The Pareto Principle, aka the 80:20 rule, was named after an Italian pea farmer named Pareto.
Pareto discovered that 80% of his peas came from 20% of the pods in his garden.
Today, the Pareto Principle is used in almost every facet of business, from human resources to manufacturing to sales, and of course marketing.
If you look at your own fundraising and marketing efforts, you’ll find that:
- 20% of your donors give 80% of your revenue
- 20% of your fundraising campaigns lead to 80% of your annual revenue
- 20% of your advertising accounts for 80% of the acquired donors
- Etc… 20% of causes lead to 80% of the effect
Nonprofits that thrive tend to focus on the pods that produce 80% of the peas.
So how can you improve your marketing and fundraising ROI using this same principle?
Here are a few examples to get you thinking like a pea farmer:
1. Which email messages raise the most money?
Undoubtedly, nonprofits get a significant amount of online donor conversations via email. Using the Pareto Principle, you’ll find that 20% of your email campaigns produce 80% of the donations. Analyze your email conversions and figure out how to apply these email strategies to other campaigns.
2. Which Facebook posts drive the most engagement?
Facebook has completely changed the way nonprofits raise money. Instead of having to hunt for potential donors, potential donors hear about nonprofits from their Facebook friends.
Maximizing Facebook ROI means focusing your Facebook campaigns on the topics and interests that engage the most fans. For example, with Facebook Insights you can easily discover the 20% of your posts that drive 80% of your sharing.
3. Which marketing campaigns drive the most event registrants?
Following the Pareto Principle, 20% of your event marketing generates 80% of the event registrants. Using Google Analytics, you can discover the campaigns that drive the most registrants.
Once you figure this out, you can then focus 80% of your resources on the top 20% of your event marketing campaigns.
Pareto Principle in practice: Discovery and Effort
As you can see, the Pareto principle can be used in a number of ways for your nonprofit. But however you decide to use the 80:20 rule, keep in mind that it requires two mindsets:
- Discovery: Which pods are producing 80% of your peas? Using analytics (email, website, donor stats, etc) will help you discover the key 20%. For example, which fundraising stories drive 80% of your new donor conversions? Check out this useful Pareto excel spreadsheet.
- Effort: How will you grow more peas? Once you discover your key 20%, how will you adjust your marketing and fundraising strategies to get even more from that 20%? For example, you might develop a donor recognition campaign specifically for 20% of your donors that give 80% of your revenue.
In short, use the Pareto Principle to find the marketing and fundraising efforts that produce the most impact. This is how the most successful nonprofits maximize their marketing ROI in terms of both time and money.