I first wrote this right after the economy crashed in ’08. Thought it was worthy of a second go-round.
My father-in-law, Ron, is a 77 year old retired farmer in Southeastern Nebraska. He wears a John Deere hat, sports a farmer’s suntan and talks kinda slow.
He had this to say about the Big Bailout:
“The people that stole my cow now want me to feed it. I resent that a lot, but I do not want my cow to die. So I guess we will have to send more cow feed their way. In the good ole days, we could have hung a couple of the rustlers and that would have delayed the next raid by awhile. Now they expect to get rewarded.”
Gotta love that simple farmer common sense.
Gotta love the fact that he’s from Nebraska. (Just like me.)
I’d like to add a few comments of my own.
First, the contrast between the mainstream news media and the entrepreneurial culture online couldn’t possibly be more striking.
Journalists, as a group, are the most financially threatened population in today’s economy.
Not because of the banking crisis, but because the Internet is destroying their business. They’re ALL scared. Radio, newspaper, TV reporters – all of them.
THAT is the lens they see the world in to begin with. The grim reaper is pounding at their door and this colors EVERYTHING they say.
Those reporters who are able to perceive opportunity have already abandoned ship to seize it. The ones still reporting are the ones who are still hanging on. Can you hear the water seeping in? Glug-Glug-Glug…
Not only are they paranoid, they are irresponsible and lazy. One time Ken McCarthy said, “Reporters don’t report, they repeat. They don’t investigate, they elaborate.”
You CANNOT trust these people to tell you what is really going on.
On the other hand, entrepreneurs are unanimous in their resolution to gain ground during this next season. Yes, we clearly understand we may witness all manner of turmoil.
But we know that many, many assets will be undervalued, that average thinkers will cut back on marketing and advertising and customer acquisition, that people whose stocks have gone down will do the stupidest thing possible and SELL them in fear of further loss.
Their loss is our gain.
All you have to do is read the emails and watch the videos that are coming out in droves from those of us who are on the front lines working with top performers. I spent last weekend with 65 other entrepreneurs at my Chicago seminar and the atmosphere in the room was powerfully upbeat, even effusive.
I fully understand how easy it is to see the good news as a masquerade and the disaster as being fully real. But as far as I’m concerned, the bottom line reality is still this:
1. Crisis ALWAYS creates opportunity. Always. “The time to buy is when blood is running in the streets.”
2. It’s like that old story about the two guys being chased by the bear. One says to the other, “I don’t have to outrun the bear. I just have to outrun you.”
Let’s talk about #2 for awhile.
It sounds so terribly vulture-ish to say that, doesn’t it? Doesn’t it sound so… exploitive? So mercenary?
Oh yes, it most certainly does.
But it’s still true.
One of my other favorite truths:
“In the land of the blind, the man with one eye gets to be king.”
Just about every market I’ve ever seen is a land of the blind. All but the most ferociously competitive niches, anyway. I’d be hard pressed to look at any business in any industry and not be able to find, within 15 minutes, significant holes in their marketing strategy.
If you’ve got holes, baby, this is the time to patch ’em.
Cuz here’s the deal:
Your market is the land of the blind, and… it might just constrict. (Or it might not. But it might.)
If it does, some vendors will go under.
Your job is to make sure it’s somebody else, not you.
80/20 Rule says:
20% of the businesses get 80% of the business.
That means the members of the 20% make 16X as much money as the members of the 80%. And it also means, if the water level rises, it’s the 80% who drown first. The 20% drown last.
The 20% seldom ever drown.
They plug their leaks, they tighten their ship, they whip their crew into shape. They prepare for the long winter and they get busy. They still drink and sing Irish folk songs at their crazy parties and they still have a good time. They enjoy their good time with resolve and determination.
For a long time we’ve had 5% unemployment. That means 95% employment. That means 95% of people who want a job, have one. Less unemployment than that surely requires some kind of exception to the laws of the universe!
