80/20 Rule for Marketing & Life by Perry Marshall | Performance Strategies Event in Milan, Italy

good morning thank you for inviting me to Italy this is my first time and thank you for spinning your day with me today if if you are able to grasp what we talked about the the principles that you receive today will be useful to you literally every day of your life literally every department in your life and in fact those of you who like really latch onto this you'll probably use this every at least once every hour of your working day for the rest of your life I mean that this is really that serious and

so the the book 8020 sales and marketing is the book that I really really wish that I had had when I got laid off from my engineering job when I was 26 years old and my wife was three months pregnant and so I come into this meeting and I don't know why we're in this meeting and there's all these weird assorted people from our company and the guy is looking kind of nervous he's like well you know you're all laid off like oh okay so yeah the company the sales had slowed down and the company

had to get rid of some people and I was one of them so what are we gonna do now so I spend a few weeks looking for engineering jobs in Chicago I'm not finding any and I end up going into sales so from engineering into sales out of the frying pan into the fire as we like to say and so I remember my friend Frank he said to me you know Perry like you don't just wake up one morning and go into a completely new profession I'm like well I'm a pretty smart guy this shouldn't

be too hard [Laughter] so the next the next two years were my years of baloney sandwiches and ramen soup as I like to say and and so I went into a sales job and every day I have this big manufacturers directory and my job is to pick up the phone and find somebody that will let me go to their office and see them so I'm pounding on knocking on doors all the time trying to talk to people that don't want to talk to me and trying to sell something I really figured out it took me

a long time to figure out I was selling the wrong thing to the wrong people for the wrong reasons so our credit our credit card balances went up and up yet you guys have ant visa and uncle MasterCard here in Italy I was at the metro station they had a nice big visa picture with all these happy looking people visa doesn't really make people happy you know but we went into serious amounts of debt and and in this job I I tried really hard I worked on all these projects and every single project I would

work on something would fall through at the last minute it was like it looks really good and I'm gonna get a big Commission check and then and it was just over and over and finally one day I walk in the door eight o'clock in the morning Perry we need to talk to you and I go into this office and you know Perry we're done this is not working you're a good guy you try really hard but yeah we're done and then and then I Drive home was which in so an hour to get to work

I get fired a drive home I walk in the door nine o'clock my wife looks up she instantly knows you got fired like yeah so now in the middle of this I had started to take a serious inventory of my life because it wasn't working okay and I would listen all these motivational tapes and read all these sales books and I was I was trying so hard to be somebody I was not but I didn't know like I didn't know any better I was just doing the best I could but I had discovered direct marketing

okay now Direct Marketing isn't a new idea in 2018 it was kind of a new idea in 1997 at least to most people of course direct marketing has taken over the internet and people know all kinds of things they've seen people do all kinds of things but they don't know why they do them and most people don't know the difference between a tactic and a strategy they don't they don't know the difference between a technique and a principle okay a technique is something that works today for a very very particular reason and it might not

work tomorrow like it might be some technological thing or it might be some trend or some fad okay but a principle is something that's always always true and and so the reason I wrote the book 8020 sales and marketing was because just about everything that works in sales and marketing works because of 80/20 and usually 80/20 is the easiest way to explain why it works and if you don't know something it's the easiest way to figure it out so today I'm gonna try to help you think I'm gonna give you tools that will help you

figure out your sales in your marketing life and they'll actually figure out your whole business because you have to do things for the right sales and marketing reasons not just for for business reasons so if we can go to the slides here I'll get on with the story so my friend John Paul Mendoza was he was 17 years old when he dropped out of high school in Denver Colorado and he decided I want to be a professional gambler and he hitchhiked to Las Vegas and he started playing poker for a living and after a few

weeks of this he was like wow this is harder than I thought this is harder than it looks like on TV and so John was in a bookstore reading look shopping for gambling books so he could get better at this and he meets this guy named Rob and he finds out robber is a professional gambling ring and they start talking and John says well do you think you could teach me how to play poker and win more win more games and and he says for a percentage of your winnings I could do that and so

they have a little agreement and they shake on it and as soon as they shake hands he says jump in the Jeep John we're going for a ride and so they they jump in the Jeep and they're driving down the highway and John says okay how do I win more poker games and Rob says the way you end more poker games is you play people who are going to lose and those people are called marks you know like they have a bull's-eye on their forehead because you don't play good people you don't play professional gamblers

what you want is the kid that just flew in on on an airplane with his grandmother's inheritance money and he thinks he's gonna get rich in Las Vegas that's that's who you want and John says okay so where do I find people like that he says here I'll show you and they pull into a parking lot and he takes him into a strip club and they walk in there so you know this guy 17 year old kid in a strip club there's women there's drinking there's loud music there's lots of distractions shall we say in

the strip club right and this guy Rob he sits down at a table and Rob always carried a sawed-off shotgun everywhere he went and it was in his jacket and he pulls out the shotgun and he holds it under the table and he opens it and then he slams it shut so it goes that's called racking the shotgun and when he makes that noise a few people jerk up their heads and look around like there's these biker guys over there and they look around like what was that and the owner comes over hey what's going

on here we're fine just teaching the young man a lesson don't worry about us we're not gonna cause any trouble here and he says to John John did you see those biker dudes who turn their head when they heard that noise John goes yeah and he says don't play poker with them they're not marks play poker with everybody else that's called racking the shotgun in everything you do in marketing is racking the shotgun hey there's a seminar in the one who wants to go a whole bunch of people don't go and a few people go

