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We have just launched our new book entitled 'Wake Up and smell the Coffee Profits' available now on Amazon. It is dedicated to Pareto because we love using the 80/20 rule in almost everything we do. Today we will look at Pareto's law , - the 80/20 of making money at coffee. 80 percent of readers will probably not finish this article which is why you can only get good coffee in 20 percent of establishments.
There is a world of difference between efficiency and effectiveness, and it's in that world that good baristas flourish. They are well aware of the power and presence of the 80/20 rule and have probably read Richard Koch's book, "The 80/20 Principle" because even its subtitle -- "The Secret of Achieving More with Less" -- is at the heart of those who make money at coffee. It dramatically emphasizes the effectiveness that can be gained by simplicity.
Alas, even baristas don't hit the bullseye with every espresso shot but they can get 80% of the way there every time, which is great tasting coffee, by addressing the three key factors in espresso production – Freshness, Cleanliness & Extraction. Quite often what is obvious, is simple and generally makes common sense yet in 80 percent of cases is ignored.
On Freshness - how many grinders have you seen with the coffee pre ground in the dosing chamber sometimes hours before use. Consider your most important set of customers . . 20 percent of them, the first ones of the day, coming to you for their daily hit and you give them coffee that was ground the previous day and if it is Monday possibly two days ago! Coffee starts to deteriorate as soon as it comes into contact with air.
On Cleanliness - what about the steam wands caked with milk and the Portafilters that have never been stripped down and scrubbed. 80 percent of the coffee machines are dirty all effecting flavour, missing the opportunity to hook the customer and so effecting profit.
On Extraction - only 20 percent of the espresso shots poured in the UK approach anywhere near the 20-30 second target brew time and are sour. 80 percent of operators do not even understand what the correct extraction time is and why it is necessary quoting a need for speed, which is why only 20 percent make good money at coffee.
However, it is not just in coffee production that attention must be paid in order to operate a profitable coffee business. Profitable operators direct their energies towards learning which 20 percent of their marketing generates 80 percent of their sales. Just knowing this to be true is a compelling reason to learn where each of your customers learned of your existence, to recognize that all customers are not created equal and that 20 percent of them most likely account for 80 percent of your profits.
The 80/20 rule teaches you simplicity and applies to more of your business than marketing and more of your life than business:
80 percent of what you achieve at work comes from 20 percent of the time you spend working.
20 percent of a company's products usually account for 80 percent of its sales. And 20 percent of its employees contribute to 80 percent of profits.
20 percent of criminals account for 80 percent of crimes.
20 percent of motorists cause 80 percent of accidents.
20 percent of your carpets get 80 percent of the wear.
20 percent of your clothes will be worn 80 percent of the time.
80 percent of traffic jams occur on 20 percent of the roads.
20 percent of computer users purchase 80 percent of software.
Your job? To find out which 20 percent of your marketing is motivating the most sales, to determine which 20 percent of your customers are producing 80 percent of your profits, to learn which 20 percent of your prospects are most likely to become customers.
When you discover which 20 percent of your customers are responsible for 80 percent of your sales, focus on keeping them happy, increase the amount of business you do with them, and tap them for their referral power because these are obviously satisfied customers. Paying more attention to them reduces your marketing budget because you can pay less attention to the 80 percent who motivate 20 percent of your profits.
Once your mind has absorbed the full implications of the 80/20 rule, consider applying it in other ways: celebrate exceptional productivity rather than raising average efforts. Look for short cuts. Be selective more than exhaustive. Delegate and outsource as much as possible. Target a limited number of goals and focus like a laser beam upon them.
Because you're focused, don't do any of these things in a hurry. Patience will enable you to spot the areas that need changing, and consistency like great tasting coffee and quality will win the day in the long term. Fast isn't beautiful. Big isn't beautiful. Small isn't beautiful. It's simple that is most beautiful if you're an 80/20 person.
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