The definition of the Pareto Principle, or Pareto Rule, states that 80% of consequences (or results) come from 20% of causes (or efforts.) The term was coined back in the early 1900s when the Italian economist Vilfredo Pareto noticed that 80% of Italian land was owned by just 20% of the Italian people. It is said that he also recognized the same pattern in his own home, after seeing that 80% of the peas in his garden came from 20% of its pea plants. From there, he concluded that the same behavior could be applied to businesses and economics rather than just land.
In business, the Pareto rule is used to “identify inputs that are potentially the most productive and make them the priority.” Once such factors are identified, managers should give them the most focus, as they are critical to business success. For example, if 20% of your employees are responsible for 80% of your revenue, or if 20% of your products represent 80% of your sales.
But if you think the Pareto rule is to be found exclusively in the business world, think again. Examples of it can be found virtually everywhere: 80% of pollution comes from 20% of all factories around the world; 80% of all traffic accidents are caused by 20% of drivers; 80% of a country’s internet coverage is located in 20% of its cities.
On the other hand, to achieve the remaining 20% of the results needed demands 80% of your efforts.
The Customer Service rule
By now, it comes as no surprise that the Pareto rule can apply to Customer Service as well. And it can manifest itself in different forms. For example, 80% of complaints are made by 20% of your customers.
We looked at our customer data and came up with another Pareto rule conclusion: 80% of your customers’ ticket volume comes from 20 ticket categories or topics. Among about 100 categories (on average, a customer defines between 80 and 120 categories), 20 is a small number but that translates into 80% of the volume of tickets and, consequently, 80% of where your team is focusing their attention and efforts.
Our calculations are based on data from our own customers across different industries — banking, retail, e-commerce, marketplaces, and software. We concluded that the top 20 categories for each of these customers represent between 60 and 80% of their customer support tickets. We might have bent the rules a little, by considering customers whose ticket category behavior was 60% for the top 20 categories. However, we still think it’s relevant to include them as they prove the point that those tickets require the most of your and your team’s efforts.
After identifying this, you will be able to better strategize how to tackle those 20 categories. It can be by allocating more human resources to handle just those tickets, investing in technology — automations or self-service, for instance — that will help take some of the load off your agents, or simply to more easily organize and distribute incoming requests. Whichever solutions you choose to implement, it’s always a good idea to keep the Pareto Rule in mind.