that's rack the shotgun you send the email most people don't open it some people do that's rack the shotgun some people click on the website from the email and go visit the website and most people don't that's rack the shotgun some people sign up for the webinar and some people don't that's rack the shotgun some people share the social media post most people don't that's rack the shotgun everything is racking the shotgun Donald Trump racks the shotgun every day multiple times a day okay and he's dividing these people from those people now most of us

are intimidated about racking the shotgun but it's it's what you do most of us are afraid to find out is it a yes or is it a no because 80% of the time it's a no and 20% of the time it's a yes and we don't want to deal with the disappointment but the way that you succeed is you rack the shotguns so I read this book by Richard Kosh you guys had Richard kasha about a year ago I believe that at one of these seminars Richard wrote a book called the 80/20 principle and I

knew about 80/20 lots of people know about 80/20 but I didn't understand that I didn't really understand it I thought it was just a handy business tip okay and I and I do remember when I was when I when I was a sales manager at a company I read about the 80/20 principle it said that 80% of your sales comes from 20% of your customers and 20 percent of your sales comes from the other 80% and I printed out a sales report and I got out my calculator I'm like I'll be darned that's true Wow

and then I didn't really think about it anymore I didn't understand how to use it I'm reading Richards book and I get to page 14 I'm like oh my word this is everywhere now I'm gonna explain to you why I had this epiphany and I hope all of you have it epiphany and and I'm gonna explain there's there's some science behind this that's very profound now first let's do a little experiment so I want everybody please stand up everybody in the room stand up okay if you own less than five pairs of shoes sit down

if you have more than five pairs of shoes stay standing okay ten if you own less than ten pairs of shoes sit down otherwise stay standing okay twenty if you own wess than 20 pairs of shoes sit down otherwise stay standing okay and look around this is very instructive okay and pull it by the way there's no shame just just work with me here forty if you know less than forty shoes sit down more than forty shoes stay standing okay eighty if you own less than 80 pairs of shoes if you own a lot of

shoes be proud stand up okay eighty we got one two three four okay 160 plus 160 sit down okay 320 is anybody 320 how how many how many shoes do you think you probably have 330 Dead get that right three three okay give this lady hint give us a hint what this is finding right wait would you believe me if I told you that 20% of the people own 80% of the shoes yes okay but here's the interesting part the interesting part is 20% of the 20% own 80% of the 80% you got that so

20% okay 20% of 20% own 80% of 80% so that means four percent of the people own 64% of the shoes does that make sense but we can do it again 20 percent of the 20 percent of the 20 percent own 80% of the 80 percent of the 80 so that means 1 percent of the people own 50% of the shoes stand up again domain names if you own less than 10 domain names sit down ok good a roomful of marketers you've got lots of people that own domain names ok 10 okay now 20 domain

names 20 or less sit down 40 80 163 20 is anybody still yeah we got a few here 320 I've got 500 did we lose you at 500 was that is anybody else standing how many how many domain names do you think 3 8 380 okay so would you believe me if I told you that 1% of the people owned 50% of the domain names 4% of the people on 64 the domain names do you see that almost everything is like this the world is way more unequal than you think now this is very this

is very powerful now I want to talk to you about one of like the most important discoveries that I ever made this is really foundational if you can get this it'll change your whole life it'll change the way that you see the world so you can see here on this picture I have a tree and then I can zoom in to the leaves and the branches and then I can zoom in to the leaf itself and then I can zoom into the cells and the leaves and at every level I have a branching pattern branching

branching branching so it so a tree is a pattern inside a pattern inside a pattern inside a pattern it's it's it's branching at every level ok now there's a word for this and the word is fractal ok fractal means pattern inside a pattern inside a pattern inside a pattern fractals are everywhere okay so you have a river coming down a mountain and the water is flow to the river down to the ocean or it's raining on a Tuesday afternoon and in your yard there's a little stream running from the sidewalk into the yard they look

the same even though the little stream in your yard is only one millionth the size of the river in the mountain okay rivers are fractal sand dunes are fractal the craters on the moon you know there's all the different sizes of craters those are fractal okay 80/20 is fractal there's an 80/20 inside every 80/20 and then there's another one and another one and another one so back to the screen these are more mathematical computer-generated patterns so so over here we have a triangle inside a triangle inside a triangle inside a triangle and they go on

infinitely 80/20 is fractal so it describes so the Grand Canyon the Grand Canyon is a picture of fractal 8020 s right because there's a big Canyon but then there's smaller ones and smaller ones and smaller ones and smaller ones all the way down to a microscope and it just keeps going and going okay the reason that 80/20 is true in business and marketing and sales is the same reason why the Grand Canyon looks like that the Grand Canyon isn't just one river it's a million little rivers its rivers inside of rivers so 80/20 is because

of positive feedback so let me give you an example of positive feedback you have fourteen-year-old boys and they both sit down on the back porch and they try Jack Daniels for the first time okay and they both like it but one of them likes it a little more thirty years later one of them has one drink a week and the other one has ten drinks a day right that's positive feedback he liked it a little more so we drank a little more so he liked that a little more so he drank some more and he

liked it and then 30 years later he's an alcoholic positive feedback it happens the same way as a river forms from wider running down a mountain the water finds a path of least resistance and then the river gets deeper and deeper and deeper this is how 80/20 works okay if we if we did a stand-up if you have more than one bottle of wine in your house 2 4 8 16 32 it would be true ok so I want to show you something pick a pick a number between 1 and 50 30 ok so I'm

