Practical Growth

Use the 10% Rule to spend less and grow faster

One of the most useful tools I use in entrepreneurship and marketing is The 10% Rule. I use it every day.

It works like magic well when looking at any market or any set of execution results.

It’s like the 80/20 Rule of the Pareto Principle, but since there are twice as many choices of everything these days, the best 20% is down to just 10%.

There are three simple steps to using The 10% Rule:

1) Identify your real question about a set of anything.

– Where is the best set of small businesses that will buy your new service?
– Which marketing tactic is best for efficient growth?
– What % of VCs have outstanding returns regularly?

You don’t have perfect data and you don’t know the answer, but you have to make a call and take action somehow.

2) Eliminate 50% of the market completely. Really.

For example, 50% of Americans DON’T do any of these things:

  • Have any retirement savings
  • Own a gun in their household
  • Read any books
  • Have graduated college or university

It’s a great start to identify that half of your big market has no need and is not interested in what you sell. At all. Identify them and ignore them completely.

3) Identify the 10% that will create almost ALL your early results.

Don’t think about how big your market is. Think about the 10% of that market that understands what you do and has an acute problem they are trying to solve.

How many of those do you think you might sell to?

Try 10%.

Then 10% of those is where your actual sales traction will be.

That’s 1%.

There is a 100% chance the answer to what you need is in the 10%.

Focusing on the 10% makes you start in the corner vs. starting in the middle or the whole.

In early markets, averages are meaningless. Early adopters are in the 10%.

Think about Jeff Bezos in 1995. 10% of the population buys almost all the books. And 10% of the population was plugged into the internet.

Jeff Bezos didn’t convince people to get on the internet and start buying things. He didn’t get more people to read books. He focused on the 10% of people who read books and buy things on the internet.

Amazon started in the corner. I’m sure The 10% Rule applies to almost any e-commerce question they can think of now. What products are most profitable? Who’s buying the most? Etc.

The 10% Rule is a simple way to use the Power Law.

The Power Law is where big leverage exists. If you are starting something that will grow big someday, you’ll need leverage.

Find your 10% and double down to grow faster at anything.

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