Many of you have heard of “the 80/20 rule”. We refer to this term a lot, because it’s something we use a lot. We even called it out in our recent article, Don’t be afraid of CX. After we posted this article, several of you asked, “How do you use the 80/20 rule to move toward CX success?”
This article will answer that question.
Introducing the Pareto principle (i.e., the 80/20 rule)
The 80/20 rule is more formally known as the Pareto principle. First noted in 1896 by Italian economist Vilfredo Pareto, the principle states that about 80% of results come from 20% of effort.
In other words, 80% of your effort will yield only 20% of the results.
Stated this way, this principle seems wildly inefficient and, quite frankly, unfair. Who would want to spend $80 only to make back $20? If this is how the world around us works, many of us should rethink how we work!
Well, dear reader, that’s exactly what we did.
Inversing the Pareto principle
All of us face challenges within our work. Instead of giving in to these challenges at first glance, one needs to look at them more closely to see the fortune to be reaped. In this case, we can flip the Pareto principle. By doing this, our phrase changes to:
20% of your effort will yield 80% of the results.
Now this is an investment we can get behind! Most people would agree that spending $20 to earn $80 is a highly efficient and impactful strategy.
But of course, the world is more complex. To reap this generous reward, one has to answer a very important question:
How do you define the critical 20% of effort that will yield 80% of the results?
That, my friends, is where it gets CX-y.
Defining CX Impact
Perhaps it’s best for us to take a moment and consider what we mean by impact. One definition describes impact in this context as “a significant or major effect.” This perspective causes us to ask, “A significant or major effect, on what?”
In our case, the what is usually business. More specifically, impact is about meeting or exceeding our business goals (i.e. increase revenue, decrease costs, etc.) Even more specifically, it’s using CX principles to meet or exceed business goals.
So, step 1 in uncovering the critical 20% of effort is clearly defining business goals; this is one of the first steps we undertake in all of our client partnerships.
Once you’ve defined goals, you need to set a baseline, or measure where your business is in relation to your goal. This allows you to understand how much impact you need to make to reach your targets.
Therefore, step 2 is uncovering the critical 20% by choosing and measuring initial metrics to define your starting line. During our collaborations, we center our work around a set of critical CX Metrics that showcase CX Impact (or lack thereof).
With your business goals and relevant CX metrics defined, you’re partway to defining which of the many efforts you have in your backlog that will produce 80% of your desired results.
Getting the rest of the way there will take some informed trial and error.
Estimating CX Impact
With goals and measurements in place, it’s time to review your efforts with a critical and trained eye.
For each effort in question, ask yourself: Is the result of this effort important to our business? How much will it matter to our customers? How costly is it? (You can read more about this process in our Now, Next, Later Framework article.)
In this review, you’re doing the best you can to estimate which efforts will have the most impact. At the end of this process, you’ll have a list of features or efforts ranked by their assumed impact.
You could easily take the top 20% of these efforts, implement them all at once, and hope you get the 80% of outcomes you desire. However, we don’t recommend this approach. It introduces too much risk and variability – and quite frankly chaos – into your business functions.
Instead, we recommend working on the first one or two efforts. Look for changes with potentially high impact on business and customer success but low implementation costs.
Once these have been implemented, measure the impact. Did you see the result you expected? If yes, keep going. If not, investigate to find out why. Then, use your findings to change course.
Iterating to find CX success
As you iterate through your efforts, measure their impact, and then make data-based decisions, you narrow the target on the critical 20 percent.
The key is that you are no longer guessing your way to CX success. Instead, you’re using data and observations to drive efforts that create an impact.
This process saves you time and resources because you are no longer trying to accomplish everything all at once. Rather, you are focusing on efforts that produce real results. As the 80/20 rule shows us, the more you can hone in on the 20%, the more impact you’ll see.
