May 12, 2025 • 30 mins
Have you been applying the 80-20 rule all wrong? Most entrepreneurs have a surface-level understanding that 80% of results come from 20% of efforts, but as Perry Marshall reveals, this barely scratches the surface of this powerful principle's true potential.
TODAY'S WIN-WIN:
Use the 80/20 principle to identify new opportunities for your business.
LINKS FROM THE EPISODE:
- You can visit our guest's website at:
- https://www.perrymarshall.com/
- Get a copy of our guest's book: CLICK HERE.
- Attend our Franchise Sales Training Workshop:
- https://bigskyfranchiseteam.com/franchisesalestraining/
- If you are ready to franchise your business or take it to the next level: CLICK HERE.
- Connect with our guest on social:
- https://x.com/perrymarshall
- https://www.facebook.com/perrymarshallcom
ABOUT OUR GUEST:
Perry Marshall is a renowned business strategist, best-selling author, and expert in digital advertising. Known for Ultimate Guide to Google Ads and 80/20 Sales and Marketing, Perry has consulted across 300+ industries, shaping the $400B digital ad space. He’s the founder of the $10M Evolution 2.0 Prize and co-founder of the Cancer & Evolution Working Group. Perry’s insights bridge the worlds of marketing, science, and entrepreneurship, making him a must-listen for anyone seeking growth and innovation.
ABOUT BIG SKY FRANCHISE TEAM:
This episode is powered by Big Sky Franchise Team. If you are ready to talk about franchising your business you can schedule your free, no-obligation, franchise consultation online at: https://bigskyfranchiseteam.com/.
The information provided in this podcast is for informational and educational purposes only and should not be considered financial, legal, or professional advice. Always consult with a qualified professional before making any business decisions. The views and opinions expressed by guests are their own and do not necessarily reflect those of the host, Big Sky Franchise Team, or our affiliates. Additionally, this podcast may feature sponsors or advertisers, but any mention of products or services does not constitute an endorsement. Please do your own research before making any purchasing or business decisions.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Tom DuFore (00:01):
Welcome to the Multiply your Success podcast,
where, each week, we helpgrowth-minded entrepreneurs and
franchise leaders take the nextstep in their expansion journey.
I'm your host, Tom Dufour, CEOof Big Sky Franchise Team, and,
as we open today, I'm wonderingif you have ever heard of the
80-20 rule.
Well, if you're like most of us, you've probably heard of it,
(00:22):
but how familiar are you with it?
Have you applied it to yourbusiness?
Well, our guest today is PerryMarshall, and he has become an
expert at applying the 80-20principle to your business and
your life Now.
Perry is a renowned businessstrategist, bestselling author
and expert in digitaladvertising.
He's known for the UltimateGuide to Google Ads and 80-20
(00:45):
Sales and Marketing.
Perry has consulted across over300 industries, shaping the
$400 billion digital ad space.
He's the founder of the $10million Evolution 2.0 Prize and
co-founder of the Cancer andEvolution Working Group.
Perry's insights bridge theworlds of marketing, science and
entrepreneurship, making him amust-listen for anyone seeking
(01:05):
growth and innovation.
You're going to love thisinterview, so let's go ahead and
jump right into it.
Perry Marshall (01:11):
Perry Marshall.
I'm the founder of Perry SMarshall Associates, author of
80-20 Sales and Marketing, andreally glad to be with you today
.
We're going to have a good time, Absolutely Well.
Tom DuFore (01:22):
Thank you, Perry.
Really appreciate you beinghere and spending some time
together.
I really wanted to at least getthe conversation started,
talking about your book 80-20Sales and Marketing and talking
about this 80-20 principle, andlet's start there.
Let's talk about why write abook about this.
Perry Marshall (01:40):
I thought I understood 80-20 a long time ago
when I read some business book.
It said 80% of your businesscomes from 20% of your customers
and the other 20% comes from80% of the customers.
And I thought is that right?
I printed out a QuickBooksreport, I pulled a calculator
(02:01):
out of my desk, I went down,sure enough, from top to bottom,
20% of the way down, yep, thatwas 80% of the revenue.
And I go oh, that's interesting.
And I thought I understood itand that's what most people
understand.
Most people have heard thisbefore.
I did not understand it.
I didn't really understand itat all.
(02:23):
So at the time I had thiscustomer named Dimitri and his
company only ordered a fewthousand dollars of stuff every
year.
It was a very small customerbut he would always beat me up
about well, you guys don't havethis software feature and you
don't have that.
And I was at a software companyand I would always try to like
(02:46):
make him happy and he wouldthreaten to leave.
And what I didn't realize atthe time was this guy's a minnow
and you shouldn't get tangledup in that and 80% of your
business comes from a fewcustomers and he's not one of
them.
But I just didn't quite connectit.
And a few years later I wasreading a different book and it
(03:11):
said 80-20 has a lot to do withchaos theory.
And suddenly my head explodedbecause that is something that
I've studied.
That is the science that dealswith things like tornadoes and
earthquakes and glaciers andcracks in windshields and black
swan events.
And I go wait a minute.
(03:32):
And I jumped up.
I was in a coffee shop, Ijumped up, I ran home and an
hour later I'm laying on theliving room floor with papers
everywhere, I'm doingcalculations and my wife walks
in and she goes what happened toyou?
I'm like I just had a hugerealization.
My brain melted.
So I want to explain.
(03:54):
Why did my brain melt?
Well, in chaos theory they showyou that a crack in your
windshield and a crack in theSan Andreas fault are the same.
You know it could be reallytiny, it could be really huge.
It's the same process thatmakes them both.
