The ROI Hunters read a lot of material, especially other advertising and marketing material. We would expect most hunters of ROI to be constantly increasing their knowledge and understanding. An ad by Adobe with the Title “How did 80% of information become 100% useless?” caught our eye. Is it true? Have we embraced Pareto’s principle too much? So we want to dwell on this some more, after all, Hunting ROI is not for fractionalists.
Pareto’s Principle – the 80 / 20 Rule
Simply put, it is a mathematical equation that explains how the unequal percentage of values occurs in many areas of measurements. For instance, 80% of profits may come from 20% of your clients, which implies, 80% of your remaining clients generate the remaining 20% of profits. In the case of a web site, 75% of all page views may come from 10% of all pages on the site, which implies, 90% of the pages on the site are only getting 25% of the page views. (Notice the pairing of numbers must always equal 100% or 75+25 and 10 + 90)
Traditional Management Theory
Most experts will tell you that you should focus on the 20% that are generating the 80% as a general rule, and pay less attention 80% that only returns 20%. Some experts may even tell you to drop your clients that are not generating the most returns because they are dragging you down by the sheer amount of energy it takes to service them over your most profitable clients. To a point I agree with them, but as a marketing consultant that focuses on improving the environment of my clients, I can’t apply this advice everywhere.
Data is Valuable
When it comes to reviewing statistics, either web logs, email campaigns, or any other, we try to look at all the data. Just because we are reviewing the 80% of readers that only generated 20% click-thru on a email campaign, we are going to look at it and see why it didn’t work. What could we have done differently? Are these the same dead heads as the last test we ran? Should we use the limited resources we have in different ways and completely avoid these dead heads and see if they show up else where?
As we explain to our clients, it is healthier for them (and us) to think of plans in the strategic sense and not get caught in a quick fix mode each time they think they have spotted a trend or become frustrated with results. Rerun another test and try to review all the data and don’t just look at the most impressive numbers, pay attention to the lagging indicators and play with them as well. Moreover, what ever else you do, try to have some fun!