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Implementing the 80:20 Rule with Predictive Modeling

80:20 rule, predictive modelingIt has lots of names.  The 80:20 rule.  The pareto principle.  HVC.  Power Laws.  Zipf laws.  Whatever we call it, the idea is that around 20% of our potential customers will account for 80% of our upside.  While the numbers can move around a bit, this basic idea applies in all aspects of customer management.  It applies among your customers: a small proportion of your customers will provide most of your profit.  It also applies among your prospects: a small proportion of the prospects have the potential to deliver much more profit than the rest.

If the 80:20 rule describes your market, how can you leverage it?  Fortunately, it is pretty straightforward! [Read more…]