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19% returns a year? We're serious.

  • By Kat Wingert
  • | 9:01 p.m. March 20, 2013
  • | 2 Free Articles Remaining!
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Who wants to earn 19% returns a year?

With a promise like that, you might be suspect of a scam. Understandably so, in a world of 1% returns on savings and a volatile market with Washington's decision paralysis encouraging fear and instability in the business world.

Yet those returns are what Joe Hahn promises, sans an elaborate Ponzi scheme. Hahn, who spoke at this month's Gulf Coast CEO Forum meeting, espoused the benefits of 80-20 management.

Based on the Pareto principle, which is also know as the law of the vital few, Hahn, vice president of consultant company Strategex, insists the concept is simple. It's the execution that's tricky.

For example, if you dug into your data, you would find that more than 80% of your business comes from 20% of your customers. So if that's true (which Hahn says it is for every business, in every industry), then why is it that we treat all our customers the same?

By doing so, he argues, we spread costs across all customers, no matter how unprofitable those relationships. Instead, we should be providing our superior customers with superior service. That's the 80-20 rule.

Watch the video below as Hahn explains cost distribution for businesses compared with their revenue distributions.


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