That means of the bottom 80% – the mediocre people who have no inspiration and little sense of responsibility and can’t follow instructions – only 5% of THOSE are unable to find work.
A 5% unemployment is therefore a virtual violation of the 80/20 rule. A merciful one, but nonetheless a violation. Ah, the luxuries of a society that values equality.
Now…. let’s say the unemployment rate rises to 10% or 15%.
You know what that means?
It means you can fire any deadbeat you want and you’ll be able to almost instantly replace him with a savvy, competent, responsible, hungry person who can follow instructions and genuinely contribute to your bottom line.
If you have the guts to do that, you will pull out ahead in the race.
It means if you have any cash at all you can buy investments at record-low prices and rake it in big time when the market comes back.
Let’s see, a few other implications of the 80/20 rule….
80/20 applies to nearly everything you could possibly measure. It’s not merely a business abstraction, it’s a law of nature. Which means:
80% of the bad debt comes from 20% of the loans. (That’s the part they’re selling to the US government. Wall Street guys generally understand 80/20 stuff.)
80% of the corruption comes from 20% of the politicians.
80% of the pork is found in 20% of the legislation.
80% of the bills in Congress are written by 20% of the lobbyists.
Now here’s something else I know:
80% of the people on my email list will only effect 20% of the change that they need to make happen.
20% of the people on my email list will effect 80% of the change that is going to happen.
Yes, a small number of those within the sound of my voice will make huge strides in the next weeks and months.
In accordance with these principles, I am only sending this email to the top 20% of my list. The most responsive, the most proactive, those most devoted to their own education.
I am ignoring the other 80%. They don’t really deserve to read this message.
You do.
(That’s awfully elitist of me, isn’t it?)
It’s because I’m narrowing my focus. YES I will still be ruthless about acquiring new customers and selling with every tool in the arsenal.
I will be providing extreme value to those who have done business with me in the past and who have already shown, by their actions and their educational investment, that they are committed to staying ahead of the curve. The information you get from me in the coming months will be the best ever.
One more thing:
There is a top 20%.
There is also the top 20% of the top 20% – the 4%.
There is the top 20% of the top 20% of the top 20% – the 0.8%.
What you should really aspire to is to be a top 0.8% person.
Let’s compare the 0.8% person to the 80% person:
-Every move he makes is carefully chosen because his time is 16X as valuable
-He understands that of all the things on his list of 37 things to do, 4 or 5 of them are more important than all the others put together. The 80 percenter acts as though all items are equally important
-He is profoundly selective about the information he reads, listens to and acts upon; the 80 percenter is ‘open minded’ about almost everything
-He belongs to some kind of ‘good ol boys club’ – which is ’80 percenter’ lingo for a trusted circle of people among whom there is nearly zero transaction cost. Every successful business person I know has one; 80 percenters don’t have good ol’ boys clubs, they just gossip and have bitch sessions
-He doesn’t care what most people think, and knows that more often than not the masses are tragically wrong; the 80 percenter IS the masses.
Consider yourself privileged for having received this email. Something you did qualified you to get it. And don’t let grass grow under your feet. Survey your customers, find out what they’d like more of than what they’re getting from you now, and sell it to them.
Don’t be the slow guy. Be the guy who outruns him.
Carpe Diem – Seize the Day. Make sure the bear seizes someone else.
Perry Marshall
Share This Post
About the Author
Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.
He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.
31 Comments on “Farmer Ron, the Big Bailout, and the 80/20 Rule”
Please run for president!!
Hi perry
To say: Thanks
Regards
Larry
I’d like to suggest that there is non-monetary value (which paradoxically translates into monetary value later on) in the 5% of your non-buying customers. This is part of the leap of faith of effective marketers, which I witnessed first hand in my decade plus in retail.
