In this episode of the Art of Paid Traffic, Perry Marshall, author of ‘80/20 Sales and Marketing: The Definitive Guide to Working Less and Making More‘ explains why and how the concept of the 80/20 principle can be applied to growing your business through paid traffic.
The 80/20 rule, or Pareto’s Principle, states that 80% of your results come from 20% of your efforts or input. Perry shares exactly how to use this principle to grow your business while working smarter rather than harder.
In Today’s Episode, You’ll Learn:
- How to use the 80/20 principle to squeeze more out of your paid traffic.
- How to use 80/20 to figure out where you should be spending your advertising dollars.
- What 80/20 tells you about where to find your customers.
- Perry shares the concept of “racking the shotgun” and why this is a concept you need to understand if you want increase your paid traffic results.
- Why he pushed a bunch of people away from buying his book on Facebook ads and the lesson we can all learn from this.
- How do you decide where to focus your energy to get the biggest ROI for your business possible?
- The concept inside of every 80/20 is another 80/20 and another and another…
- And a whole lot more!
Win a Copy of Perry’s 80/20 Sales & Marketing Book
If you’d like to win a copy of Perry’s book ’80/20 Sales and Marketing: The Definitive Guide to Working Less and Making More’, I’m giving away two copies!
Here’s how to win:
- Head over to iTunes and leave an honest rating/review for this show by Friday, April 17th, 2015.
- Email me at [email protected] to let me know you’ve left a review.
- I’ll select 2 people at random to win copies of his book. Easy peazy!
I’ve read this book twice now within the past year and it’s one of my favorites. It’s all highlighted, underlined and the pages are dog-eared. You’ll love it too, I’m sure.
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Links & Resources Mentioned in this Episode
Perry’s website: sell8020.com
Reserve a free spot for Rick’s Facebook Ads for Beginners: How to Create Killer Facebook Ads On Less Than $10 A Day webinar: fbadsfornewbies.com/webinar
Rick’s Facebook Ads flagship training: The FB ADvantage: Automated Facebook Ads Made Simple
Got A Question You Want Answered On the Podcast?
Every month I’m doing a Q&A episode where I answer your questions about Facebook ads and paid traffic. If you ask something I can’t answer or I feel will be better answered by a specific expert, I’ll find that person to get an answer for you.
To ask a question to be answered on the podcast, click below and leave me a voicemail. All you need is a microphone and Internet connection.
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Transcript of Today’s Episode
Rick: Perry Marshall, I’m really excited to have you on the podcast today, thank you so much for joining me on the Art of Paid Traffic.
Perry: Thank you, it’s great to be here.
Rick: Our challenge is going to be keeping this conversation shorter, but we have a lot to talk about.
You wrote the book on 80/20 Sales and Marketing, it’s probably one of my favorite business books from last year. I want to start off by asking how you define the concept of 80/20 sales and marketing.
Perry: 80/20 is the 100 year old principle that says 20% of the stuff that gets done produces 80% of the results and it started with an Italian economist who noticed that every country he looked at, no matter what their political system, 20% of the people had 80% of the money.
I think a lot of business people have heard that and they know 20% of our customers write us 80% of the cheques. But that’s about as far as most people take it and it’s so much more powerful than that.
In 2003 I had a giant epiphany like an electrical storm in my brain moment. I suddenly realized that 80/20 was everywhere and it described almost everything. At the time I had been using Google AdWords for about a year. Google introduced AdWords in early 2002, I started using it almost right away and it was like “This is the coolest thing I have seen, I’m not telling anybody about this”.
Seriously, for the first year, other than a couple of clients and friends, this was my secret fishing hole.
One thing led to another and I found myself in the AdWords education business but there was a period of time where I was trying to figure it out.
I specifically recognized that just about every single thing in AdWords, every button, every data you collect, every thing you test was all 80/20 and the way to squeeze the juice out of AdWords was to apply 80/20 to it.
Google went on to become the most important development in advertizing since television. I went on to write the world’s best selling book on internet advertizing, specifically my Ultimate Guide to Google AdWords.
80/20 was the engine and I would teach advanced 80/20 concepts to my coaching clients and more advanced customers, but not really to the masses. A couple of years ago I said I’m going to do something really crazy, I’m going to put my secret sauce into a book and I’m going to explain 80/20 properly because almost every smart thing that you ever do in marketing is because of 80/20.
I want you to see this for what it is. 80% of the traffic is on 20% of the roads. 80% of the sap is on 20% of the tree branches. 80% of the customer service complaints comes from 20% of the problem. 80% of the traffic is on 20% of the websites. It goes on and on. You cannot look out the window without seeing something that’s 80/20.
It goes a step further than that. Inside every 80/20 is another 80/20. We could take the top 20% of our customers that write 80% of our purchase orders and we can ignore the other 80% but within the top 20%, 80/20 is still true of them. That leaves us 4% and 80/20 is still true of them. It’s true until I’m down to one customer.
This becomes very powerful because it means that 50% of all defects comes from 1% of the causes. You can tremendously simplify your life by doing an 80/20.
What’s the stripped down root cause underneath the whole thing? When you figure this out, your life becomes so much less complicated and you can start funnelling more energy into the stuff that works. You can save time, money, it makes Google ads work, it makes Facebook ads work, it makes everything work.
There’s nothing better than you can understand in business than really having your brain wrapped around 80/20.
Rick: I’m a Facebook ads guy so we’ll use that as an example. We’ll use the 80/20 exactly how you described it there. We’re starting a new Facebook ads campaign, we want to drive traffic, build our email list and eventually sell our widget. How are you approaching the Facebook ad campaign from an 80/20 perspective?
Perry: First of all, 80/20 tells you that wherever you’re starting from or wherever you think your customers are, actually 80% of those are the wrong people and only 20% are the right people.
