60:30:10 is the New 80/20 Rule
Sometimes the best discoveries are the simplest observations…
Whether you know it as the Pareto Principle or the 80/20 Rule, the definition of this famous business rule simply states that, “20% of your priorities will give you 80% of your production IF you spend your time, energy, money and personnel on the top 20% of your priorities.”
Pareto: A Quick Background
The Pareto Principle was created by Management consultant Joseph M. Juran who first suggested the principle in 1941 and named it after Italian economist Vilfredo Pareto. Back in 1906, Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population; Pareto went on to develop his ‘principle’ after discovering that 20% of the pea pods in his garden contained 80% of the peas.
Back in 2005 I met John C. Maxwell. John is a New York Times best-selling author of over 80 (excellent) books and a leadership coach to presidents, world leaders and Fortune 500 executives. He spoke to me about the Pareto principle and he gave me some advice I’ll never forget…
“If you make a list of the 10 most important things you need to do each day (prioritised in the right order), and then concentrate only on the top 2 items, you will likely receive 80% of everything you ever want to receive out of life.“- John C. Maxwell
The Pareto Principle can also be applied to other areas of life:
- TIME: 20% of our time produces 80% of the results.
- COUNSELING: 20% of the people take up 80% of our time.
- PRODUCTS: 20% of the products bring in 80% of the profit.
- READING: 20% of the book contains 80% of the content.
- JOB: 20% of our work gives us 80% of our satisfaction.
- SPEECH: 20% of the presentation produces 80% of the impact.
- DONATIONS: 20% of the people will give 80% of the money.
- LEADERSHIP: 20% of the people will make 80% of the decisions.
- EMPLOYEES: 20% of a team usually produce 80% of the work
From Pareto to 60:30:10…
While the 80/20 rule is a long established principle that has I have seen proven many times over the last 10 years since I spoke to John, I have noticed a formula which I have found to be even more powerful – especially in the world of industrial marketing and brand management.
Let me explain…
After leaving my agency to work for the Phones 4u Group in 2010, I was given a very limited budget to build a social brand for the UK’s largest phone retailer, aimed almost entirely at 13-24 year olds. Having limited resources, over-worked team members and many agencies wasn’t the problem, my biggest challenge was speed. Once a deal with a manufacturer or a network was finally in place (the deals were always last minute), I was usually given between 7 and 10 days to create a campaign, brief the creative teams to build a game in less than a week (usually a Facebook app with data capture and a competition mechanic), plan the media budget and launch the campaign.
“Brands are no longer competing against each other. They are competing against speed.” – Marc Benioff
More out of necessity than any clever thinking, I split the budget for my first campaign 60:30:10. The first 10% of our campaign budget was spent on strategy, planning and insights. This helped to make sure that whatever we were going to create resonated with our target audience. Once we had a plan, 30% of our resources were allocated towards creative – at Phones 4u this usually meant a Facebook connected game and an app. 60% of the budget was then allocated for paid media on the appropriate channels, to reach the audience demographic that we had already identified
“Things need to be made simpler, but not simple.”– Albert Einstein
The first time I employed this formula was to build a game called Face Invaders, to launch the Sony Experia Playstation phone in the UK. It was a huge launch for Sony but we had no time at all the go through the lengthy agency planning processes. Using the 60:30:10 split, we quickly came up with the idea to use Facebook API’s to build a game. In the style of Space Invaders, it pulled in the names and faces of your best friends (!), who you had to shoot in order to try and win a phone. The game was so successful that Facebook security teams stepped in thinking that it had been hacked. It went on to have millions of plays and from that moment on, it became a winning formula I used on every campaign. 60:30:10 also helped us to launch quicker (and with more success) than all of Sony’s other media partners, many of whom had substantially bigger budgets and resources.
