Pareto’s law and touchpoints?


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It is cumulative effect of all touchpoint interactions that represents overall brand experience for a customer. Given that cumulative effect, is it then wise to apply the same theory as identified by business management thinker Joseph M. Juran, who said that roughly 80% of effects come from 20% of the causes? He named the theory after Italian economist Vilfredo Pareto who observed that 20% of the population of Italy owned 80% of the land and developed the theory further by stating that 80% of the peas came from 20% of the pods.

I wondered if Pareto’s theory applies to touchpoints that make up the customer experience? There have been many definitions through the past decade of what constitutes a touchpoint. The one I like best is simply put as follows: “an interaction between 2 or more entities which happens anytime any place by any means for a purpose”.

The idea for this discussion came from an experiment conducted by a Colorado based marketing firm applying Pareto’s theory to the marketing function within a business exploring the notion that that 80% of the effects come from 20% of causes.

Fusion Partners went about identifying the 20 most important functions of a B2B marketing department. They picked the top 4 (or 20%) and suggested the net effect of focusing on that 20% of effort would account for 80% of results.

There are parts of marketing, where it is very difficult to clearly measure an ROI (Return on Investment), for example PR, Social Media, but after some in depth analysis, they arrived at the Four Pillars of Marketing, which they suggest are the following:

  1. Compelling Brand Promise
  2. Informative & Engaging Website
  3. Effective Pull Marketing Strategy
  4. Optimized Marketing and Sales Model

I would recommend the following 5 stage process to analyze touchpoints:

1. Understand
2. Chart
3. Measure
4. Analyze
5. Take Action

A proper feedback mechanism in place, such as a well recognised EFM solution, should help to make prioritizing of touchpoints a more straight forward exercise.

When this has been done, then you will be able to highlight the areas that are of most concern for your business, for instance, in the Telecoms Market analysis conducted by 2020feedback, you will see that a key issue for the industry is high customer churn, as such, touchpoints that led to customer retention and referrals rank high in importance, and are managed accordingly.

When touchpoints are prioritized, would it not be an interesting exercise to map out which ones account for most investment from the business, and the level of correlation between revenue spend and the net effect that spend is having on customer experience? I would imagine that as with many things, you will find that 20% of the touchpoints account for 80% of the value.

So back to the key question, should you, therefore, spend 80% of your time, working on the 20% of most important touchpoints?

It is a difficult question to answer for definite, sometimes these things can be difficult to quantify. In my view, as long as you don’t neglect the remaining 80%, given historical precedent, it is something, at the very least that is definitely worth investigating.

If it only serves as an exercise to get you thinking about and prioritizing your touchpoints, it will definitely be worth your while.

Republished with author's permission from original post.

David Heneghan
David founded CX Index to help businesses leverage feedback to make more profitable decisions. Through our software platfrom we conduct sophisticated data analysis to help businesses drive more porfitable customer centric decisions. @cxindex


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