going to show you an interesting little experiment if you'll show my computer screen here there are seven and a half billion people in the world and I'm going to use if if I say theirs if I say there's 200 countries and 7.5 billion people in the world then 8020 will tell me how many people are in every single country so if you put 8020 on a graph it looks like this and so so country number 200 is over there in the corner country number 1 which is China would be over here and as you get

close to the right side it zooms up with incredible speed okay yeah you said 30 okay if I mouse over number 30 it says country number 30 is gonna have 47 and a half million people now let's go take a look here this is the Wikipedia page countries by population okay and see what was that number the the theoretical number that it predicted was 47 million the actual number of people living in Spain is 46 million okay other words I picked a random number I know there's 200 countries I know there's seven half billion in

the world 8020 will tell you how many people live in country number 30 and it's accurate to within a few percent 80/20 is a law of nature and it's all over your life it is everywhere go back to the regular slides please so if if I put the world's population on an 8020 curve the black curve is the theoretical prediction and the blue is the actual people living in those countries or for example let's say that I read in the newspaper the Southwest Airlines very popular airline in the US has 15 billion dollars of revenue

and is number 171 on the fortune 500 I can plug those numbers into 8020 and I can predict the size of every other company in the fortune 500 and this is the theory and this is the actual so this is going on in your business right now it's in almost every spreadsheet it's the files on your hard drive 20% of the files on your hard drive take up 80% of the space 20% of the attachments in your email take 80% of the space now let me let me show you another example this these are the

top albums of 2012 Adele 21 Taylor Swift red one direction up all night now I want to show you something if I take all those albums I got this data from Spotify if I take Adele's album 21 and I rank the the songs from the least popular to the most popular the blue line is how many plays they actually got now if I take all of those albums all the top albums of 2012 and I say how many plays did track 5 get this is what that graph looks like if I say all the songs

on all of the albums of 20 type outcomes of 2012 this is how many plays each song guy do you see that this is exactly 80 20 whether I look at one album I look at track 5 on I'll all the album's or I look at all the songs on the album's they're all 80/20 and everything in your business is like this - if you can see this you'll have the ability to predict what is going to happen in the future so vilfredo pareto he's the first guy to figure this out I think he's one

of the 100 most brilliant people of the last hundred years and and greatly underrated people talk about Einstein people talk about you know the guys that discovered DNA or the you know the the people who discovered you know Thomas Edison Pareto is just as important as any of those guys because he recognized a fundamental law of cause and effect now with Pareto it was the wealth of the wealth distribution of countries he figured out that no matter what country he looked at 20% of the people owned 80% of the wealth and it didn't even matter

what kind of government they have or what kind of wealth redistribution scheme that they had it was still 80/20 well what people figured out eventually was that his discovery applied to lots of things it's in science it's in math it's in physics it's in engineering and yes it's in marketing and sales and business management and quality control all kinds of fields now what you see here is the academic version of it's called a Pareto distribution and I'm not gonna try to explain it I'm just gonna tell you that you kind of have to understand calculus

to understand what it's trying to tell you I don't think it's very easy to use it's kind of hard to understand it's not very useful and what I what I decided to do was I needed to change the way that it was presented I needed a way to show it this more intuitive to business people in a way that shows the fractal nature so I reformulated it lie this and so again you've already seen these curves but so so what what what the the old version does is it shows the concentration of value this shows

the quantity of value so these are visit this is the wealth of the people in the Forbes 400 okay and so if if if I go to the top if I follow this along the the theoretical amount of wealth owned by the the the Forbes 400 very closely matches the theory and you can see that the vast majority of the wealth is in this area right over here because it it zooms up into the sky at incredible speed so everything isn't on Earth is incredibly unequal now in school most of the time they try to

teach us to make things equal so we want you to get an A in history and an A in math and an A in science and an A in reading and an A in physical education but that's not how your life is gonna work the way your life is actually gonna work is you get an A in English or Italian or whatever your language is and you don't do math at all and if you got a C in math it doesn't really matter that much what matters is if you're gonna if you're gonna teach Italian

or if you're gonna teach English then you better be really good at that right because 20% of the classes you take are 80% of what you're actually gonna need in your life so this new way of presenting 8020 I came up with us 15 years ago and with some help my friends at performance strategies we just published this in Harvard Business Review this is the first time actually put the math out into a publication and we have we have a website eighty to eighty twenty curve comm where you can enter numbers and you can predict

what's gonna happen so I'm gonna show you some useful ways to do this so population of cities in Italy well the black is the theory and the blue is the actual reality donations to a church on a particular Sunday morning it's 80/20 the dairy output of Wisconsin counties so there's all kinds of weird random things and they all fit this pattern so though the way that you've been taught to think about numbers is very limiting in business everybody is teaching you the wrong way to think about numbers so when you have customers most people think

of their customers is all being the same the reality is is that you have one giant customer who's just as important as the next two put together who's it just as important as the next four put together who's just as important is it the next eight who's just as important as the next sixteen okay so if you have five hours today and you need to help some customers this is how you use your five hours you spend one hour serving customer number one you spend one hour serving the next two and then another hour and

the next four and the people over at the end they only get a little bit of attention they don't deserve a lot okay if you want to maximize your income maximize your sales maximize the impact of your marketing that's how you allocate your time y'all seen a curve like this the bell curve you you take a test in school and the average on the test was 77% and then a few people got a hundred and a few people got a thirty that's that's how everybody teaches you to think about numbers it's the wrong way to

