The 80/20 rule. Basically says 80% of your goal / objective comes from 20% of the audience / source. So that might mean at work, 80% of the problems are caused by 20% of the staff (the bad apples). Or 80% of your team’s points are scored by 20% of the players. Or if you are in sales… like sponsorship sales, that means 80% of your revenue come from 20% of your partners. Or if you are a brand / sponsor and you have a portfolio of sponsorship investments… 80% of your time and effort (activations, investment etc.) goes to 20% of your partnerships. (Hence why with some sponsorships you don’t activate to the chagrin of the property, because the ROI on it is not as strong as doing an activation with another property you sponsor.)
What this means is that 80% of your servicing should go to 20% of your sponsors. That does NOT mean you neglect the other 80%, it means that other 80% get what they paid for and a little more but 80% of your time and effort as a sponsorship selling property should be allocated to that 20% or so that spend the most with you.
To understand the success of this model… look at loyalty programs. If you are a Marriot Bonvoy member or an Air Canada Aeroplan member… you get perks. Those perks make you loyal. Those added benefits others don’t get makes you book with Marriott or WestJet or whomever whenever you possibly can.
And the more you are loyal… the more you benefit. So, the more you spend, the more they pay attention to you. For instance, go online and look and see the benefits that a top tier Bonvoy member gets versus a bottom or mid level member. I am part of the IHG hotel group loyalty program. Their “top tier” is Diamond Elite. And this group counts for less than 5% of the people who stay at IHG hotels annually. And they take care of those people. Those Diamond Elite members are guaranteed a room at any hotel (even if it is sold out) in the group at anytime (if booked more than 48 hours in advance of check-in). Basically, that means for this 5% of their guests… they can call up 3 days in advance to a booked hotel in the group and ask for a room and will get it. With Air Canada, their “Super Elite” status members have a dedicated concierge line to call and be taken care of. If you miss a connection, they put you up at a hotel. You need to make a last minute change; they handle it like the best of travel agents… no charge. You get upgraded, you get better rates, you get treated like their top 20%.
The message here is… take care of their partners that spend the most money with you. Sure, smaller partners are really important too as they may grow into a larger partner, but remember that 80% of your revenue is coming from 20% (or so) of your partners. Those are the folks who you want to spend the most time and effort with servicing.
It is funny, as I was writing this, I thought about the TMC I wrote a few weeks back. It was about technology and I spoke a little about our prospecting product for clients… Sponsorship Playbook. It is built on the same premise. We find out from your database where your audience spends their money. And we look to determine which 20-30% is spending the most and where they are spending it. Once we know that we can tell you what sectors you should be focusing on for prospecting (and it is often very surprising) and even what specific companies. So for instance if that data shows that your key folks (that 20 or so percent of your database) is spending a ton of money on travel and they are spending that amount of money which is 5 or 20 times greater than the average Canadian in this same profile group, you know you should be focused on prospecting travel sector and the data may identify what cruise lines or what airlines those folks specifically use. The 80/20 rule is for prospecting and servicing.
Hopefully that has made you think differently. Feel free to reach out if you have issue with anything in this TMC as I know the idea of telling properties to focus on their biggest partners is going to have backlash!
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