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is 80% : 20% rule still holds true

Created by : Rajeev Bahl, SBU-Head (UROLOGY),  | 02 10 2011 08:09:24 +0000
Keywords : is 80% : 20% rule still holds true
Activity:  251 views;  last activity : 03 01 2011 17:40:21 +0000
 
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The 80-20 rule is simple. Any company has its dedicated set of customers. They give the company the maximum business. So here these 20% top customers give 80% of revenue. Going the other way round the lower 80% customers give lesser revenue.

The reasons for this are really simple :

1. The smaller group has a dedicated input output demand and the bond with them is strong. 2. These customers are the regular ones and are more specific resulting into the accurate results from our side.

3. The larger group on the other hand is of the customers who have already given the major part of its work either to someone else or it is doing it on its own.

4. This the group with maximum noise as the customers keep on changing and stability factor is minimum.

In the 80-20 rule we are not talking about the exact numbers. We are talking about the approximate ratio which holds to be true for all the organizations who do the 80-20 analysis.
By Purvi Ghosh, Marketing analyst, Percept Advertising  02 12 2011 07:27:35 +0000
 
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Your views are correct Ms.Purvi Ghose.

The 20 percent represents as the companies loyal customers who should be retained at any cost.
By NATTERAJA R. ARIKRISHNAN, GM-Projects, Bentec Electricals & Electronics Pvt. Ltd  | 03 01 2011 17:40:21 +0000
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I completely agree with the 80:20 rule. The 80% business of a company is generated by the 20% of its top customers. So companies provide the extra service package to these customer to maximise its business. In different sectors like FMCG, Airlines, Banking various companies are driving the Trade Loyalty program to this 20% customers.
By Sudipta Ghosh, Area Executive  | 02 24 2011 16:00:26 +0000
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I support your views, Purvi.

Thanks for referral.

 
By SHRIKANT MANOHAR DANKE, Project Manager, Phadnis Infrastructur Ltd  | 02 14 2011 06:21:02 +0000
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Purvi u are right in your view point but looking to other point we can say Mr Rajiv has valid point for his view.
By Diwakar Tiwari, Sr. Manager, THE Arvind LTD  | 02 12 2011 11:04:50 +0000
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80-20 or the Pareto Principle still hold good even today. 20% of the population has country's 80% money stashed up in swiss banks.Isn't this a classic example of 80-20 in practice today?
By Saibal Ray, Sr. Process Engineer, KPIT Cummins Infosystems  | 02 12 2011 10:14:06 +0000
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I agree that this holds true but how many comoanies will like to change this!!!
By abhinav , Sales/International Key Account Manager, Rittal  | 02 12 2011 09:23:00 +0000
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It is a marketing principle that 80% customers gives you 20% of the business whereas, 20% offer you thechunk of 80%.

In the changed market scenerio, Do you still agree or you have some other view point

 
By Rajeev Bahl, SBU-Head (UROLOGY),  | 02 10 2011 08:09:24 +0000
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Scenario has been totally changed now.
By Anand Sharma, Monitoring the research funded by DIT, Department of Information Technology  | 02 17 2011 11:14:30 +0000
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no the scene is changed now
By Dhairya kumar(ДХАИРЯ КУМАР ), Service/Maintenance Engineer, Electrical  | 02 12 2011 17:04:25 +0000
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It is okay if the 20 are loyal. Any slight defection in these 20 can cause a huge drop. As Prahalad had said, the wealth is ALWAYS at the bottom of the pyramid. It is there that all companies must concentrate
By V. Srinivas, Freelancer, Information Technology  | 02 12 2011 12:18:13 +0000
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Banking on the business of the 20% customers giving 80% business is not advisable if the 10% of them change their mind the organisation banking on them will be in trouble. It is always advisable to have a wider customer base.
By kanukurthy sudershanrao, Operations Manager, Andhra Bank  | 02 12 2011 11:19:46 +0000
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