think about numbers here's why so if the if you had a science test and the average was 77% here's the real question the kids that got a 77 on on their science test are they gonna be scientists not usually okay now if if we put the science capability of all those kids on an 80/20 curve it looks like this okay and if you look at this the top the best two students in the class practically speaking are gonna do more science in their life than the other 30 put together I think it was Bill Gates

or Steve Jobs said one good computer programmer can can get more accomplished than a hundred mediocre computer programmers Steve Jobs said you know a really good taxi driver is at best three times as good as a bad one but a really good computer programmer could be a thousand times more productive so in companies in markets in customers there's these tiny concentrations of huge value okay if I want to sell 50 shoes which is easier selling one pair of shoes to 50 of you or selling 50 pairs of shoes to one lady who obviously loves shoes

if this is one of the most important things you have to understand in marketing it's called the hyper responsive customer in every crowd there's a customer who buys everything they'll buy the most expensive thing you have they always want the biggest and the best or everybody's going to order one and they're going to order a hundred or everybody's gonna order 10,000 and they're gonna order a million so what's average is the wrong question everybody talks about average average almost never matters average is not the lever that turns things the right question is who are the

superstars and how super are the superstars so 80/20 applies to time productivity cash flows vendors so it could be which which vendors you buy the most stuff from it's also which vendors caused the most delays you're manufacturing a product and it has a hundred and fourteen parts and all the delays come from two vendors who can't get their act together everybody else is on time but they're late and you can't ship until you have all the parts 80/20 applies to customers and remember it's not just 20% of the customers it's 4% of the customers it's

1% of the customers 1% of your customers give you 50% of your money media channels there's a lot of media channels you can't deal with all of them you can't be in pen tryst and Twitter and Skype and snapchat and Google and Facebook and TV and radio you can't do that you have to figure out what's the 20% of the media channels that have 80% of the effectiveness or the 1% of the media channels that have 50% employees if you have 10 employees two of them accomplish as much as the other eight put together now

this is not what most people want to hear but it's true defects product defects 20% of the defects caused 80% of the warranty returns if you have a car there's probably like four things that go wrong with that car if they fix those four things the warranty returns or the recalls would go down less than half what it means is you only have to fix a few problems you don't have to fix everything the enemy of 80/20 is perfectionism oh I've got to polish this one thing it's got to be so perfect well there's usually

one or two things in your business that have to be perfect and everything else doesn't have to be perfect you have to apply perfection to a very small strategic am I am i applying my perfectionism to the one percent that controls 50 percent or am I just wasting my time am i procrastinating you know here's something very useful all of you in fact we're gonna do a little exercise here this is called the principle of the $2700 espresso machine now I noticed something very interesting I come to Italy I do not see Starbucks everywhere everywhere

else they go through Starbucks all over the place so this is a Starbucks example I hope you'll forgive me but it also applies to Lavazza or anywhere else okay 80/20 says for every $10,000 for every 10,000 cups of coffee that you sell for one and a half-year owes you'll sell one 2700 euro expresso machine it's almost a law of physics what 80/20 says if if I have this many people spinning a little bit of money one of them wants to spend a lot of money the money is burning a hole in their pocket okay so

here's the rule and I'm gonna have you guys do a little exercise this morning here's the roll 1/5 the people will spend 4 times the money okay now this is incredibly powerful in fact some of you you'll learn what I'm saying here you'll go home and you'll increase your business 50% overnight just from this okay so let's let's apply it and then I'll give you guys a little exercise to do together ok so if I have 10,000 people and they spent $1 1 1 euro 50 cents how many of them will spend 4 times how

many of them will spend 6 1/5 the people will spend 4 times of money two thousand people will spend six so in other words if 10,000 people will buy a small coffee mm I'll buy a six dollar fancy latte with foam in it okay well so how many people will spend 24 how many four hundred okay how many will spend ninety six eighty and sorry sorry I'm kind of mixing this up here so if 80 will spend ninety six how many people will spend four hundred sixteen right and how many people will spend sixteen hundred

but about three you see that this is true and here's the important part you don't need any more new customers to do this this is all from the same group of customers okay so I started out with 10,000 customers spinning a 150 that's the hard part getting 10,000 people to spend a euro and a half that's the hard part that is customer acquisition okay all you have to do to get 2,000 of them to spend six is to have a six euro product all you have to do to get eighty people to spend 96 is

having 96 euro product and if the product seems valuable to them this is how many of them will buy it if if you predicted that 80 of them are gonna spend 96 and they didn't it means your ad is wrong your offer is wrong the product is wrong because I guarantee you 80 of your people want to spend ninety six euros and I guarantee you three of your people want to spend sixteen hundred euros it's like a law of physics this is incredibly powerful so if you have a small let's say you have a small

company like you're a web design agency or you know this is especially useful for small companies it's like well I have 10 clients who each give me a thousand euros a month and I make ten thousand euros a month okay one of those clients will spend 8,000 euros a month all you have to do is have a product or a service that costs 8,000 euros a month that they think is a good deal and they'll buy it I have lots of customers who have they've gone from struggling in a small agency or consulting firm or

service company to actually making pretty good money so like for example I have a a guy named Daniel in Spain and he he teaches a program called Camtasia any of you know the Camtasia computer program and and he was selling these smaller packages and he figured out oh wait a minute I need a I need a twenty-five thousand dollar product and he put that together and he had a big company come and buy it from him they were like well we don't we don't want to buy Camtasia training for all of our employees we want