A tree has tiny, tiny littlebranching patterns in the leaves
(04:16):
under a microscope and has ahuge branching pattern when you
back out and that's calledfractal.
And what I suddenly realizedwas 80-20 is fractal.
There's an 80-20 inside every80-20 inside another one and
another one.
So not only do 20% of yourcustomers produce 80% of your
business, 20% of the 20% produce80% of the 80%, and that goes
(04:42):
again and again until you'redown to only one customer.
So this goes all the way toJeff Bezos.
It guarantees you that somebodyin the world is going to have
that much money.
And what it says is that theinequality where the 80 and the
20 and the 20 and the 80 isbaked in.
(05:04):
It's a law of physics and when Isuddenly saw it I couldn't
unsee it.
It is absolutely everywhere.
Most people have never noticedthis.
In fact, I have a friend whotexted me a week ago.
He goes.
My daughter is about tograduate from major university
(05:27):
with a degree in statistics andhe goes.
I was talking to her last night.
She's never heard of the 80-20principle Degree in statistics,
never heard of it.
It is the most pervasive thingthat nobody ever told you about.
It's in your Facebook account.
It's in shoplifting.
If 80% of the stuff is stolenby 20% of the shoplifters,
(05:53):
you'll never eliminate all theshoplifting, but you can
eliminate 80% of it by findingtwo people.
It's true of employees and it'strue of ad campaigns.
It is a total mind shift.
It's like putting on a set ofx-ray glasses that allow you to
see things that you never sawbefore.
(06:14):
It is the most important thingyou can learn in business.
Tom DuFore (06:17):
It is a tremendous principle and one I've been
familiar with, like youdescribed, but then taking it
and essentially duplicating thatwithin itself right these, with
like you described, but thentaking it and essentially
duplicating that within itself,right these branches, as you
described, the branches youshared with the leaf, and then
the branches and so on, yes, andit applies to almost everything
(06:38):
.
Perry Marshall (06:39):
Let me tell you a story.
I have a friend who, at age 17,he dropped out of Catholic
school in Denver, hitchhiked toLas Vegas and became a
professional gambler.
This was his fantasy as ateenager to be a pro gambler.
So he got a fake ID and he'sgoing around the casino and he's
(07:01):
playing poker and about a monthinto this he's like this is a
lot harder than I thought it wasgoing to be.
So he goes to a gamblingbookstore and he's looking at
the books and he starts talkingto this guy who's there and he
finds out the guy runs aprofessional gambling ring and
his name is Rob.
(07:22):
And Rob, do you think you couldteach me to do what you guys do
?
And he says for a percentage ofyour winnings, I can teach you
to do what we do.
And so they shake on it Jump inthe Jeep, john, we're going for
a ride.
Gets in the Jeep, they'redriving down the highway and
John says so, rob, how do I winmore poker games?
(07:46):
And Rob says you need to playpeople who are going to lose.
You don't go after otherprofessional gamblers.
You want the 18-year-old fromWichita whose grandma just gave
him some money and he's going togo to lost wages and get rich.
And he goes well, where do Ifind that kid?
And he goes here, I'll show you.
And they pull into the parkinglot of a strip club.
(08:09):
They go in there.
There's women, there's music,there's lots of distractions,
loud rock and roll playing.
Rob sits John down at a tableand he pulls a sawed-off shotgun
out of his jacket.
He holds it under the table andhe slams it shut.
So it goes.
(08:29):
And in the middle of this loudclub there's a few people that
hear that noise and they're like, what?
Like?
There's biker dudes over therewho made that noise.
And the owner comes over thetable.
What's going on here?
It's okay, just teaching thelad a lesson.
John, did you see those dudeswho turned around when they
(08:49):
heard that noise?
Yeah, don't play poker withthem.
They're not marks.
Play poker with everybody else,and that is what we call racking
the shotgun, and that is whatwe call racking the shotgun, and
that separates the 80 from the20.
Everything you do in sales,everything you do in marketing,
(09:15):
everything you do inentrepreneurship is racking the
shotgun.
So, with customers, everysalesperson in the world is
obsessed with all the peoplethat didn't answer the phone,
didn't buy, didn't click on thepeople that didn't answer the
phone, didn't buy, didn't clickon the link, didn't, didn't,
didn't.
What's so easy to forget isthat the dids are 16x, the
didn'ts Like if you look at80-20, the top 20 are 16x, the
(09:41):
bottom 80.
And then there's a top 20 ofthose, that's 4x, and then
another top 20, that's another4x.
So I call it the espressomachine principle.
For every 1,000 people who buya $5 latte at Starbucks, one of
(10:02):
them will spend $2,700 on agleaming stainless steel
espresso machine.
It's a law of physics that ifyou've got a lot of buyers who
buy, you know, for a dollar,there's a few buyers that'll
spend $10,000.
It's a law of physics.
80-20 guarantees that it's true.
(10:24):
A law of physics 80-20guarantees that it's true.
And a lot of people don'trealize this and they don't
understand that the coffee justkeeps the lights on and it keeps
the customers coming in thedoor, but all the money is in
the espresso machine and a lotof businesses are not what you
think they are.
80% of the money in Vegas comesfrom these people that they
(10:46):
call whales, that spend $100,000on a hand of poker and there's
special wings and rooms andsuites for those people that the
rest of the world doesn't evenknow exists.
And most people don't know thatMcDonald's isn't really selling
hamburgers.
They're growing the value ofreal estate and most smart
(11:13):
businesses.
There's something behind it.
That's not what you see on thefront door and that's all.
Espresso machine principle.
Tom DuFore (11:19):
As I'm listening to you describe and talk about this
, I guess my question that comesto mind is this is great, but
if I'm listening into this, howdo I apply this to my business?
