MASTERING THE PARETO PRINCIPALPosted on 2019-01-01
“The Pareto Principle”, also known as the “The Law of the Vital Few”, is a general rule dictating that 20% of causes are responsible for 80% of effects. You may or may not already be familiar with this law, but I find that it’s best explained through examples.
Original inspiration came in 1896, when Vilfredo Pareto showed that around 80% of the land in Italy was owned by just 20% of population. Shortly after a man named Joseph Juran discovered that this “predictable unbalance” did not only apply to land ownership, but many facets of everyday life.
- Income:The richest 20% of people have 80% of worlds income
- Health Care: In the US, 20% of patients use 80% of the health care resources
- Computer Errors: In 2002, Microsoft reported that 80% of the errors and crashes in windows and office are caused by 20% of the bugs involved
- Business:20% of the customers are responsible for the 80% of the profit earned and 20% of the customers are responsible for 80% of complaints
- Clothing and Life Style: People wear around 20% of their clothes 80% of the times
Now why should you care? Simple… Work smarter, not harder!
As technology has progressed it has dramatically changed the way businesses reach their consumers, while the real estate industry, especially commercial real estate, has remained stagnant. A large majority of real estate professionals today still think "marketing" means casting a large "catch-all" net in the hopes of catching a few leads. This tactic ends up not only being very expensive, but also ineffective. In turn, properties can sit on the market for years without any interest and thousands of dollars down the drain!
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