We’ve all learned over the years about Vilfredo Pareto’s famous “80/20” principle. Simply stated, for many events, roughly 80% of the effects come from 20% of the causes. While this works well for prioritizing efforts in a resource starved world, this framework may cause businesses to overlook hidden gems within their portfolio of products, technologies and customers.
Our work with leading manufacturers has convinced us this is a misguided approach. In Aftermarket businesses, we have consistently seen that roughly 20% of an OEMs installed base regularly transacts with them. Applying the Pareto Principle in this case presupposes that this 20% represents 80% of the total value of the installed base.Nothing could be further from the truth. We’ve proved time and time again that manufacturers have the potential to double, even triple, the size of their available Aftermarket by judicious, proactive targeting of the entire Installed Base.
[clickToTweet tweet=”The ‘Middle 60’ is the real hidden treasure for most companies. ” quote=”The ‘Middle 60’ is the real hidden treasure for most companies.”]
Who are the Middle 60?
The “Middle 60” is the real hidden treasure for most companies — that is, 60% of customers between the top 20% and bottom 20% of the customer base. The “stored value” that these customers hold in terms of Aftermarket repeat and recurring revenue is immensely valuable, and can be unlocked in relatively inexpensive fashion using modern Big Data analytics and other tools.
Finding ways to stay connected with this segment of the customer base guarantees growth, drives connectivity, and leads to future revenue streams over the lifetime of the customer.
 Pareto Principle on Wikipedia