These stories are great, butmaybe what's something practical
or a nugget from your book thatI might be able to apply?
Perry Marshall (11:37):
So if you're advertising on Google or
Facebook, 80% of the money is in20% of the ad campaigns, 20% of
the ads, 20% of the keywords.
There are huge parts of thosethat are generating huge amounts
of waste.
I guarantee it.
(11:59):
If you hire 10 salespeople, twoof them will outperform the
other eight put together.
I guarantee you that is goingto happen.
80-20 guarantees you it's goingto happen.
Most people try to fix the runts, and not only do they try to
(12:19):
fix the runts that can't befixed, they also annoy the
performers.
Like you got Charlie and he'san amazing closer and Susie is
assaulting him because hisexpense reports aren't in on
time.
Well, why don't you get yourhire him an assistant to follow
(12:41):
him around with a shoebox andpick up his receipts or whatever
you've got to do?
But don't annoy the guy withthat crap and let him perform.
There are areas of waste inbusiness 10% of your product
line, 10% of your clients, 10%of your employees.
You are taping dollar bills toevery box that goes out the door
(13:04):
and you don't know it.
You would make more money ifyou discontinued that product or
if you doubled its price.
You're afraid to double theprice because you'll offend
somebody.
Well, you're losing money.
It's everywhere and there'snever just one cockroach.
Tom DuFore (13:23):
You mentioned raising prices on that product.
That's 10 or 20% drivingrevenue.
Are there other practicalthings you've seen or
suggestions you might have forsomeone that says, okay, I like
this.
What can I do to analyze thisand start making some
adjustments?
Perry Marshall (13:39):
There's a principle called the 21-20 rule
and it says that 20% of yourbusiness makes 120% of your
profit.
That's the best 20% of yourbusiness and the worst 20% of
your business loses money.
And brings your 120, you wouldhave made down to the 100 that
(14:00):
you did make.
You have employees who arelosing you money.
I have a good friend namedNancy Schlesinger, longtime
client.
She's a recruiter, been in thatbusiness for 30 years.
She told me a bad employeecosts five to 14 times their
salary.
I thought, oh well, that's gotto be an exaggeration.
(14:23):
It's probably one or two X andNancy's just exaggerating.
Well then, a year or two later,I had to fire a bookkeeper and
then, when I had a betterbookkeeper, I started finding
out what all the mistakes were.
There were $50,000 invoicesthat never got sent out two
(14:44):
years ago.
Well, how does a customer feelabout getting a $50,000 invoice
two years later?
Does that go over?
Very well, that bookkeepercosts you way more.
Like that's just one mistakeand that's not all the other
mistakes.
It is absolutely true that bademployees cost you way more.
(15:04):
A players attract A players, bplayers drive away A players and
attract C players.
That's 80-20.
Tom DuFore (15:13):
Have you applied this just to other areas of your
life, just in general?
Not just you know running yourown business, but where else
have you applied this?
Just to other areas of yourlife, just in general?
Not just you know running yourown business, but where else
have you applied this?
Perry Marshall (15:22):
It is true in personal relationships, it's
true in science, so it's 80-20is true of the traffic on the
streets.
In your town, 80% of thetraffic runs on 20% of the
streets and 50% of the trafficruns on 1% of the streets.
It's true of craters on themoon.
It's also true of personalrelationships.
(15:43):
The top 20% of your personalrelationships create 120% of
your happiness and the bottom20% of your relationships create
negative 20% happiness.
Okay, you have toxic people inyour life that you need to get
rid of and you haven't gottenrid of them.
Because you're not, because youdidn't rack the shotgun and
(16:04):
decide to do something about it.
It's everywhere.
Tom DuFore (16:11):
That's just amazing to think about.
Well, real quick, while we'rein the midst of this, how can
someone get a copy of your book,learn a little bit more about
what you're doing, maybe followwhat you're up to?
Perry Marshall (16:22):
If you go to perrymarshallcom slash podcast,
you can get 80, 20 sales andmarketing for seven bucks
including shipping.
It's about 20 bucks on Amazon.
It's got 1300 reviews, 4.7stars.
It will completely change yourlife and that's at
perrymarshallcom slash podcast.
And it comes with a coupleextra videos that you wouldn't
(16:44):
get if you bought it on Amazon.
So go pick that up and sign upfor my Perry Marshall Minute,
which is a daily email thatcomes out, and it will get you
thinking 80-20.
I have a whole bunch of 80-20fanatics that follow me and
learn and it just goes deeper.
(17:06):
It's like martial arts.
You can get a first degreeblack belt, but you could also
get a second or a third or aninth.
How deep do you want to go?
Tom DuFore (17:15):
Fantastic.
I love it.
Well, Perry, this is a greattime in the show.
I always like to ask everyguest the same four questions
before we go, and the firstquestion is have you had a miss
or two on your journey andsomething you learned from it?
Perry Marshall (17:29):
Yeah, about nine years ago I was talking on the
phone and I looked through myFrench doors and my brother was
in the next room and he's thepresident of my company and I
live in Chicago and he lives inNebraska.
So I wait a minute.
My brother's here unannounced.
(17:50):
This doesn't look good.
So I finished my phone call,Brian, what are you doing here,
Perry?
We need to talk.
And he goes.
We have too much overhead, wehave too much employees, Our
expenses are too high, we needto cut back.
And we spent that was like twoin the afternoon.
(18:11):
We spent until 11 o'clock thatnight arguing and debating.
Well, Brian, we're going to dothis and we're going to do that,
and I think we're going to befine, and you don't know how
awesome this next thing is goingto be.
