Blog 28 - The Pareto Principle: Unlocking Business Growth and Smarter Work Winning
The blog this week is from Jeremy
The Pareto Principle: Unlocking Business Growth and Smarter Work Winning
In the world of business development, one principle consistently proves its worth: the Pareto Principle, or the 80/20 rule. Originally observed by economist Vilfredo Pareto in the early 1900s, this concept states that roughly 80% of outcomes come from 20% of inputs. In business growth and winning work, this imbalance is striking — and once understood - highly actionable.
What Does the 80/20 Rule Mean for Business Growth?
For most B2B and B2G organisations, the pattern is clear: 80% of profits often come from just 20% of clients. These are your high-value accounts—the ones that:
Have programmes of work extending into the future.
Are collaborative and easy to work with.
Show a higher propensity to negotiate work, rather than being purely price-driven.
Conversely, the long tail of smaller, one-off clients often erodes profitability. These deals tend to be won on price, involve work far from home and come with clients who are more demanding or even litigious. The result? Higher delivery costs, strained teams and minimal margin.
The Economics of Retention vs Acquisition
The numbers reinforce this focus. Studies show that acquiring a new client can cost five to seven times more than retaining an existing one. The probability of selling to an existing customer is 60–70%, compared to just 5–20% for a new prospect. In other words, deepening relationships with your top 20% isn’t just smart—it’s essential for sustainable growth.
Why the Pareto Principle Rings True in Winning Work
Applying the 80/20 rule to your targeting, bid strategy and account management can transform outcomes:
Focus on the vital few: Invest time and resources in clients who deliver recurring, profitable work with good forward pipelines.
Qualify ruthlessly: Build insights into your bid/no-bid decision framework. If a project is one-off, price-driven and far from your core geography, think twice.
Segment strategically: Use profitability analysis to classify clients into:
Core Growth Accounts: Long-term, collaborative, profitable.
Transactional Accounts: Price-sensitive, high-risk, low-margin.
This approach aligns with research showing that businesses applying the Pareto Principle to operations and strategy consistently outperform peers by concentrating on high-impact activities.
Characteristics of Profitable vs Unprofitable Clients
Profitable clients share common traits: predictable pipelines, strong relationships, and reasonable expectations. They value quality and partnership over price. Unprofitable clients, on the other hand, often:
Demand excessive support.
Require frequent changes or concessions.
Generate high service costs relative to revenue.
Recognising these patterns allows you to allocate resources wisely and avoid the trap of chasing low-value work.
Actionable Steps for Growth Leaders
Analyse Your Client Base: Identify the top 20% driving 80% of revenue and margin.
Create Account Plans: Develop long-term strategies for these clients, including pipeline visibility and relationship mapping.
Optimise Resource Allocation: Assign your best talent to high-value accounts.
Build Retention Programmes: Loyalty initiatives, executive sponsorship and innovation workshops can deepen engagement.
Say No Strategically: Walking away from unprofitable deals frees capacity for work that matters.
The Bottom Line
The Pareto Principle isn’t just a theory—it’s a practical lens for decision-making. By focusing on the clients, projects and activities that truly move the needle - you can reduce wasted effort, improve profitability and secure sustainable predictable growth. In a competitive landscape, working smarter—not harder—is the ultimate advantage.
Other Resources
We’re on a mission to help companies like yours win more work.
Here are some other free resources that should help you too. Feel also free to share them with friends and colleagues:
Bid Writing Training - Learn to write winning tenders here.
Free Bid Writing Basics Training Video - Watch the video here.
Writing Crown Commercial Services Bids - Learn to tackle the challenges of writing CCS tenders here.
The Bid Toolkit - We make winning simple.
Our free work winning Podcast, the Red Review, can be found here.
You can also follow Jeremy on LinkedIn for hints, tips and insights here.
100% Typo Guarantee—Our blog posts are free-range. It was hand-crafted with love and sent out unfiltered. There was no review queue, no editorial process, no post-post revisions. Therefore, I can pretty much guarantee that there is some sort of typo or grammatical error or literary snafu. Got a business to run and a four year old to Dad. Sorry.