somebody to come in here and train us and and and and put together a program for us so we did that and he immediately increased his money then he had a son with some medical problems and he was able to buy his son some medical treatment that he couldn't afford before so I'm gonna do an exercise here if you can guys get the the people running the show if you give five minutes what I want you to do I want everyone to find a partner just pair up to people and I want you to exercise

the espresso machine principle and here here it is what espresso machine if I created in my business with customers by that we are currently not selling right now you understand if I have a if I have a coffee shop and I am selling all of these you know 1 euro 5 euro cups of coffee and I don't know that one customer and a thousand will come and spend 2,000 euros on an espresso machine I'm leaving a lot of money on the table you might actually find out that all of your profit at the end of

the year came from selling espresso machines and that if you didn't have an espresso machine you wouldn't even be in business so I want you to hair up and I went I want you to talk about what is the missing espresso machine in my business okay you got five minutes and then we'll come back in five okay good thank you so is that stimulating could I get anybody to come up and tell me what you came up with anybody come up with a really interesting idea can I get a volunteer to hey we we were

we really came up with something cool anybody don't be shy yeah yeah yeah come up welcome good morning your name is Leticia what did you find I am a doctor oh so I have to apply this to my patients yes right yes so if a medium consultation is 125 euros mm-hmm and I have a hundred patients yes yes yeah any patients mm-hmm will be willing to pay 500 euros right that's right 100 spend 120 rate than 500 135 to make it easier 125 yeah 20 patients will pay 500 yes and for patients yeah would pay

mm yes free surgery Frank yes and 0.8 we paid yes 8,000 yes which is true so I have to make this confirmation yes yes probably you know something in the in the five to ten thousand range right okay so what what do you think people would like for that yeah I have to think about it well so let's let's talk about it right so so this this could be this basically the same thing but much much better right a much better version so so so it in in in the US we call this can see

Aaron where you don't stand in line right you get higher priority everything is done for you mm-hmm right you like like usually with medical care I have to go to this place I have to go to this place I have to do all these things but you you pull it all together in one place and here's another thing that could work is you could sell it you could sell a membership or a subscription you do what so like five 500 a month perhaps and to have services they get a certain level of preferential treatment and

affluent people they want to move to the front of the line yet yesterday I went to Duomo and I bought the skip the line pass right so in your practice do you have a skip the line pass not yet well you can have one yes right good never hit give her a hit I have a question yes I was thinking thank you if I make an event for example and I have hundred people to come to my event the first time I will give it for free and then I will ask for a prize for

the following okay yeah I was running the price the higher the first prize and the more the twenty percent of the people who come will be willing to pay does that work that rule so for example if I make them pay they pay ten dollars to come to the first free event yeah so 20 percent will spend $40 which is very low right and to make a $2,500 event I have two very little people yes of those 100 who spent very little money the first time will come so I have to higher the price of

the first time to make more people spend more money or not does that work okay so that's it that's a that's a really great great question so so when when you are introducing something new you have to decide do I want quantity or do I want quality right so so if if you charge 10 euros for an event and you get a hundred people to come what you're doing is saying I have a hundred people that think this is worth some money like it's not free but like they they are actually I we call it

skin in the game and the United stright usually usually if you're trying to make a profit that's not the best way to do it because what you're acquiring customers remaining meneka phrase to make a 500 dollar event right so if i want to get right to the 500 dollar rent the first event will be i will have to sell it for not so cheap but well or you could sell it cheap or you can just say I have this audience I'm trying to make some money I'm just gonna sell something expensive so you you can

have something that's 6,000 right out of the gate and maybe you're just trying to get one person or two people now most of the time when a business is new this is how they actually pay their bills so I worked the other way around it started from here to get to here it's a pet it depends on if you're trying to make money first or if you're trying to build an audience first so so building an audience I have to go the notches but I have to get here so to work it out I have

to find my audience from here you have to have an audience and so and so so I hear a lisp it this way because this is this is a great question it's worth it's worth spending time on okay so okay build an audience make a profit okay these are actually kind of opposing goals okay so if you want if if having an audience who's listening to you they come to your workshop then you Church 10 okay if you're trying to make a profit and you and you do big ok make a profit you charge 500

and you do small ok what 80/20 says is money is made from small numbers not big numbers money is made from small numbers not big numbers this is huge mo so and this is always true like you have a little tiny restaurant on the corner of the street and hundreds of people go in there but they make half of their money they make from 25 people like there's a story about a guy who bought an Irish pub and what the owner tried to tell so he bought it from the previous owner the previous owner tried

to get the new owner to understand we make half our money from four guys if you just like it's a little tiny pup right if you keep these four guys happy this business will and he's like oh I'm gonna have all these new beers we're gonna have all these craft beers we're gonna attract all these people he goes up business because he's not making his for guys happy right so now if you so let's say you have a hundred people spend 10 euros ok well so you collected a thousand euros well frankly you you probably

spent a thousand euros just to have the event you didn't really make any money but at the event you can sell to fifty one thousand twenty five hundred services because they're listening to you you don't make money on the event you make money at the event now if you're but if you're small and you don't have an audience at all and you have to eat like you have to buy groceries you probably do this so does that make sense all right good give your hands thank you anybody else anybody else want to come up and