Well, about two or three monthslater, it was obvious he had
been right and I had been wrong,and I was now three months
(18:34):
further behind on myover-optimism and now I really
needed a cut.
Now, anybody who really owns abusiness and has done it for a
while and has had to make cuts,knows that when you cut, the
improvements do not immediatelycome, Because you have things
like severance packages andstuff like that, and we were
(18:55):
laying employees off severancepackages and stuff like that and
we were laying employees off.
And that was really the firsttime that I learned the
subtraction side of 80-20.
80-20,.
Go back to the rack, theshotgun story.
It's more about who you don'ttalk to and what you don't do
(19:16):
and what product you don't shipout and which employee you don't
hire, as much as it is aboutwhat you do.
Tom DuFore (19:23):
You can apply it to set boundaries right.
Perry Marshall (19:25):
Yes, and most entrepreneurs that I know are,
yes, people.
We're optimists and we lovelife and we love adventure and
we're interested in people andwe're interested in ideas.
And well, you know what?
You can't fund all the ideasand you can't hire all the
(19:47):
people and you can't invest inall the things that cross your
path.
You have to be very, veryselective.
Tom DuFore (19:53):
Let's talk about a make.
Let's look on the other side.
Perry Marshall (19:56):
I had a huge victory a little over 20 years
ago, and so now that I'm 55, Iguess it's an early victory, but
I want to tell it to youbecause it pertains to right now
.
So in 2001, in the summer, acompany approached the company I
worked for and said we want tobuy you out.
And that was exactly accordingto plan.
(20:18):
We were developing a chip.
We had been working on this forthree years.
The intention was we want tomake ourselves attractive.
This is what we want.
So that was all great.
So they started doing thenegotiations and when it was
almost about done, 9-11 happened.
(20:39):
And all of a sudden the ordersstopped coming in.
We're selling capital equipment.
Everybody just froze.
Sales plummeted.
The company's just about to getsold.
They're offering me a job.
The company's just about to getsold.
They're offering me a job.
And, especially given how scarythe world was, it seemed
(21:01):
extremely attractive to take thejob, even though the job offer
wasn't really that great.
And my wife says take the moneyand run.
No, and go start the companythat you've always been talking
about starting.
And I'm like she goes, no, I'mserious.
And I asked around and this onelady said to me Perry, the time
(21:23):
of maximum uncertainty ismaximum opportunity.
Now is the time to make a jump.
And again, remember, 9-11 hasjust happened.
People are driving around withflags on their cars and the
planes aren't flying andconferences are canceled.
(21:43):
And I decided she was right andall the other employees thought
I was crazy and I jumped outand I started a consulting
business.
A year later, the founder of thecompany I worked for he had
become a vice president at thecompany that took us over.
(22:03):
He hated his job.
He didn't get along withanybody Very common, by the way,
when buyouts happen he ended upleaving and kind of having a
little fight about it and thenew company was a train wreck
and I escaped all that.
Meanwhile, the world was juststarting to shift from employee
(22:25):
world to freelancer 1099 worldand I had made that jump at the
exact right time in a year.
Well, it wasn't even a yearlater that I was happy about it.
It's actually three monthslater.
I made the most money that Iever made in a year.
Well, it wasn't even a yearlater that I was happy about it.
It's actually three monthslater.
I made the most money that Iever made in a month, which at
that time was $12,000.
I'm like, dude, like this islike six figure territory and
(22:48):
I'm what?
And like, no matter whathappens, I still think back on
that of what, how good it wasthat I took that advice.
And I bring that up now becauseright now feels like 9-11 to me
(23:10):
in the world, but it's adifferent 9-11.
It's not a this one thinghappened, it's a.
There's 1,700 things happeningand everybody's arguing about
them and debating them and a lotof people are frozen and
they're scared and they'rehiding under rocks and they're
just not really doing anything.
(23:31):
That is the wrong thing to bedoing right now.
Right now is major opportunity.
It doesn't look like it, it is.
Let's talk about a multiplierthat you've used to multiply
yourself, your organization, anybusiness you've run, the best
multiplier is know thyself isknow thyself, know thy strengths
(24:00):
and weaknesses, and I have myown version of this.
In the 80-20 book there is alink to take what we call the
marketing DNA test, and it is atest that measures how do you
sell and persuade as compared toanybody else in the room.
And the reason I made this testwas, first of all, early in my
(24:23):
sales career.
I bombed badly.
Two years of bologna sandwiches, ramen soup, baked potatoes and
salsa is really cheap, by theway Really cheap and I didn't
know it at the time.
But I was trying to be somebody.
I was not People.
(24:46):
I would admire them and theywere on stage or they were on
tapes or books or videos.
I was trying to be like themand I didn't understand no, how
do you sell?
And then, later on, I got moresuccessful and I started
consulting.
I've worked with thousands ofentrepreneurs and sales and
(25:07):
marketing people and over andover I've seen people try to
shove a square peg in a roundhole.
Maybe they're a really goodnegotiator and they're killing
themselves trying to make aYouTube channel.
Or maybe they're a really goodcopywriter and they're trying to
be a social media diva orwhatever, if you can figure out
(25:29):
what your strengths are.
Those are huge multipliers.
If you're a really good writer,the best investment you can
make is to go to a writing classthe right one and get even
better.
It's not.
Oh, I'm going to go to.
I'm going to learn how to runvideo cameras.
(25:50):
Now, because YouTube is popularis now, because YouTube is
popular, people get on thesebandwagons and they don't value
what they bring.
That is a huge multiplier, Ithink.
Tom DuFore (26:04):
for sure, most of us go through that, or some of us
get stuck in that and finddifferent versions of that as we
go through life.
So I think that's a great,great multiplier there.