I have a friend who sell cars, for example; when I purchase my next vehicle, guess who gets the sale? (You already know who got the last one.) Unless he does something really offensive before then, no-one else will sell me a car. It’s automatic, if you’ll pardon the pun. Why? For the sake of the relationship. You can’t put a price tag on the human factor. Meanwhile, when someone else asks me where to get a vehicle I’ll promote my friend, at no cost to him.
Personally, Perry, I’d like to say thanks for the encouragement. I’ve been studying how to write screenplays as the next step in my writing career, partly because the writer’s dream was incomplete as a novelist. I’ll have at least two finished in the next few months.
Learning how to write screen plays = great marketing training. You gotta tell a great story.
Great words of wisdom Perry. It is very easy to get lost in the daily stuff and see everything as important when in reality only very few ‘to dos’ are really growing your business. I have been making a habit of backing up from my business every few days, thinking big picture and then re-prioritizing based on 80/20 thinking. This helps a lot.
Also, as a consultant, it amazes me how many people tell me how terrific my advice is and then take zero action.
Excellent post. Will post link on my FB page.
Hi
Greetings from Yorkshire, UK.
I guess the top 20% of the list doesn’t necessarily mean buyers but also readers (potential buyers!)
I’ve purchased and profited but my main problem is scaling many camapigns. Anyway without getting evangelical (we’re reserved!) chose 1 person who you follow and stick with it. (I chose Perry Marshall.) Too much info from ‘various differing professionals’ leads to procrastination. Cheers
I need to write a business letter to send out to some clients and this just provided some extra motivation.
Perry- This is a Remarkable, NO… BRILLIANT article… “Learning” to focus ONLY on that which produces desired results… Best, Brian-
If you listen to your customers, and give them what they want (NOT what you THINK they need) you cannot fail (unless you try really hard to)!
As always very interesting and entertaining. In fact I hadn’t realised how easy your posts and videos are to read / watch until I had the unfortunate idea to listen to a webinar on ATM by another guru. Interesting and a little dated but not at all enjoyable. Well done, I really do enjoy these posts.
Perry – thanks for the email and advice. I’m a big believer in the 80/20 rule and also think its critically important for any successful entrepreneur to stay focused on niches as you have articulated on many occasions. Whether its niches of customers or defining your product or service niche, if you focus all of your attention on niches while by incorporating the 80/20 rule, it will pay off in a big way.
Thanks for some good ol’ fashioned Nebraska wisdom from a Farmer Ron.
I’d like to comment on: -He is profoundly selective about the information he reads, listens to and acts upon; the 80 percenter is ‘open minded’ about almost everything.
80% of the emails I receive only provide me with 20% of worthwhile messages to open. 20% of those emails provide me with 20% worth reading, and 20% of those that I read give me reason to respond. And Perry, yours are.
Three years later I’m still a novice Renaissance man and sharpening my spear so when that bear is on my heals I’m going to turn and chuck it right into its heart. Thanks, keep ’em coming. Farmer Ken
I do remember when you posted that before! Still, a great article!!! Thanks Perry! From another former-Nebraskan ;)
As usual, great advice. Thanks Perry.
Perry… Thank you so much for your words of wisdom and inspiration. We will meet someday because we are so much aligned in thought and opinion. I expect that it will be as a paid client rather than a loyal fan and reader.
I hope you don’t mind (I know you won’t) if I pass on a few of your words (with link-backs of course) to others that need it. …Howard
certainly.
You are a marketing genius! I just had a massive change of mindset some months ago and I always strive too get better and better… now I am aiming for the 0.8%. By the end of the month I will get one of your products.
Thanks for the wonderful words of wisdom. Most of us know these things but we need to be reminded of them often. It is too easy to lose our focus and get sidetracked chasing the things that really don’t matter.
Unfortunately with respect to the percent that understand and take action on this or any message, I think it is more like 90/10 or maybe even 95/5.