do a talk talk to me about what do I have one more volunteer just one okay I'll move on so let's see oh I think I would there we go thank you all right next so this is a Google AdWords account and these are the keywords so skin care skin products skin creme skincare skincare exact match skin care products exact match if you look if you look at these columns you have four thousand two hundred clicks on this keyword then you have a thousand seventy one clicks nine hundred twenty three clicks the number of clicks

in your keywords is eighty twenty now one of the things eighty eighty twenty applies to is your time so I say there are there's four kinds of work there's ten euros per hour work there's 100 euros per hour so what's $10 you're ten $10 ten euro an hour work it's things like running errands I'm gonna go to the office supply store and buy some pens and pencils I'm gonna sit down and I'm gonna pay some bills I'm picking up the phone and calling prospects trying to sell them something and I don't have any relationship with

them I'm a salesperson doing my expense reports okay I'm cleaning my office that's all ten 10 euros an hour work okay then there's a hundred euros an hour work I'm solving a problem for a perspective or a current customer I'm talking to a qualified prospect like I know I should be talking to this person they have a level of interest in buying something I'm writing an email to prospects or customers and the people are already on my email list I'm doing marketing tests or marketing experiments so when she was up here and we were talking

about well are we gonna do this are we gonna do this her working on that that's at least easily $100 an hour work then there's thousand-dollar thousand euro an hour work well planning and prioritizing your day you know most people they start their day they just dive in they just sit down at their computer and they start answering emails and they start reacting to stuff if you stop you slow down and you say what do I really want to accomplish today what are the 20% of my activities that are 80% of what I really want

to do here's a here's a good one what one thing if I did that one thing today I could justify taking the rest of the day off that question always exists then there's thousand there's 10,000 euros per hour work what's that so let me ask you a question let's say you're buying a house and the house costs 200,000 euros and you negotiate you spent an hour negotiating with the seller and you get it reduced to a hundred and ninety thousand euros how many euros did you make in one hour you made 10,000 euros an hour

any negotiation is like that and it makes you uncomfortable like well I don't really enjoy doing that it's worth a lot of money it's like it could take you you could take you a year to earn that money some other way creating new and better offers for your business so the timesheet the the lady that was up here the doctor that was up here if she figures out how to build an espresso machine in her business figuring that out that's 10,000 euros per hour work public speaking selling to high-profile customers so if she she has

her seminar she charges 10 euros she gets a hundred people there probably her speaking to those people and explaining the medical procedures that's probably 10000 euro an hour work talking to those people it's very very important and valuable even a 20 euro an hour person makes thousand euros an hour at least one minute of the day so let me give you an example I have a friend who does dentist seminars so it's just like this and everybody's a dentist and he plays a trick on him he caught he calls their offices and he records the

call so Johnson Dental Associates can I help you and they say yeah you know I my wisdom teeth are hurting I need to talk to somebody and the lady says just a minute and she puts him on hold and then the hold music plays so what this guy does is he says so dr. Johnson is in the audience he says and dr. Johnson does not know this is gonna happen he says so we call dr. Johnson's office here's what happened and they play the phone call over the speakers and then they put the pen I'm

on hold and then 500 people sit there and listen to hold music for three minutes while dr. Johnson crawls under the table and hides okay now if a person is ready to spend 3,000 euros on dental treatment and they get put on hold for three minutes and they hang up and they call the next dental office how much money did the dental office lose for putting somebody on hold like how much money did the dentist spend on advertising marketing publicity phone books internet listings Google Facebook and then the call comes in in the end and

a 20 euro an hour employee doesn't think it's very important and you lose a customer how much does that cost what you want to know it's some thousand euro and our work is mystery shop your own business like have somebody call the business and pretend to be a customer and record what happens it will make you cringe and you'll fix it and oh you'll probably fire somebody right I mean you know I'm telling you the truth true even a $20 an hour person makes $1,000 an hour or at least one minute of every day very

important things happen in short periods of time I'm gonna come back to this in a couple of minutes this is a very interesting one but I want to do this in the next section how many of you have taken the marketing DNA test give me a show of hands a few people in the room so I believe you guys should have got an email giving you access to that test and there's also a link there's a link in the 80/20 book where you can take it free we sell it for $37 us but there's a

backdoor in the 80/20 book where you can get past that you don't have to pay everybody has to sell even people who don't sell ok so computer programmers secretaries doctors waiters waitresses bartenders marketing managers everybody sells why do I say that everybody has to get other people to cooperate with them no matter who you are the question is how do you do it so I've worked with thousands and thousands of marketing people and sales people I've seen people sell all kinds of different ways so for example there's a kind of salesperson I call them a

hostage negotiator you put them in a room in a dangerous situation or a high-stress situation they will somehow work it out they'll get the other person they'll work out a deal they'll just do it and you're not even sure how they did it and they usually talk really fast and they're all enthusiastic and they're really emotional and they just manage to get it done ok so that's one way that some people sell ok here's another way that some people sell any of you ever know somebody they sit in their cave and they spend like two

months writing emails and sales letters and then they press send and a whole bunch of money shows up you may ever seen somebody do that okay or maybe they somebody orchestrates a giant product launch with all of these partners and promotions and everything that that's a way of selling or how about how about a person who meticulously directs and edits video until it's just right and then they put the video out there and they send out the email and here comes a whole bunch of money okay or how about a person who gets in front