Well, the final question we askevery guest, perry, is what
does success mean to you?
Perry Marshall (26:21):
I think success means if you got a terminal
diagnosis, you wouldn't changevery much of anything that
you're already doing.
You know, we've all heard thestories of you know, my life
flashed before my eyes.
What am I doing?
What am I up to?
Totally changed my priorities.
I think success is you don'tneed to change your priorities
(26:45):
because you already got themfigured out.
Tom DuFore (26:47):
That's powerful, very, very powerful.
Well, as we bring this to aclose, perry, is there anything
else you were hoping to share orget across that you haven't had
a chance to yet?
Perry Marshall (26:57):
I think that if you think things are choppy now,
just wait a little while.
2025 is going to be a choppyyear, and that means it's going
to be increasingly tough forpeople who are hanging on to
whatever the way things were,because I think normal just went
(27:19):
out the window.
I think there is no normal.
You need to let go of yournotion of normal.
There is big opportunity inembracing the new and the
strange.
In hindsight, there is noquestion that 9-11 had a lot of
opportunity in it.
There's no question that COVIDhad a lot of opportunity in it
(27:42):
and we could go over that indetail that would be a whole
other conversation but we canall agree that those
opportunities existed and thatmost people didn't seize them.
And so how are you going to dothis different than most people
did the last couple of scarytimes in life?
That's what I want to leave youwith, because the future
(28:04):
belongs to the bold.
Tom DuFore (28:06):
Perry, thank you so much for a fantastic interview,
and let's go ahead and jump intotoday's three key takeaways.
So takeaway number one is justabout the 80-20 rule in general
and how Perry talked about.
He didn't really trulyunderstand it until he had this
connection point with the chaostheory and how he saw it can be
applied to every industry andevery area of life.
(28:29):
Takeaway number two is how he'stalked about applying it to
your own business.
For example, looking at yourGoogle ad spend and Facebook
advertising and looking atprobably 80% of your keywords
and spend is not producing thekind of results you're looking
for, that it's the 20% that'sdriving most of your results and
(28:51):
keywords, et cetera, and hegave another example of how it
may be applied to yoursalespeople or to your profit in
your business.
Takeaway number three was justapplying it to your life in
general or personal life, and hesaid, for example, 80% of the
traffic likely runs on 20% ofthe streets and, thinking about
(29:12):
your own personal relationships,that you're probably your top
20%.
The top 20% of yourrelationships generate 80% of
your happiness.
I thought that was a reallyunique way to think of it, and
now it's time for today'swin-win.
So today's win-win comes fromthe tail end of the conversation
(29:34):
.
I thought this was a greatlittle nugget that Perry shared
with us.
He said with the changingenvironment that we're in, he
said, think about the newopportunities that are in front
of us and it got me thinkingokay, well, how can we apply
this 80-20 principle he wastalking about to new
opportunities for your businessor for your personal life in
this changing business climatethat we're living through?
(29:57):
So that's the episode today.
Folks, please make sure yousubscribe to the podcast and
give us a review, and rememberif you or anyone you know might
be ready to franchise ourbusiness or take their franchise
company to the next level.
Please connect with us atBigSkyFranchiseTeamcom.
Thanks for tuning in and welook forward to having you back
next week.
Welcome to the Multiply your Success podcast,
where, each week, we helpgrowth-minded entrepreneurs and
franchise leaders take the nextstep in their expansion journey.
I'm your host, Tom Dufour, CEOof Big Sky Franchise Team, and,
as we open today, I'm wonderingif you have ever heard of the
80-20 rule.
Well, if you're like most of us, you've probably heard of it,
(00:22):
but how familiar are you with it?
Have you applied it to yourbusiness?
Well, our guest today is PerryMarshall, and he has become an
expert at applying the 80-20principle to your business and
your life Now.
Perry is a renowned businessstrategist, bestselling author
and expert in digitaladvertising.
He's known for the UltimateGuide to Google Ads and 80-20
(00:45):
Sales and Marketing.
Perry has consulted across over300 industries, shaping the
$400 billion digital ad space.
He's the founder of the $10million Evolution 2.0 Prize and
co-founder of the Cancer andEvolution Working Group.
Perry's insights bridge theworlds of marketing, science and
entrepreneurship, making him amust-listen for anyone seeking
(01:05):
growth and innovation.
You're going to love thisinterview, so let's go ahead and
jump right into it.
Perry Marshall (01:11):
Perry Marshall.
I'm the founder of Perry SMarshall Associates, author of
80-20 Sales and Marketing, andreally glad to be with you today
.
We're going to have a good time, Absolutely Well.
Tom DuFore (01:22):
Thank you, Perry.
Really appreciate you beinghere and spending some time
together.
I really wanted to at least getthe conversation started,
talking about your book 80-20Sales and Marketing and talking
about this 80-20 principle, andlet's start there.
Let's talk about why write abook about this.
Perry Marshall (01:40):
I thought I understood 80-20 a long time ago
when I read some business book.
It said 80% of your businesscomes from 20% of your customers
and the other 20% comes from80% of the customers.
And I thought is that right?
I printed out a QuickBooksreport, I pulled a calculator
(02:01):
out of my desk, I went down,sure enough, from top to bottom,
20% of the way down, yep, thatwas 80% of the revenue.
And I go oh, that's interesting.
And I thought I understood itand that's what most people
understand.
Most people have heard thisbefore.
I did not understand it.
I didn't really understand itat all.
(02:23):
So at the time I had thiscustomer named Dimitri and his
company only ordered a fewthousand dollars of stuff every
year.
It was a very small customerbut he would always beat me up
about well, you guys don't havethis software feature and you
don't have that.
