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Customers and Marketing

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"The well-known 20-80 rule says that the top 20% of the customers often generates 80% or more of the company's profits" (Kotler and Keller, 2009, p. 130). Do you think that the top 20% of the customers should get preferential treatment since they generate 80% or more of the company's profits?

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Customers and marketing are examined.

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THE 20-80 RULE: IMPLICATIONS

This rule says that the top 20% of the customers often generates 80% or more of the company's profits. However, this does not mean that the top 20% of the customers should get preferential treatment since they generate 80% or more of the company's profits.
While they generate the largest part of the company's income, they only form a minor portion of the company's total number of customers. The remaining 80% is still very large that when demoralized with the perceived preferential treatment, they may look for other sellers of the good or service.
Preferential treatment may mean better and may be more quality customer services that will be given to this 20% part of the total customers. While this may make the 20% happy, the 80% may not. ...

Solution provided by:
Elisa Valdez, PhD
Education
  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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