How the 80/20 rule applies to business

0:04 Hi, you love done too, that's true. For why great Young. This is the Pipe Man here on the Adventures pipe Man W four C Y Radio. And this is another edition of our segment Positively pipe Man, and we have our returning expert guests, because man, he's such an important guest. He helps your business and like no other person on the planet, and in these segments every week, he's gonna come on as part of this Monday show for Positively Pipe Man and give us strategies that can make our dreams in business come true. So let's welcome back Michael Barbarita.

0:58 How are you fantastic? Dan, how are you doing? Thanks for the kind words. Oh my pleasure, you know, because it's true, like I don't even need a script because I listened to you on your own show on our network, and I've talked to you at length, and you know, I just know you're the right answer to most of our businesses out there, especially in the trying times that we're experiencing right now. That's for sure. I appreciate it. Thank you. So what I'd like to know is, you know, we always talk about the eighty twenty rule, So how does that really apply to business? According to Michael Barberita and next Step CFO.

1:42 Yeah, great question. By the way, you know, as we were doing research for our book and as I interview business owners for the book, it was very common that from a business standpoint, people felt that the eighty twenty rule. And by the way, no one's ever wrong about the eighty twenty rules, so I don't want to make it tell them that way. But most people think eighty twenty and they're right that eighty percent of their revenue comes from twenty percent of their customers, and that's absolutely correct. But what we discovered when we were doing research for our book is that eighty percent of the revenue comes from twenty percent of what you do every day, and that business owners aren't focused on the key components of that twenty percent that drives eighty percent of the revenue.

2:33 And what we did when we were doing research for our book is we identified seven areas that we call the seven step Pathway to Profit formula, and we identified seven areas that which represents the twenty percent that drive eighty percent of the revenue. And you know, most business owners want to know what that twenty percent is, and that's what we're going to do today, we're going to go through that and a lot of business owners that identity really never understood what that twenty percent was. And so we're going to go through today the first step in the seventh step pot thread of profit formula. And by the way, I want to mention one other thing.

3:18 When we were doing research for our book, we found that there were eight areas of impact where that business owners had to had to know about, and then when we dug deeper and deeper, there were more lands and more lands, more lands, and we ended up at thirty two with this and this. Under those thirty two categories, there was another twenty or thirty categories. And so business owners are overwhelmed. And that's what that's what kind of led us to understanding what that twenty percent was that drives eighty percent of the revenue. Because business owners are just completely overwhelmed. And what they do, Dean, is they hire marketing companies. And the first thing that marketing companies do is they omit all the stuff that's needed for a business owner to get grounded. All those areas that I talked about, they skipped over those completely and went right to Facebook ads or social media ads and that's starting in the weeds. And so what we did is we identified those seven steps that drive eighty percent of the revenue. And the first one is leads, but not just any lead, good quality leads for your ideal customer.

4:31 That that's really critical. And you know, all of all of this first part that I'm gonna be talking about is really just about messaging all it's really about. The second is conversions. And let me define conversions. Conversions is taking a prospect, whether it's cold or warm, into your sales process, whatever that is, you know, for a retail of the sales process of them showing up in the retail store. For somebody like my sales process is a meeting, So it could be a meeting, it could be proposal, it could be an estimate, whatever your sales process is. So the first step is quality leads. The second step is conversions.

5:14 I want to talk about those leads for a second too, because as somebody that's been a salesperson since I'm like eleven years old, okay, I've gone through every kind of lead there is, and here's what I found that just proves the point of what you're saying is Okay, So when I was in the investment business. When I started in the investment business, the people, the leads they were giving us were basically as cold as cold could get. They you know, it's just basically buy a book of names and phone numbers and that was your leads. Right then later in the business, I would do exactly what we're doing now, and I would have a radio show to get leads for my investment business. And you know, there was such a huge difference because when I was first in the business, you had to make like five hundred calls a day.

6:12 This was the numbers. Five hundred calls a day to get twenty people to actually talk to you and have that twenty five to seven maybe want some information, and you would mail them out information, you know, back in. The snail days, and. Then out of that one of ten would actually become your client. So you'd have to make five hundred dials to get a client, which is a lot, okay, and it's a lot of work, and it's time consuming, it's not fun, you know. But then I could get on like a radio show like this as one example. I don't mean somebody else's by me. I had my own radio show. And then and then you know that was a different time too, when like infomercial type of stuff worked, you know, really well. And then I would get these leads that ninety percent of them would send me money, you know. And so yeah, you would think because I only had a handful of leads, it's like, oh, I'm not going to get any business. But that handful of leads got me way more business than the five hundred dials that you know to get one lead, you know.

7:29 So I wanted to stress that point because your strategies for people are so that they can gain more you know, revenue with less effort and time. That's correct, That's right. And the messaging is the key. You know, your messaging and a code call is completely different than the messaging that you have in your show. Yeah, totally right. So, uh, and that's something business owners need to understand more. It's not next to the set. It isn't. It isn't Facebook versus Instagram, versus LinkedIn versus. It's not that. It's the message. Yeah, if you get the message right now. Granted you could go to the wrong platform in terms of demographics, I get that, But the bottom line is, you know, lots of times when business owners talk shop. Have you tried Facebook?

8:21 Has it worked for you? You know that it's totally irrelevant. It's about the messaging, whatever, the messaging that that particular business had. I think that's so true too, by the way, because listen, you could still say to anybody an our age group, you know, something like PLoP PLoP, fizz fizz, and they will automatically think of alka seltzer. Okay, you can say, how do you spell relief? And I don't even think you can buy roll ads nowadays, but you still remember the message. That's right, absolutely, no question. And that's the case. That is absolutely the key. So in continuing on with the seven steps. So the first step is leads, as I said, the high quality leads, second is conversions. The third step is closing rate. And by the way, a business owner needs to track their data. They need to track the information because that's how they learn where they need to tweak.