And I was at a software companyand I would always try to like
(02:46):
make him happy and he wouldthreaten to leave.
And what I didn't realize atthe time was this guy's a minnow
and you shouldn't get tangledup in that and 80% of your
business comes from a fewcustomers and he's not one of
them.
But I just didn't quite connectit.
And a few years later I wasreading a different book and it
(03:11):
said 80-20 has a lot to do withchaos theory.
And suddenly my head explodedbecause that is something that
I've studied.
That is the science that dealswith things like tornadoes and
earthquakes and glaciers andcracks in windshields and black
swan events.
And I go wait a minute.
(03:32):
And I jumped up.
I was in a coffee shop, Ijumped up, I ran home and an
hour later I'm laying on theliving room floor with papers
everywhere, I'm doingcalculations and my wife walks
in and she goes what happened toyou?
I'm like I just had a hugerealization.
My brain melted.
So I want to explain.
(03:54):
Why did my brain melt?
Well, in chaos theory they showyou that a crack in your
windshield and a crack in theSan Andreas fault are the same.
You know it could be reallytiny, it could be really huge.
It's the same process thatmakes them both.
A tree has tiny, tiny littlebranching patterns in the leaves
(04:16):
under a microscope and has ahuge branching pattern when you
back out and that's calledfractal.
And what I suddenly realizedwas 80-20 is fractal.
There's an 80-20 inside every80-20 inside another one and
another one.
So not only do 20% of yourcustomers produce 80% of your
business, 20% of the 20% produce80% of the 80%, and that goes
(04:42):
again and again until you'redown to only one customer.
So this goes all the way toJeff Bezos.
It guarantees you that somebodyin the world is going to have
that much money.
And what it says is that theinequality where the 80 and the
20 and the 20 and the 80 isbaked in.
(05:04):
It's a law of physics and when Isuddenly saw it I couldn't
unsee it.
It is absolutely everywhere.
Most people have never noticedthis.
In fact, I have a friend whotexted me a week ago.
He goes.
My daughter is about tograduate from major university
(05:27):
with a degree in statistics andhe goes.
I was talking to her last night.
She's never heard of the 80-20principle Degree in statistics,
never heard of it.
It is the most pervasive thingthat nobody ever told you about.
It's in your Facebook account.
It's in shoplifting.
If 80% of the stuff is stolenby 20% of the shoplifters,
(05:53):
you'll never eliminate all theshoplifting, but you can
eliminate 80% of it by findingtwo people.
It's true of employees and it'strue of ad campaigns.
It is a total mind shift.
It's like putting on a set ofx-ray glasses that allow you to
see things that you never sawbefore.
(06:14):
It is the most important thingyou can learn in business.
Tom DuFore (06:17):
It is a tremendous principle and one I've been
familiar with, like youdescribed, but then taking it
and essentially duplicating thatwithin itself right these, with
like you described, but thentaking it and essentially
duplicating that within itself,right these branches, as you
described, the branches youshared with the leaf, and then
the branches and so on, yes, andit applies to almost everything
(06:38):
.
Perry Marshall (06:39):
Let me tell you a story.
I have a friend who, at age 17,he dropped out of Catholic
school in Denver, hitchhiked toLas Vegas and became a
professional gambler.
This was his fantasy as ateenager to be a pro gambler.
So he got a fake ID and he'sgoing around the casino and he's
(07:01):
playing poker and about a monthinto this he's like this is a
lot harder than I thought it wasgoing to be.
So he goes to a gamblingbookstore and he's looking at
the books and he starts talkingto this guy who's there and he
finds out the guy runs aprofessional gambling ring and
his name is Rob.
(07:22):
And Rob, do you think you couldteach me to do what you guys do
?
And he says for a percentage ofyour winnings, I can teach you
to do what we do.
And so they shake on it Jump inthe Jeep, john, we're going for
a ride.
Gets in the Jeep, they'redriving down the highway and
John says so, rob, how do I winmore poker games?
(07:46):
And Rob says you need to playpeople who are going to lose.
You don't go after otherprofessional gamblers.
You want the 18-year-old fromWichita whose grandma just gave
him some money and he's going togo to lost wages and get rich.
And he goes well, where do Ifind that kid?
And he goes here, I'll show you.
And they pull into the parkinglot of a strip club.
(08:09):
They go in there.
There's women, there's music,there's lots of distractions,
loud rock and roll playing.
Rob sits John down at a tableand he pulls a sawed-off shotgun
out of his jacket.
He holds it under the table andhe slams it shut.
So it goes.
(08:29):
And in the middle of this loudclub there's a few people that
hear that noise and they're like, what?
Like?
There's biker dudes over therewho made that noise.
And the owner comes over thetable.
What's going on here?
It's okay, just teaching thelad a lesson.
John, did you see those dudeswho turned around when they
(08:49):
heard that noise?
Yeah, don't play poker withthem.
They're not marks.
Play poker with everybody else,and that is what we call racking
the shotgun, and that is whatwe call racking the shotgun, and
that separates the 80 from the20.
Everything you do in sales,everything you do in marketing,
(09:15):
everything you do inentrepreneurship is racking the
shotgun.
So, with customers, everysalesperson in the world is
obsessed with all the peoplethat didn't answer the phone,
didn't buy, didn't click on thepeople that didn't answer the
phone, didn't buy, didn't clickon the link, didn't, didn't,
didn't.
What's so easy to forget isthat the dids are 16x, the
didn'ts Like if you look at80-20, the top 20 are 16x, the
(09:41):
bottom 80.
And then there's a top 20 ofthose, that's 4x, and then
another top 20, that's another4x.
So I call it the espressomachine principle.