The thing I always keep in mind is that there are people that can earn money in every economy. During the Great Depression, Jimmy Carter era and even now there are people out there earning a lot of money; the 20%. Some are earning lots and lots of the money; the 0.8%. My thinking is to keep my eyes on and listen to this top 20% so I can start patching holes and running faster than the others; 80%. Right now I’m doing that by listening to and applying your Marketing System. Because the bears are out and looking for an easy meal. Time to lace em up and gets to running.
Thanks for providing such very uncommon common sense.
Ronnie
“Probably only 15% of the people on my list have ever bought anything. You’re right, there’s fewer well educated marketers out there than you think….”
That is VERY interesting,like Nathan I think I have only bought one or at most two products of yours, but I do read all the stuff you send (well, most of it!) and aspire to one day meeting you in Maui. Meanwhile only about 8% of my list buys anything, but it is improving.
Thanks for your help and advice
Penny
READ EVERY WORD
TNX FOR COMMONSENSE
COMES FROM GOOD STOCK FROM NEBRASKA
Hey Joe,
I know who you are!
A shout out to ya.
Perry
I think your father in law could not have summed up things more concisely or, precisely than he did. That was perfectly put. He sounds as anti-establishment as they come. Dylan wrote something similar in effect in ‘Ballad of a Thin Man’. Worth listening too, you just gotta spend some time deciphering the lyrics.
Now you see this one-eyed midget
Shouting the word “NOW”
And you say, “For what reason ?”
And he says, “How ?”
And you say, “What does this mean ?”
And he screams back, “You’re a cow
Give me some milk
Or else go home”.
Just a footnote: In regards to the 80/20 rule and the whole ‘out running the bear’ sag. I mean, seriously, I’m in the top twenty percent of your list? I’ve only brought one product from you in the three or so years I’ve been receiving your emails. I guess you really don’t have to be that much faster than the next man to outrun that bear.
Cheers and regards.
Nathan.
Probably only 15% of the people on my list have ever bought anything. You’re right, there’s fewer well educated marketers out there than you think….
Only fifteen percent? That’s got me baffled! If you’d asked me to hazard a guess, I’d have figured upwards of fifty percent. That surprises me and further illustrates why you don’t have to be all that fast to outrun that bear.
Nathan.
I do forward on, to my ‘ Senior Agent ‘ Rose in the Philippines, most of what I receive from you re marketing with the aim to make her more aware of her potential and to also assist my goals of fishing vessel sales in the Asean region.
Zero success as yet, with what know is a very clever fishing vessel design, but I enjoy the challange AND I have NOT spent any money yet until I get the feeling that a corner is turned and this may be warranted from the ground work I have already done and am doing etc. IE enter the design in the WWF International Smart Gear Competition 2011. ( results mid November 2011 )
Great publicity should my entry win and gauarenteed of some vessel new builds then I would expect!
I enjoy your thinking, many thanks over the time I have been receiving your information and I know it has focussed me slowly but surely re marketing and giving me direction to shoot for!
Thanks
Rodney
Kansai Fishing Company
New Zealand
Interesting point about fear and the traditional media. I have always written off some of the decline in reporting standards to the 24-hours news cycle which leaves so little time to tune the story and really get it right. However, I am not sure the fear that they have regarding the survival of their business is what drives their agenda. It has always been “if it bleeds, it leads” and we are as a whole doing a lot of bleeeding.
You are absolutely right when things get tough, the tough are not only the ones who survive but do very well in the process.
Hi Perry,
Thanks so much for giving me the opportunity to receive the Farmer Ron article. I believe all (good) things come from the Lord and He has led me to you. I’m not where I’d like to be yet, but if I continue to follow your lead, I’ll get there. -:)
Delores
Thanks for trying to educate, but i’m a lone artist, and while i reproduce my work and make utilitarian things, I haven’t been able to connect any of what you have to say to the sale of artwork. Am i missing something, or is this just about marketing of merchandise? (i know my website is crap, but they don’t seem to work for sales)
Thanks.
hhearn
I haven’t looked at your website so I can’t comment on it. But if you say your website is crap, nobody is going to buy art from a crappy website.