- Mar 17, 2011
- 201
- 94
- First Name
- Ryan
The "80/20 Rule" is an idea that applies to numerous different situations. Originally introduced by management thinker Joseph M. Juran, it was named after Italian economist Vilfredo Pareto who observed that 80% of income in Italy was received by 20% of the Italian population. Thus this rule is often referred to as "The Pareto Principle."
The assumption is that most of the results in any situation are determined by a small number of causes.
For example, in most developed countries, 20% of the population controls 80% of that country's wealth. In business, 20% of customers will account for 80% of sales. In software design, 20% of code will account for 80% of bugs. On a farm, 20% of the crops will give 80% of the total yield. Dig into any system that involves inputs and outputs and you’ll run into this law sooner or later.
In my experience with the auto retail industry, I would argue that the Pareto Principle applies to how dealers embrace new ideas and technologies.
That is, until at least 20% of dealers embrace a new idea, the other 80%-plus will not. Not until we near the 20% threshold will the remaining dealers begin to follow suit.
Generally speaking, it takes at least 2-3 years for new ideas to reach that 20% threshold, and then another 3-5 years for the industry as a whole to catch on. We’ve seen this in several key areas such as dealer websites, search engine marketing, BDC, CRM, chat, and now social media to name a few.
I'm interested in knowing what "new ideas" we are seeing today that only 20% of dealers out there are experimenting with? Things that come to mind for me are texting, online shopping carts, personalization, video, mobile shopping.
How do you identify progressive dealers compared with those that want to remain with the pack? I spoke with a dealer today that wasn't concerned about the fact that he has only ONE GOOGLE REVIEW. This shocks me!
What say you?
The assumption is that most of the results in any situation are determined by a small number of causes.
For example, in most developed countries, 20% of the population controls 80% of that country's wealth. In business, 20% of customers will account for 80% of sales. In software design, 20% of code will account for 80% of bugs. On a farm, 20% of the crops will give 80% of the total yield. Dig into any system that involves inputs and outputs and you’ll run into this law sooner or later.
In my experience with the auto retail industry, I would argue that the Pareto Principle applies to how dealers embrace new ideas and technologies.
That is, until at least 20% of dealers embrace a new idea, the other 80%-plus will not. Not until we near the 20% threshold will the remaining dealers begin to follow suit.
Generally speaking, it takes at least 2-3 years for new ideas to reach that 20% threshold, and then another 3-5 years for the industry as a whole to catch on. We’ve seen this in several key areas such as dealer websites, search engine marketing, BDC, CRM, chat, and now social media to name a few.
I'm interested in knowing what "new ideas" we are seeing today that only 20% of dealers out there are experimenting with? Things that come to mind for me are texting, online shopping carts, personalization, video, mobile shopping.
How do you identify progressive dealers compared with those that want to remain with the pack? I spoke with a dealer today that wasn't concerned about the fact that he has only ONE GOOGLE REVIEW. This shocks me!
What say you?