of a seminar with 500 people and sells them a big idea so you see all of these are different ways that people sell what if there's a way that you sell but you don't know what it is so in my first job my first sales job I did not understand there's a certain way that Perry Marshall needs to sell and Perry is trying to be Fred and he can't do it very well Perry is trained to be Wally and he can't do it very well Perry is trying to be Zig Ziglar Perry is trying to

be Steven Covey Perry is trying to be how many of you have like tried to be somebody you're not in sales it's it's a good way to kill yourself like really I mean when I was dying I mean I remember when I had the sales job I've been in it about a year and a half and nothing is working I'm not getting very much commission my boss is frustrated with me my deals are falling apart my credit cards are spiraling out of control have you have you ever asked yourself the question I wonder when they're

going to stop sending me these credit card offers anybody relate to this like when does this come to an end I'm sure this is not gonna last forever right and like the debt keeps going up I was i I had so much stress I was getting sick I was getting mono mononucleosis and my wife is sending me to the doctor and he's like boy you're under a lot of stress and like well I don't know what I'm supposed to do about this like you know like I got to feed my family I've got a you

know a one and a half year old baby here I don't know what I'm supposed to do so I just keep trying harder okay if you're trying as hard as you possibly can and it's not working you're probably you're selling the wrong thing and or you're selling it to the wrong people or you're selling it the wrong way so let's talk about number three selling it the wrong way so I created this marketing DNA test and there are there are eight there are eight modes of selling okay so a producer a producer is a person

who sells based on this is reliable this is dependable this follows the steps and they use the steps to sell it okay so they will check all of the boxes and when they're when they're organizing their own their own sales process they will check all the boxes okay so not only this is how they do it but it's what they try to sell to the other person our product checks all the boxes our product meets the standards our product is endorsed by all the right people okay that's a producer okay a producer the they get

their ducks in a row okay an alchemist an alchemist is always trying to show you something you've never seen before this is new this is innovative this is groundbreaking this is breakthrough we've put this together in a new way that you've never seen before that's an alchemist now a producer in an alchemist or kind of opposite of each other right the the reliable and the dependable versus the new and the innovative okay so there's the first two modes of selling okay all right then you have recorded verses live what do I mean by that so

there's a live salesperson they work in the moment they don't work off of the script they don't even have a plan they're just you get them with another person and they they just go okay now there's a different kind of salesperson I call them recorded and that's they want to edit the video they want to write the email they want to write a book they want to create the brochure they want to get it all lined up they want to get it edited and perfect and then put the sales message out okay so a live

person is typically a face-to-face sales person and a recorded person is typically a marketing person they want to sit there and they want to get the message right okay so there's that's the next two modes of selling okay all right then you have words and images okay there's people who sell with words they tell stories they'd like to get the slogan the elevator speech I'm a words person I write books okay I sell a lot better writing books then I sold knocking on doors visiting companies and trying to convince them to buy stuff okay you

have people who sell with images they sell with pictures they're going to show you something look at this look at this Porsche look at this Ferrari look at this look at this beautiful chart look at this beautiful graph people sell with pictures they're visual okay then you have analytics and empathy there's people who sell with charts graphs numbers proof scientific studies case studies white papers right okay and then there's people who sell with passion they sell with emotion they tell you a story they pluck your heartstrings they make you laugh they make you cry does

this make sense so you have these eight different things I have found that everybody is some combination most people you take two or three of these and you put them together and this is how you sell and usually there's two or three of these that are not how you sell if you know this you will save years of pain and suffering years when I figured out so I am a word alchemist I tell store about what's new what's breakthrough what's innovative so like I discover vilfredo pareto but I discovered that there's this thing that nobody

ever talked about which was Pareto's principle was fractal that there's a Pareto inside a Pareto inside a Pareto inside of Pareto in fact maybe we should have little vilfredo pareto russian dolls and we can have you know a little tiny one and then a bigger one and the bigger one and then then everybody will understand you know 80/20 inside the 80/20 right this is how I roll right but I work with other people you know they're a they're a live alchemists that's usually the hostage negotiator if you take the marketing DNA test it will tell

you how you sell and then you say okay so I'm gonna I'm gonna concentrate so if you're a writer so let's say let's say you're a writer you're yura which would be a recorded words person if you are high recorded and high words than you're a writer if you're a writer you will get more benefit from going to a writing class then you will from going to ten sales trainings where they teach you how to sit down in front of people and talk to them because your strength is 80/20 the 20% of your ability has

80% the the 20% of the things that you can do have 80% of your effectiveness and so when you invest in that small number of things you will get a big return on investment I'm a good writer but if I invest time and money in becoming an even better writer even a little bit better you have the principle of the slight edge if I could get 10% better at writing I move ahead of 50% of the writers seem with like you could be editing video let's say you're a your your a recorded images person that

would be perfect for a video editor or video producer or a film director or summat you're gonna sell on YouTube or Instagram or something like that okay so you exercise that ability so I would encourage all you take the marketing DNA test again there's a link inside the 8020 sales and marketing book let's talk for a few minutes about traffic and lead generation so show you a shortcut from the 8020 book so everything in marketing is in this triangle so the first thing you need in marketing is traffic t4 traffic okay if you don't have

traffic I mean you could be a shoe store you could be a restaurant you could be a website you have to have traffic otherwise you get nothing okay then you need to convert the traffic conversion is I'm going to say something I'm gonna say the right thing and they're gonna decide to buy what do I have to say to get somebody to buy and then I have economics what do they buy and how much do they spend traffic conversion in economics there's one thing that's missing and that's 80/20 but 80/20 in the center so marketing

