The Pareto Principle: the 80/20 Rule and How It Works

Posted by on Jan 27, 2012 | 3 Comments

Chris Pirillo, the lead Gnomie here at LockerGnome, has chosen a new direction for our organization. I call those of us who gather here at LockerGnome an organization, because we are a group of organized geeks who share a common thread. That common thread is our desire to share our experiences with technology with one another.

In order to better achieve this goal, LockerGnome has introduced a new Gnomies value section. This section ( a feature that is provided for a modest $97 a year) is intended as a way to stimulate other geeks by sharing and distributing information. However, this section will also be informative for those who are hoping to learn more about what technology has to offer them.

That being said, I am one of the registered Gnomies and as such have been visiting this site on a regular basis. I feel that this site is extremely valuable and what recently piqued my interest was a question from Jay Rimmer:

Chris Pirillo, just heard you talking about 1,000 fans; do you have a link to that article? Kind of interesting, I do believe a lot in the Pareto Principle, also known as the 80/20 rule.

This question made me wonder just how many others in the LockerGnome community were aware of the Pareto Principle, (aka: the 80/20 Rule) and how it supposedly works. Jay Rimmer’s explains (with some help from Wikipedia):

I’ve taken these examples from Wiki on the link above: 80% of your profits come from 20% of your customers; 80% of your complaints come from 20% of your customers; 80% of your profits come from 20% of the time you spend; 80% of your sales come from 20% of your products; 80% of your sales are made by 20% of your sales staff. Although it’s obviously never going to be exactly 80/20, it’s more of a guild line. I guess it would suggest that you would potentially have more than 1,000 true fans. I personally do believe in the 80/20 rule, and use it to my advantage a lot of the time.

To which Chris Pirillo responded:

Jay, to answer your questions: My honest goal is to reach 10,000 Gnomies and maintain personal connections. I’m able to manage with larger audiences with the tools at my disposal now — I just can’t because I can’t drive revenue with incessant commenting in the general Web (Gnomies isn’t lumped in there, obviously). The tools will need to evolve. Moreover, I’m trying to create an environment of shared intelligence (not just mine). I believe we can get there in less than five years’ time. That, and general follower count is irrelevant on any platform. :)

The Pareto Principle: the 80/20 Rule and How It WorksAfter reading this exchange between Chris and Jay, I contacted Chris and presented him with my proposal to write an article about the objectives of the new Gnomie community, in which I would include information about the 80/20 rule. Chris stated that before writing the article I should contact some of the Gnomies who have already joined the new site and ask them to share their opinions in this article. Here are what my fellow Gnomies had to say:

Karl Conyers:

I think we are coming together as a group of geeks who love technology, sharing thoughts and ideas with each other. I joined because I started watching Chris on YouTube starting in 4th grade and here I am going into my first year of high school as a Gnomie. I enjoy everything about Gnomies!

Robert Heathcote:

What we do here, I am still learning myself. Though as I understand it and why I joined the Gnomies team is to be part of a group of like-minded people who love to chat and share in the LockerGnome experience. I have been a fan of Chris and LockerGnome for a few years and, though I’m from Australia, I see this as a way to be part of the team. I hope to learn tricks and skills to one day make something of interest and contribute where I can; this is why I invested in the Gnomies.

Bob Morris:

We are self-selecting geeks sharing ideas about tech and business using a method that filters out the noise. And it’s friendly!

So why would you want to become a Gnomie?

In addition to the regular LockerGnome site (which will remain free and ad-supported), Gnomies will be able to feast on special value items in the form of the following features:

  • Exclusive Media Content
  • Exclusive Private Groups
  • Exclusive Google+ Hangouts
  • Get Your Questions Answered
  • Discounted Rates on Promotional Services
  • Exclusive Tips & Tricks
  • Exclusive Giveaways
  • Hardware & Software Discounts
  • Business Advice
  • Coaching and Consulting Services
  • Social Media Intelligence
  • Free Downloads
  • Monthly Webinars
  • Priority Attention
  • Twitter Influence
  • Be a Gnomie of the Day
  • Behind the Scenes Access
  • Private Chat Rooms
  • Learn Content Publishing Strategies
  • Undying Gratitude
  • More Bonuses? Yes!

Chris has a lot of good ideas and will be offering additional features, exclusive to the Gnomies community as this private network evolves. Stay tuned!

Here’s where you can read up on Gnomies and see what it’s all about.

Comments, as always, are welcome.

  • Anonymous

    Exclusive data is SELDOM that, these days. EG:I found a computer for $650, that even the COMPANY Website listed @ 200$ MORE, even before shipping & tax. It usually depends on the resources available to you.

  • Anonymous

    Another facet of the Pareto Principle is that 20% of your clients cause 80% of your problems; Do yourself a favor and send them to your competition.

  • Daniel Milstein

    Good Share.I hope more people discover your blog because you really know what you’re talking about.  Can’t wait to read more from you!