percentages or not, is that it reminds you to focus on the 20% who matter. You’ve likely heard it said that it’s a lot easier to get a current customer to spend more money with you than it is to get or acquire a new customer.

Those current customers are your 20% and location based marketing is starting to provide the means to directly interact and engage with them in ways you’ve never been able to. Through the use of welcome and check in specials, as well as location based coupons and other specials, you can reward your best customers and give them opportunities and incentives that will make them want to spend more money with you. And it won’t cost you much money at all to do so.

I wrote yesterday how I thought that the promotion Ann Taylor is doing with Foursquare, while good to see and very well crafted, could be improved to reward not just the Mayor of the stores, but those 20% who drive their business revenue as well.

Location based services and apps are starting to provide even more ways to market to and engage directly with your best customers. TriOut introduced their freemium and premium business models last week. Their premium package takes that engagement level up several notches with messaging and real time alerts. Imagine the possibilities that messaging your best customers could do for your marketing and sales efforts, your ability to build a community around your business. And that’s on top of check in specials and coupons too. You can also get real time alerts when a customer checks in, posts a photo or a review. The possibilities for customer engagement there is as exciting as it can be. To the best of my knowledge, TriOut is the only service offering this at the moment but you know the others won’t be far behind.

In the past, you’ve perhaps used some kind of loyalty card or program to reward those vital 20%. Are you beginning to get a sense of how location based marketing can not only drive new customers your way but how it can be used to grow your revenues and ring your registers through creative engagement with your best customers?

One last little nugget about Vilfredo Pareto. He also observed that we as humans are not really motivated by logic and reason but by sentiment. I’ll bet that you could use location based marketing to tap into that and form some great emotional connections with your community of customers. They’ll be telling great stories about you and your business forever.

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