Whenever I have worked on campaigns since then, I have used the same ratios. £100,000 for a campaign? Easy, we’ll spend £5,000 on planning and strategy with an agency or in-house team, £30,000 on creative and build, £60,000 on media and £5,000 at the end of the campaign to measure and report on campaign performance. Brands could never believe I was so certain of a ratio that worked so well, because they usually had to wait days just to get a budget proposal back from their agency. 60:30:10 meant that I could always provide numbers on the spot and start planning immediately.
Whilst I have seen 60:30:10 work many times over for campaigns I have worked on, I have also seen this model work for brands such as Nike, Samsung, Rovio (Angry Birds) and Zynga (Farmville) – all of whom seem to use roughly similar splits. Rovio famously built the $1 billion+ Angry Birds franchise for just over $100,000 having had their previous 40+ games fail, using a similar formula, proving that good strategy wins (eventually)!
60:30:10 works in many other areas too:
- Writing a Book
Seth Godin spends 10% of his time planning a book, 30% writing it and 60% of his time promoting it. He often does this in blocks of 100 days. Leadership coach John C. Maxwell has a similar process. Both of them have written over 100 books, many of the New York Times best-sellers and they put their success down to this process.
- Social Media Listening
I have noticed that the most successful social brands (KLM, Red Bull, Disney, Burberry) spend 10% of their time creating content, 30% of their time listening to their audience and 60% of their time having meaningful conversations with them, or engaging quickly for customer care. Gary Vaynerchuk refers to this as his 90:10 rule in this video, which I have shared many times over the last couple of years.
- Personal Finances
I once heard an interview on Oprah with Bill Rancic (first winner of the Apprentice with Donald Trump), and Bill encouraged people to be financially secure with his 50:40:10 model for personal finances. Not quite 60:30:10 but close. He stated that most people can live off 50% of their income with the right planning. 40% can be saved or invested. And if you are that way inclined, 10% can then be given away to charity or church.
- Influencer Fan Engagement Programs
NPS (Net Promoter Score) is a metric used to assess customer satisfaction for many global brands (especially retail or CPG brands). An interesting observation I’ve seen over the years is that many of the fastest growing brands seem to have around 10% superfans – the evangelists who tell everyone about you. These are the ones that PR agencies and outreach programs love to target. 60% of consumers are usually passive. Happy enough to buy but not so excited as they tell all their friends. 30% of consumers are unhappy for one reason or another, especially if it is a new product or fast growing brand with operations or logistical challenges during accelerated growth periods.
Steve Jobs’ iPhone launch keynote in 2007, arguably one of the best business presentations of all time, was split 60:30:10. 10% on industry trends and background, 30% talking about Apple as a business and 60% revealing the iPhone and talking about the product. All Steve’s keynotes had a similar formula, with a certain narrative and method of storytelling ~ something he picked up from the way stories were made at Pixar. In many of my own presentations, I often spend 60% of the presentation on industry trends, 30% on specific use cases and 10% on marketing cloud products.
- Team Time Management
When you have big goals and small teams, it is often difficult to organise time management within a team, in a way that aligns with your core business goals and objectives. I did an exercise at Salesforce ExactTarget Marketing Cloud recently where I split everyones time into 3 core areas; the main goal (promoting the commercial side of the business), our secondary goal (raising brand awareness), and our long-term goal (industry thought leadership). I could have added as many levels as I needed depending upon the size of the team. Using this simple model below in Excel, once I moved across all the tasks that we needed to do (prioritised in the correct order), it became clear exactly who needed to do what, in which order, and how many hours a week that person should be allocated to each task. It’s not something that we’ve rolled out yet, but it convinced me the process has merit for team management. It is a process that brands like Disney use to manage their hundreds of digital media and social executives and one which I think works for teams small and large. It’s processes like this that also help tech companies such as Facebook and Google move so fast (without breaking things!).
Let me know what you think in the comments below. Whilst I have obviously over-simplified some complex processes, the best ideas are often the simplest ones. As a foundation for building a campaign, creating your next project or managing your team ~ I think the 60:30:10 model is as solid a base as any other concept I’ve ever come across