9:23 You know, if if you have a closing rate of one percent, if you if you if you could get quality leads and you could convert them into your sales process, but your sales process yields a closing rate of one percent, you know where you have to work. You know, you have to what you have to work on, but you have to know that data. Otherwise you're going to be flying blind and you're really not going to tweak in the right areas. And ignorance is not bliss in this instance. Very true. And so you have high quality leads, you're converting more of them into your sales process and and then you're increasing your closing rates. Now, the fourth step is retaining clients. You know, this is where a lot of businesses fall down. They they don't focus at all on client retention. And here we are, we're putting it in there as one of the you know that part of that twenty percent that business owners need to focus on that drive eighty percent of your revenue because you need to retain clients. Yes, uh, it's it's a critical component and and you have and yeah, and it's and you and it takes some work. It's not one of these you don't a lot of business owners think that once they have a customer, they get to keep them by default.

10:37 No, no, no, no, no, does it happen? No? And nowadays they think it even more like we think because we live in this world of AI and everything's automated that you know. No, no, no, that's why you know. I run this network, you know, on a new technology but old school philosophy. Customer, you have to. Be on the same team with your customer so that you can get them the success they need, So you can get the success you need. Excellent, yeah, oh absolutely, it's so true. And then so you have qual high quality leads, you're converting them more into your sales process, you're closing them at a higher rate, You're retaining those customers. Now you have to focus on the average dollar per sale. So there are strategies associated with increasing the average dollar per sale for your existing customers and now obviously also any new customers as well.

11:40 But once a customer comes into your ecosystem, you're able to increase that average value. It's just part of that seven step formula that's going to drive eighty percent of the revenue. And then the sixth step is frequency of sale. So now if you have five hundred customer and you're selling them to them two point three times a year, you want to look to sell to them three times a year. Maybe you have to add more value to your products or services. Maybe you have to add more products or services but you want to increase the number of times that you sell to them. I love that concept right there, because that's something I live by as well. I think you have to constantly innovate and evolve your business so that you can do that.

12:27 You know, there's always there's always something else that could add value and benefits that would be something that your customer would want to take advantage of. I agree one hundred percent. Yeah, I've seen many times where, you know, business owners fail to fail to rejuvenate even former customers, they fail to rejuvenate them. All of your customers are what we call buyer's journey, and yeah, that journey could take anywhere from fifteen minutes to fifteen years, but they're on that journey. And you have to constantly, constantly nurture your customers and your existing base to tell to them more frequently.

13:17 And you know, I tell people throughout my whole career that have worked for me. You know, basically, you do have to continue to nurture those people because if you're not and you think, okay, I got them in the bag. You know, even in the investment business, everybody says my broker until somebody else comes along and does nurture them, and then you can't save them after that because you should have nurtured them before somebody else did. Right. Well, that's right because, as Mark Cuban says, there's always somebody out there going after your butt, you know, and trying to take you down totally right, and they'll grab those customers just as easily. And then the final step is UH we we work on costs, both fixed costs and variable costs, and there's there's a number of ways to cut costs. Business owners normally find it difficult to cut costs, but there's a lot of different ways that we use UH to to cut costs. And but but it's still it's it's one of the most it's one of the seven steps. So once just in review, it's leads, conversions, closing rates, client retention, average dollar per sale, frequency of sale, and finally costs.

14:39 And I think they need to know a lot more. So how do people reach out to you to discuss this more where you can expand on this more and give them specific strategies customized for their business and their goals. Well, I'd love what I'd love to do, uh Dean, is I'd love to interview them for the next edition of my book, because there I go through strategies that we that that we help business owners implement, not just learn, but implement and then get a really good understanding. And by the way, they can help me with the next edition of my book, because what we do is we interview business owners because business is always changing and we always want to make sure that our strategies are up to date and that they work now that they've worked in every economic environment so far, so I don't think that they're not going to work in any future one.

15:36 But we need more industry information to prove what we already know and so and then and then we update the book. So the way that works is it's sixty minutes on Zoon, I present strategies from my book and then I ask you if the impact the strategy would have if a business owner would implement in your industry. It's more of an industry perspective that I want to I want to get and then documented for the book. And that's it. And I would love to interview business owners. They could go to next STEPCFO dot net. That's next step CFO dot net, Forward slash contact that would get them into my contact page, and then they simply fill out the contact form and in the message section write the words book, interview and I'll said Jack calendar.

16:25 Nice. And then also if you could tell everybody how they could check out your book, your podcasts, your live show, all that excellent. Yes, but you can get a copy of the book. It's free, by the way, it's my contribution to the business world. Go to next STEPCFO dot net. Right on the home page you could download the book. That's number one, number two. As Dean said, you could visit our podcasts at Powerful Business Strategies dot com and our radio show called Powerful Business Strategies on Mondays at noon Eastern. Time right here on w yeah, right here.

17:06 In fact, if you have a time travel machine, after you hear this episode, go back an hour and time before an hour before the episode and you'll be able to catch a show. Otherwise, wait till next Monday. All right, Well, thanks a lot, Michael Uh. Once again, you have some amazing, like very specific strategies for people, which is why I love because there's so many coaches out there that just give such generic advice. And you know, every business is different, and that's why even the you know, the interview, like it's great that you're finding out what what is most beneficial in different industries because it's not a one size fits all. But Michael Barbarita, you probably are one size fits all. So thank you, thank you for being on the adventures of fight Man.

18:00 Thank you for listening to the Adventures of Pipemin on w for c u I Radio.