as sales works like this you get some traffic you convert the traffic you get money from the traffic that you converted and you reinvest the money to get more traffic and if you can if you can make a profit then this will go round and round and round and your business will get bigger and bigger and bigger and bigger and you'll be a millionaire okay if if you put one euro in and you only get 90 cents out and then which turns into 80 which turns into 70 then you're losing money and you're gonna go

out of business so your job is to make every time you go around the circle you make a profit and if you can do that then you're in business so now every day when you wake up you have a every marketer every salesperson has a very simple question that you need to ask I just woke up this morning I opened my eyes I looked at the ceiling I'm starting a new day am I going to get more traffic or am I going to work on my conversion or am I going to work on my economics

now write this down very important you can't fix bad economics with more traffic if you have bad economics and you get more traffic you just lose money faster okay if you're losing 1 euro every time you sell a product selling more will get you to bankruptcy court faster now this every every experienced marketer eventually has to learn this well I've got I've got a million visitors to my website and I've got this best sales pitch in the world but the product doesn't make any money or we think it's making money and it's not this happens

all the time and the faster you sell the product the Digger you dig yourself in a hole ok so then I have 8020 in the center everything in marketing is in this triangle everything that exists public relations web traffic all the different internet platforms for Instagram or YouTube or whatever everything that you sell and all of these are 80/20 now let me let me show you something inside every one of these is another traffic conversion in economics okay let's say this is a Google ad how many of you have ever used Google Adwords I'm curious

okay how many of you have ever used Facebook advertising raisi okay a lot of people okay so let's say let's say this is a Facebook ad okay so T traffic that's the number of people who saw it in the news feed okay it's the number of impressions okay conversion is the number of people who clicked on the Facebook ad like we're just we're just we're we're only talking about the traffic right we're not we're not talking about whether you convince them to buy your product we're not talking about whether they buy your product we're only

we're only on Facebook here but there's a there's a there's a t a/c entity of just Facebook this is the impressions this is the clicks this is the people who clicked on your Facebook ad and this is the cost per click let's say it costs 1 euro per click that's the traffic conversion economics of a Facebook ad it's fractal traffic conversion economics now why is there there's also an 80/20 inside of Facebook why is that well because 80% of your traffic comes from 20% of your facebook ads 80% of the cost comes from 20% of

your Facebook campaigns 80% of the clicks come from 20% of the people there's 80/20 everywhere so let me talk to you about a tradition a traditional sales funnel and then I'm going to talk to you about a when we come back after the next break I'll talk to you about a more up-to-date version okay so here's a really traditional sales funnel and it still works you have a Google ad you have what in the United States we like to call it a squeeze page but it's it's a signup page it asks somebody for an email

address so performance strategies has one of these for promoting the seminar hey we're doing this huge seminar in Milan if you would like a series of videos and interviews and updates and tips and tricks and strategies sign up on our email list and we'll tell you all about this as we head towards September 29 right okay y'all signed up for something like this to get here okay then I call it Chinese water torture drip drip drip drip drip drip I do it with email right here's another email here's another email now people have the wrong

idea about Chinese water torture they think they think they're supposed to get a sledgehammer and slam the person on the forehead no no no no no no you're seducing them you're drawing them in you're telling them stories now here's one of my rules about email or any any kind of media 80% content 20% selling a lot of people get this backwards they try to do 20% content 80% selling people get tired of it and then they hit unsubscribe there's actually something worse than an unsubscribe you know what it is it's called I don't see your

emails anymore they're still there but they're invisible and like you have a very sophisticated little system in your brain that just doesn't see it right and when the person doesn't see your email anymore you're done right they don't click they don't open maybe once every six months you might get their attention but mostly they're just gone but there's another way it can happen what happens if every time they see your name on one of those emails a little bit of happy juice squirts in their brain I always like emails from that guy I always like

emails from that lady then you can do benevolent Chinese water torture oh I like it I like it I like and then you're like water wearing its way through the Grand Canyon and eventually you know wieder eventually gets through granite right okay so you have an ad it could be a Google ad it could be a Facebook ad then you have a squeeze page then you have your benevolent Chinese water torture and then you have a sale well what I'm going to talk about in the next session after you guys get back is this is

nice in the traditional world of a desktop computer and everything is written by email like six that's great but what do you do in 2018 what do you do when you've got literally 50 different media channels but I've got snapchat I've got Instagram I've got Penn tryst I've got whatever social media stuff they have in Europe that Americans don't even know anything about right everybody's on a smartphone everybody's on an iPad they might not use their email very much what do i do then that's what we're gonna talk about when we come back from the

break now I want you to be thinking about this because the 80/20 principle is still gonna be true okay so so let's say there are let's say there are 50 different media channels you could be in would you agree that 80% of your effectiveness is gonna come from 20% of the media channels do you agree is that gonna be true so how many is that how many is that 10 right now do you also agree that 80% of the 10 is gonna come from 20% so how many is that - okay so there's 50 media

channels but at least half of your results are going to come from two of them so therefore you don't have to be an expert in 50 media channels now there's always like there's always some social media person they're like you need to be a Pinterest and you need to be on skype and you need to be a zoom GoToWebinar you need to do live seminars you need to write a book you need to you need to do product launch you need you need it right and they'll just kill you okay we're not doing that so

uh not going to do that anymore hi this is Perry Marshall if you enjoyed this video please like and share it with your friends