You’ve started to see more sales through your e-commerce business, and now you want to continue to succeed. If you don’t know where to start, it’s difficult to know how to grow your e-commerce business. You have to capitalize on what you’re doing well order to keep growing.

If you’ve ever taken a business class, you’ve heard the terms 80/20 principle or Pareto principle. It’s a classic rule with roots in the late 1800s, and it can be applied to almost everything. For sales, it’s a staple. E-commerce businesses use the principle to help drive growth and success.

The 80/20 principle states 20 percent of effects are the result of 80 percent of causes. What does this mean in regards to e-commerce? A lot. It’s often used to prove 80 percent of your sales come from 20 percent of your customers. Apply it to the products you sell, the advertising you put out, the effort you put into running your business, and more. By identifying what factors are doing the most work, you identify where your time is going to be the most well spent. Here’s an important thing to remember: if you run the numbers and it comes out to something different like 95/5, don’t panic! You didn’t mess up. 80/20 is more of a general estimate. Your specific data isn’t going to put out the same ratio as everyone else. You can learn more about 80/20 here!

The secret to how to grow your e-commerce business is within your 80/20 analysis. It’s all about pulling back a layer of your business to see what’s really going on. While it seems like a no-brainer to determine how the principle applies to you, it’s what you do with what you find that makes the difference.

Using this principle shows you opportunities within your business you weren’t aware of before. You’ll be able to find what your top products are or who your best customers are, and it might not be what you think.

The principle also shows you where things are not working out as well as you’d hoped. Your team’s big idea could not be showing the results you wanted, or a product is costing you money just to keep it stocked. The 80/20 principle is a little bit like a look under the hood. What are you doing well and what needs help? Is it even worth the work? The 80/20 principle answers these questions and is the foundation for creating a solution.

The 80/20 Principle Holds the Key to Learning How to Grow Your e-Commerce Business Fast

Let’s dig into applying the principle to your business. Once you figure out which customers are supplying the majority of your revenue, you’ll know who to focus on. These people are the center of your customer base, and you need to treat them right to make sure they stay that way. This data also shows who would benefit from certain advertising and who would be most responsive to a coupon strategy. For those customers who aren’t in the 20 percent, what’s keeping them from reaching that point? This data can also be broken down into an 80/20 example. 20 percent of those customers are contributing to 80 percent of that chunk of revenue, and it’s possible to identify a marketing campaign around their shopping history.

Any time you look at data from using the 80/20 principle, you shouldn’t be afraid to take advantage of low hanging fruit. These opportunities are going to bring you quick revenue with minimal effort. For example, let’s say a large group of your customers only made one purchase. In this situation, you could run an email campaign encouraging them to buy again based on the length of time since they ordered from you.

The 80/20 principle is also used to analyze the performance of your products. You may be surprised to find all of your sales are coming from one or a few specific products. Use this knowledge to your advantage and start featuring them to pull more people into your funnel. This knowledge can also be used to create a line of products specifically based on your customer’s current interests. Put your most popular products on your homepage, highlight them in your email newsletters, and make them the focus of your advertisements. These products are what people want, so let them shine!

In other cases, this data shows you expanding on a certain line of products is not be the right opportunity. While you still might see revenue, it’ll be hard work to see the results you want.

Figuring out how to grow your e-commerce business is an easy task once you look at how the 80/20 principle applies to your business. It’s not a one time review either! Good businesses continue to reflect on how they got to their current point. If you use the 80/20 principle continuously success will start coming your way.

Dive deeper into 80/20 here!