Here’s how to use the infamous but underrated Pareto’s Law or the 80/20 rule to lean your portfolio and focus on what’s performing, instead of mingling with the non-performers.
The 80/20 rule is basically about efficiency and effectiveness – in other word, productivity. The rule can be translated in many ways:
“80 percent of your web business revenue is generated by 20 percent of your clients” – and vice versa.
“80 percent of your effort is only yielding 20 percent of total results” – and vice versa.
In term of web property ownership, you can the 80/20 rule speaks about the possibilities, such as:
“80 percent of your time is exhausted on 20 percent of your web properties”
“80 percent of your total revenue is generated by 20 percent of your web properties”
… and plenty of other possibilities to interpret the big picture of your web property ownership using the 80/20 rule.
How to use the 80/20 rule to increase your web properties’ productivity
Here are some tips for you – from my personal experience.
1. Identify your sub-par performing web properties
Here are some steps to help you identify poor-performing web properties you own:
- Create a table of your owned web properties – include net profit and management time of each.
- Add a few columns that show a weighted value of net profit and management time – e.g. if you consider net profit as a priority, give it a 60 percent and the management time 40 percent
- Add another columns containing a total “score” (e.g. add 0.6 x $net-profit + 0.4 x hours)
- Sort your table based on the total score
There you go – you’ll see a nice list of web properties based on the criteria defined above. Of course, you could add other criteria, such as “web property value,” “web property potential” and any other things you consider important.
I recommend you to create a table for each of your web property type – domain names, websites, etc.
Now let’s start analysing: Suppose you have 100 well-sorted sites. You may want to focus on OTHER THAN the top 20 sites. Those 80 sites you see are the ones you should pay attention to.
2. Improve or eliminate
You have 2 options on how to proceed with your 80 sites; you could try to improve them – link building, site redesign, etc. or eliminate them when they are “hopeless.”
The idea here is to weed out the “hopeless” sites by selling them (at dirt cheap price tag, if you will) to buy and sell site marketplaces, such as Flippa, or webmaster forums, such as DigitalPoint Buy, Sell, Trade Forums, and start focusing on your “money” sites.
3. Use the made-available resources well
If you done this well, you might be surprised to know that you have plenty of free time and budget to do things. From my experience, your time and money are sucked dry by your non-performing web properties, leaving you with less-quality time and lack of budget to actually grow your Top 20 sites.
Now you might want to allocate the free time and budget space to either better your Top 20 sites or investing in new ones to discover web properties that can sit nicely on your Top 20 list, pushing down ex-Top 20 sites down. This way, you can always better your portfolio, and eventually your profits and site management.
Just give it a go, and share your experience in putting the 80/20 rule to work.
80/20 rule rocks!