For every 1,000 people who buya $5 latte at Starbucks, one of
(10:02):
them will spend $2,700 on agleaming stainless steel
espresso machine.
It's a law of physics that ifyou've got a lot of buyers who
buy, you know, for a dollar,there's a few buyers that'll
spend $10,000.
It's a law of physics.
80-20 guarantees that it's true.
(10:24):
A law of physics 80-20guarantees that it's true.
And a lot of people don'trealize this and they don't
understand that the coffee justkeeps the lights on and it keeps
the customers coming in thedoor, but all the money is in
the espresso machine and a lotof businesses are not what you
think they are.
80% of the money in Vegas comesfrom these people that they
(10:46):
call whales, that spend $100,000on a hand of poker and there's
special wings and rooms andsuites for those people that the
rest of the world doesn't evenknow exists.
And most people don't know thatMcDonald's isn't really selling
hamburgers.
They're growing the value ofreal estate and most smart
(11:13):
businesses.
There's something behind it.
That's not what you see on thefront door and that's all.
Espresso machine principle.
Tom DuFore (11:19):
As I'm listening to you describe and talk about this
, I guess my question that comesto mind is this is great, but
if I'm listening into this, howdo I apply this to my business?
These stories are great, butmaybe what's something practical
or a nugget from your book thatI might be able to apply?
Perry Marshall (11:37):
So if you're advertising on Google or
Facebook, 80% of the money is in20% of the ad campaigns, 20% of
the ads, 20% of the keywords.
There are huge parts of thosethat are generating huge amounts
of waste.
I guarantee it.
(11:59):
If you hire 10 salespeople, twoof them will outperform the
other eight put together.
I guarantee you that is goingto happen.
80-20 guarantees you it's goingto happen.
Most people try to fix the runts, and not only do they try to
(12:19):
fix the runts that can't befixed, they also annoy the
performers.
Like you got Charlie and he'san amazing closer and Susie is
assaulting him because hisexpense reports aren't in on
time.
Well, why don't you get yourhire him an assistant to follow
(12:41):
him around with a shoebox andpick up his receipts or whatever
you've got to do?
But don't annoy the guy withthat crap and let him perform.
There are areas of waste inbusiness 10% of your product
line, 10% of your clients, 10%of your employees.
You are taping dollar bills toevery box that goes out the door
(13:04):
and you don't know it.
You would make more money ifyou discontinued that product or
if you doubled its price.
You're afraid to double theprice because you'll offend
somebody.
Well, you're losing money.
It's everywhere and there'snever just one cockroach.
Tom DuFore (13:23):
You mentioned raising prices on that product.
That's 10 or 20% drivingrevenue.
Are there other practicalthings you've seen or
suggestions you might have forsomeone that says, okay, I like
this.
What can I do to analyze thisand start making some
adjustments?
Perry Marshall (13:39):
There's a principle called the 21-20 rule
and it says that 20% of yourbusiness makes 120% of your
profit.
That's the best 20% of yourbusiness and the worst 20% of
your business loses money.
And brings your 120, you wouldhave made down to the 100 that
(14:00):
you did make.
You have employees who arelosing you money.
I have a good friend namedNancy Schlesinger, longtime
client.
She's a recruiter, been in thatbusiness for 30 years.
She told me a bad employeecosts five to 14 times their
salary.
I thought, oh well, that's gotto be an exaggeration.
(14:23):
It's probably one or two X andNancy's just exaggerating.
Well then, a year or two later,I had to fire a bookkeeper and
then, when I had a betterbookkeeper, I started finding
out what all the mistakes were.
There were $50,000 invoicesthat never got sent out two
(14:44):
years ago.
Well, how does a customer feelabout getting a $50,000 invoice
two years later?
Does that go over?
Very well, that bookkeepercosts you way more.
Like that's just one mistakeand that's not all the other
mistakes.
It is absolutely true that bademployees cost you way more.
(15:04):
A players attract A players, bplayers drive away A players and
attract C players.
That's 80-20.
Tom DuFore (15:13):
Have you applied this just to other areas of your
life, just in general?
Not just you know running yourown business, but where else
have you applied this?
Just to other areas of yourlife, just in general?
Not just you know running yourown business, but where else
have you applied this?
Perry Marshall (15:22):
It is true in personal relationships, it's
true in science, so it's 80-20is true of the traffic on the
streets.
In your town, 80% of thetraffic runs on 20% of the
streets and 50% of the trafficruns on 1% of the streets.
It's true of craters on themoon.
It's also true of personalrelationships.
(15:43):
The top 20% of your personalrelationships create 120% of
your happiness and the bottom20% of your relationships create
negative 20% happiness.
Okay, you have toxic people inyour life that you need to get
rid of and you haven't gottenrid of them.
Because you're not, because youdidn't rack the shotgun and
(16:04):
decide to do something about it.
It's everywhere.
Tom DuFore (16:11):
That's just amazing to think about.
Well, real quick, while we'rein the midst of this, how can
someone get a copy of your book,learn a little bit more about
what you're doing, maybe followwhat you're up to?
Perry Marshall (16:22):
If you go to perrymarshallcom slash podcast,
you can get 80, 20 sales andmarketing for seven bucks
including shipping.
It's about 20 bucks on Amazon.
It's got 1300 reviews, 4.7stars.
It will completely change yourlife and that's at
perrymarshallcom slash podcast.
And it comes with a coupleextra videos that you wouldn't
(16:44):
get if you bought it on Amazon.
So go pick that up and sign upfor my Perry Marshall Minute,
which is a daily email thatcomes out, and it will get you
thinking 80-20.
I have a whole bunch of 80-20fanatics that follow me and
learn and it just goes deeper.
(17:06):
It's like martial arts.
