Notes from the book: 80/ 20 Sales & Marketing by Perry Marshall (available on Amazon, click here)

80/20 as a fractal (1)

  • 80/20 applies to many many things, maybe not in the exact number 80/20, but the pattern is the same; most commonly, 80% of revenues come from 20% of customers.
  • 80/20 is a fractal rule meaning that it can be applied over and over by “zooming in” on the top 20%, again & again:
  • 80% of profits come from 20% of customers
  • from that 20% of customers, again 80% of those profits, come from 20% of those customers (i.e. 80% x 80% of profits, comes from 20% of 20% of customers, 64% of profits comes from 4% of customers)
  • apply exponents: (20/80)^n

Rack the Shotgun (2)

  • “rack the shotgun” with your customers. This means to set a trigger in your audience to see who’s actually interested in what you’re selling. Focus on those people, forget the rest.

Get customers (4)

  • become an expert in a topic and offer a cheat-sheet for free in exchange for data (e.g. email addresses)
  • generate leads by solving problems, instead of advertising product features
  • become an expert in one sales channel (e.g. Google ads), but then diversify

Power Triangle (6)

  1. Traffic: eyes on website/ product
  2. Conversion: convince viewer to take action
  3. Economics: provide value in exchange for value

  • 4 questions to ask of any new idea:
  • Who would buy this? (T)
  • What can we say to persuade purchase? (C)
  • Can we reach them affordably? (E)
  • Can they gives us money? (E)
  • To develop a sales funnel, start at end and work backwards; e.g what would people want to buy? then work backwards to create C and T.
  • Sell results, not procedures; sell complete packages that simply solve the total problem with minimal friction for customer.
  • Keep developing new products and ideas to keep cross-selling top customers.
  • Purchase qualified lists for warm leads (never cold-call); “response lists” have already racked the shotgun:

Target the right customer (7)

  • 5 questions to ask about your target customer:
  1. Do they have the money?
  2. Do they have a bleeding neck? Do they have an urgency to solve a problem? A pain or great inconvenience?
  3. Does the USP appeal to them?
  • what does my product do better than others?
  • why buy from me versus someone else?
  • what guarantee can I offer than nobody else can?
  1. Are they the right decision maker for my offer?
  2. Does my product fit in their overall plans/ strategy? Is my product a no-friction add to their business?
  • Make headlines speak to pain points
  • Sales formula: find problem → agitate problem → solve.
  1. make sure to spend time on agitating the problem, really make it clear that it’s painful.

What’s unique about your USP (8)

  • 4 questions your USP can and should answer:
  1. Why should I listen to you?
  2. Why should I do business with you instead of anybody else?
  3. What can your product do for me that no other product can?
  4. What can you guarantee me that nobody else can guarantee?
  • Examples of things that can make you unique:
  1. Service: Guaranteed friendliness. Guaranteed Delivery. Guaranteed live feedback, etc.
  2. Unique market: e.g. only companies with 10 or less employees.
  3. Product is unique
  4. Experience is unique
  5. Price is unique

Test & optimize (9)

  • Fixing a sales funnel requires it to be broken into its individual components and testing each piece
  • Serial split test your sales funnel:
  • 2 adwords ads
  • 2 landing (opt-in) pages
  • 2 sales pages
  • 2 order forms
  • Doubling each step results in 16x improvement (tripling results in 81x)

Expanding & diversifying (11)

  • focus energy on the 80/20 graph from the highly profitable customers to the low end
  • build a solid, reliable sales funnel, then get to branding and exposure
  1. test sales funnel with paid search traffic first
  2. verify with email promotions
  3. take it to affiliates and partners
  • once you establish the best sales funnel, you can buy traffic from others

Make more from each customer (12)

  • 20% of the people will spend 4x the money (you’re currently charging them)
  • 4% of the people will spend 16x the money (you’re currently charging them)
  • Multi-dimensionality of the power curve:
  • Repeat buyers: 20% of repeat buyers are responsible for 80% of repeat purchases.
  • Money: 80% of overall revenue comes from 20% of buyers.
  • Quantity: 20% of the orders represent 80% of the quantity.
  • Diversity: 20% of the orders represent 80% of the diversity.
  • If your business does not have a range of product offerings (100:1), you’re missing out on opportunities to sell to existing customers
  • what problem can you solve that nobody else can?

Power Guarantees (13)

  • If it doesn’t make your stomach churn (because it’s so crazy), it’s probably not an awesome guarantee.
  • If you won’t take take the risk, why should your customer?
  • But make sure to establish some disqualifiers to attract the right customer:
  • They must follow all steps necessary to use product.
  • They much obe instructions and cooperate with you.
  • You must have a defined process for determining whether or not all steps were followed.
  • All steps must be laid out, simple, in black and white.
  • Determine whether the customer really is a fit before exchanging any money.
  • Master formula for a Power USP: If you are _________ (qualifying type of customer) and if you ___________ (commit X dollars and follow steps Y and Z), then you will achieve ____________ (specific results) or else ___________ (penalty to me, your vendor).
  • A power guarantee is pretty unusual in B2B sales, but when you do it, you should phrase it such that nobody can ignore it.
  • Customers who want the cheapest solution right now are usually the worst customers.
  • Sell results, not procedures.