Beginning marketers want it to be for everybody, they want to be all things to all people, it’s all very well intended.
Let’s say that you are doing some political thing and you decide that your ideal voter for your deal is fans of Barak Obama. The first thing I’m going to tell you is you might be right, except I’ll tell you that 80% of those Obama fans are not your fans and you have to as fast as you can figure out which ones aren’t so that you can narrow it down. Once you find out what that 20% is, which is usually some other characteristic that you hadn’t really thought about, your advertising cost is going to drop 80% and you’re going to get just as much results. If you take that 80% and pour it into that concentrated group of the right people, you’re going to get 3-5 times more response than you would have normally.
That’s going to be the difference between losing a bunch of money and actually getting something that looks like it’s starting to work.
Any experienced advertizer will tell you that’s when the real adventure begins because now you’re going to figure out what the 20% of the 20% that you really want, what are those people? What are they like? What’s their sweet spot? It’s usually about 2 layers in that you actually get to the real stuff.
Unfortunately what most people do is think it didn’t work, maybe it’s something else. At the end of the day, their machine gun has shot bullets in every imaginable direction and they have no ammunition left, they have to borrow money from their friends, they’re living in their car and they have no idea why it didn’t work and they don’t know that they were 10 minutes from triumph.
Rick: Is that really where the whole concept of paid traffic is, where you’re spending money to learn the data and using that data for this concept you’re talking about.
Perry: Yes, exactly.
My friend John, at age 17 dropped out of high school in Denver, hitch hiked to Las Vegas and became a professional gambler. After a few weeks he realized it was harder than he thought it would be. He got a mentor called Rob who ran a professional gambling ring. John asked him how to win more poker games. Rob explained to him how it works – If you’re going to win, you need to play with people who are going to lose. They are people that are dumber than you and will lose at poker. They pull into a parking lot and walk into a strip club and there’s women and rock and roll and drinking. They sit down and Rob pulls out a shotgun from his jacket, holds it under the table, opens the chamber and he racks it under the table. A few heads turn and the club owner came over to ask if everything was OK. Rob said everything was fine, just teaching the lad a lesson.
Rob asks John, “Did you see the people who turned their heads when I made that noise?”, John said “Yeah” and Rob said “Don’t play poker with them”.
That is what we call racking the shotgun. Everything you do in marketing is racking the shotgun.
I show a Facebook ad to 17,000 people and 1100 people click on it. Rack the shotgun. You have 1000 who turned their head and 16,000 who ignored you. Here’s what most people do:- They concentrate on the 16,000 who didn’t pay attention. Wrong. You need to narrow it to the 1000 and then rack the shotgun again to get it down to 100 and then rack it again and get down to 10 and that’s who your buyers are.
The first thing you do is you rack the shotgun and you’re going to spend money just to see who turns their head and who doesn’t.
Unfortunately, it’s not 2002 any more, clicks are not $0.10 usually. It’s going to cost you real money to do that, but you have to do it. The first bit of money that you spend on any marketing is almost always education money. Also, you have to recognize that there are shotguns getting racked all the time, all around you, all over the place. It’s a question of whether you’re paying attention or not. Are you paying attention to who is paying attention?
There’s all kinds of people doing things all around you. It’s trying to tell you what to do.
Only 1% or 2% of the people out there are really who you want and you want to figure out who you push away.
I’ll give you a quick example.
When my Facebook book came out, Facebook did not have their act together. They finally did a couple of years ago. We thought “This is super awesome for some people but for most businesses this is a disaster. We don’t want them buying this book, reading this book”. So what we did, we made a quiz and it’s at isfbforme.com. You go to that page, it takes 60 seconds, answer 10 questions and it gives you a score form 1-10. If you got an 8, 9 or 10 then do Facebook advertising. If you got less than a 5, do not do this!
We designed it so that anywhere from half to two thirds, maybe even 75% of people would be pushed away. That worked and it’s one of the reasons that even the early edition to the book got good reviews. We’ve adjusted the quiz a little bit but we still push people away. I rarely see marketers actively pushing the wrong people away. Most of the time when they do, they’re faking it. You never need to fake this. Most people are not your customers.
Rick: It’s such an interesting concept and I’m glad you brought the ‘rack the shotgun’ up because I was going to ask you about that. It’s such a cool concept that a lot of people don’t think about. I love how you position it because it’s so easily understandable.
I did have one question, we’ll finish off with this:
If you have a certain amount of bandwidth, if you have limited time, resources and energy, how do you decide when it comes to paid traffic where to focus your energy to get the biggest and the greatest ROI?
Perry: There’s lots of traffic sources. First of all, you can be sure that if there’s 20 different traffic sources you can go to, only 2, 3 or 4 of them are really going to hit the ball out of the park. The rest of them are going to be an after thought. You can’t get good at 20 traffic sources. I think you can get good at 2 or 3 and most people should just try 1.
As far as Facebook and Google are concerned, we also have a quiz that isawforme.com and it will give you a score on Google Search and Google Display Network.
Calling people on the telephone is a source of traffic, speaking at a seminar is a source of traffic, there’s lots of ways. What you do to get traffic needs to be congruent with your personality. I made a quiz called The Marketing DNA Test and if you’re a hostage negotiator, it will tell you. If you’re an analysis person that sits in a cave and does spreadsheets and that’s how you persuade, it will tell you. If you’re a copywriter, it will tell you. If you’re a video person, it will tell you.
You need to do a traffic source that really resonates with you.
Google AdWords made sense for me because I’m a guy who liked to sit there with a column of numbers and write ads, hide in my cave and not have to talk to anybody. That’s great for me but not everybody is like that. Some people want to go and shake hands, put on a suit. Whatever you do for traffic, it needs to fit you.