Focus on strengths (16)

  • email 5 friends and ask:
  • what is my unique capability?
  • what do i naturally do better than most people?
  • plus any other thoughts?
  • Make your company culture one where you call out people’s strengths.
  • Also create a hate list of things you hate doing, and find team members who love doing those to build a balanced team.

Polarize your market (20)

  • No matter what market you are in, there’s a controversy about something; pick a side that you’re passionate about and start advocating
  • If you’re not willing to take a stand, you’re boring
  • There’s nothing more powerful than selling against an enemy; the existence of a common enemy creates a market
  • It’s hard to sell sanity and reason; it’s much easier to sell fanaticism and reactionary behavior
  • The best rallying point for your own cause or position in the marketplace is strong opposition
  • To take on opposition, begin by immersing yourself in their world so thoroughly that you can pretend to be one of them

Market Research in an Afternoon (21)

  • Before you develop a product, you need to find out if people want what you’ve got
  • If you could advertise on only one keyword phrase online, what would that keyword be?
  • Describe your business in only 1 search phrase; what would it be?
  • You can’t become “king of the mountain” until you identify what mountain you’d like to climb
  • Once you know the keyword, visit the following sources and take notes in a document:
  • monitor twitter for tweets that meet the 3 points below:
  • represent frustration in the market
  • express direct benefits of a product or service
  • suggest a wish the customer may have
  • monitor Youtube for the same topics
  • use Google Blog Search and Technorati to find highest profile blogs on your keywords, read articles and pay attention to comments
  • go to to monitor keyword alerts
  • Collect all info in documents, and highlight top 20% which seems longest, most engaged, or most passionate → this provides insight into market gaps
  • Notice patterns, or missing things in the market, or contrarian position that may be suggested by the data
  • Look for a critical need that might distinguish you from every other competitor; this becomes your “point of difference”
  • Additionally, seek out language from customer’s comments and posts to echo it back in your sales/ marketing material
  • Send the following survey to your customers or prospects:
  • WHAT’s your single most important questions about [keyword]?
  • WHY is it important for you to find a solution?
  • HOW DIFFICULT has it been for you to find a good solution until now?
  • With the responses, keep only the “very difficults”; discard short answers and focus on long answers. Now you know what problem to solve.

Focus on a few metrics (22)

  • A short list of things to focus on:
  • money in, money out
  • click thru rates of google ads
  • conversions of specific keywords to sales
  • opt-in and lead generation pages
  • sales pages and order forms
  • individual traffic sources (affiliates, banner ads, etc.)
  • If your sales process doesn’t work, break it up and make the pieces work
  • If you have 12 products and 12 keywords, you’ll have a 144-box matrix of metrics to measure - not possible
  • Reduce your tracking dashboard down to only a few metrics that comprise the largest section of your matrix based on effect:
  • top 2-3 keywords
  • top product(s)
  • top 3-4 pages on your website
  • top sales funnel steps
  • Figure out what the main thing is and keep the main thing the main thing
  • Once you’ve optimized, move onto the next thing:
  • a deluxe version of your product at 4x the price
  • focus on an unmet need with pent up demand that nobody else in your market is addressing
  • if you perform a service, sell a product that teaches them how to use it; if you sell a how-to product, perform the service
  • if you’ve tapped out your existing market, take your skills into a new market
  • repackage your product or combine it with another to create more dimension of value
  • if you sell something on a one-time basis, turn it into repeat purchases with a membership

RFM: Recency, Frequency, Money (23)

  • Pay attention to customers who pay attention to you
  • Recency: how recently has your customer purchased from you? e.g. who’s purchased something in the last 90 days?
  • Frequency: How often has your customer purchased? e.g. repeat buys
  • Money: how much has your customer spent? e.g. who’s spent the most?
  • RFM is a 3-d model; each variable along one axis, forming a cube. Focus on the small fraction that provide the largest disproportionate results
  • How to do it?
  • rank customers from most recent to least recent
  • most frequent to least frequent
  • most money to least money
  • score each customer for each parameter (R, F, M) from 1-10
  • only focus on customers with a combined score of 20 (R + F + M ≥ 20)
  • Have an expert analyze your customers; send your customer list to, and they’ll provide you detailed demographic and psychographic data
  • Segment your email lists according to those customer’s interests or purchasing habits, then formulate specific messages for each of those subsegments
  • Infusion soft is a good tool to use for doing so

The final book chapters focus on using your newly found marketing genius to do well and give back to those less fortunate.

Here’s a link to the book on Amazon, well worth the purchase.

The End