You can get a first degreeblack belt, but you could also
get a second or a third or aninth.
How deep do you want to go?
Tom DuFore (17:15):
Fantastic.
I love it.
Well, Perry, this is a greattime in the show.
I always like to ask everyguest the same four questions
before we go, and the firstquestion is have you had a miss
or two on your journey andsomething you learned from it?
Perry Marshall (17:29):
Yeah, about nine years ago I was talking on the
phone and I looked through myFrench doors and my brother was
in the next room and he's thepresident of my company and I
live in Chicago and he lives inNebraska.
So I wait a minute.
My brother's here unannounced.
(17:50):
This doesn't look good.
So I finished my phone call,Brian, what are you doing here,
Perry?
We need to talk.
And he goes.
We have too much overhead, wehave too much employees, Our
expenses are too high, we needto cut back.
And we spent that was like twoin the afternoon.
(18:11):
We spent until 11 o'clock thatnight arguing and debating.
Well, Brian, we're going to dothis and we're going to do that,
and I think we're going to befine, and you don't know how
awesome this next thing is goingto be.
Well, about two or three monthslater, it was obvious he had
been right and I had been wrong,and I was now three months
(18:34):
further behind on myover-optimism and now I really
needed a cut.
Now, anybody who really owns abusiness and has done it for a
while and has had to make cuts,knows that when you cut, the
improvements do not immediatelycome, Because you have things
like severance packages andstuff like that, and we were
(18:55):
laying employees off severancepackages and stuff like that and
we were laying employees off.
And that was really the firsttime that I learned the
subtraction side of 80-20.
80-20,.
Go back to the rack, theshotgun story.
It's more about who you don'ttalk to and what you don't do
(19:16):
and what product you don't shipout and which employee you don't
hire, as much as it is aboutwhat you do.
Tom DuFore (19:23):
You can apply it to set boundaries right.
Perry Marshall (19:25):
Yes, and most entrepreneurs that I know are,
yes, people.
We're optimists and we lovelife and we love adventure and
we're interested in people andwe're interested in ideas.
And well, you know what?
You can't fund all the ideasand you can't hire all the
(19:47):
people and you can't invest inall the things that cross your
path.
You have to be very, veryselective.
Tom DuFore (19:53):
Let's talk about a make.
Let's look on the other side.
Perry Marshall (19:56):
I had a huge victory a little over 20 years
ago, and so now that I'm 55, Iguess it's an early victory, but
I want to tell it to youbecause it pertains to right now
.
So in 2001, in the summer, acompany approached the company I
worked for and said we want tobuy you out.
And that was exactly accordingto plan.
(20:18):
We were developing a chip.
We had been working on this forthree years.
The intention was we want tomake ourselves attractive.
This is what we want.
So that was all great.
So they started doing thenegotiations and when it was
almost about done, 9-11 happened.
(20:39):
And all of a sudden the ordersstopped coming in.
We're selling capital equipment.
Everybody just froze.
Sales plummeted.
The company's just about to getsold.
They're offering me a job.
The company's just about to getsold.
They're offering me a job.
And, especially given how scarythe world was, it seemed
(21:01):
extremely attractive to take thejob, even though the job offer
wasn't really that great.
And my wife says take the moneyand run.
No, and go start the companythat you've always been talking
about starting.
And I'm like she goes, no, I'mserious.
And I asked around and this onelady said to me Perry, the time
(21:23):
of maximum uncertainty ismaximum opportunity.
Now is the time to make a jump.
And again, remember, 9-11 hasjust happened.
People are driving around withflags on their cars and the
planes aren't flying andconferences are canceled.
(21:43):
And I decided she was right andall the other employees thought
I was crazy and I jumped outand I started a consulting
business.
A year later, the founder of thecompany I worked for he had
become a vice president at thecompany that took us over.
(22:03):
He hated his job.
He didn't get along withanybody Very common, by the way,
when buyouts happen he ended upleaving and kind of having a
little fight about it and thenew company was a train wreck
and I escaped all that.
Meanwhile, the world was juststarting to shift from employee
(22:25):
world to freelancer 1099 worldand I had made that jump at the
exact right time in a year.
Well, it wasn't even a yearlater that I was happy about it.
It's actually three monthslater.
I made the most money that Iever made in a year.
Well, it wasn't even a yearlater that I was happy about it.
It's actually three monthslater.
I made the most money that Iever made in a month, which at
that time was $12,000.
I'm like, dude, like this islike six figure territory and
(22:48):
I'm what?
And like, no matter whathappens, I still think back on
that of what, how good it wasthat I took that advice.
And I bring that up now becauseright now feels like 9-11 to me
(23:10):
in the world, but it's adifferent 9-11.
It's not a this one thinghappened, it's a.
There's 1,700 things happeningand everybody's arguing about
them and debating them and a lotof people are frozen and
they're scared and they'rehiding under rocks and they're
just not really doing anything.
(23:31):
That is the wrong thing to bedoing right now.
Right now is major opportunity.
It doesn't look like it, it is.
Let's talk about a multiplierthat you've used to multiply
yourself, your organization, anybusiness you've run, the best
multiplier is know thyself isknow thyself, know thy strengths
(24:00):
and weaknesses, and I have myown version of this.
In the 80-20 book there is alink to take what we call the
marketing DNA test, and it is atest that measures how do you
sell and persuade as compared toanybody else in the room.
And the reason I made this testwas, first of all, early in my
(24:23):
sales career.
I bombed badly.
Two years of bologna sandwiches, ramen soup, baked potatoes and
salsa is really cheap, by theway Really cheap and I didn't
know it at the time.
But I was trying to be somebody.
I was not People.
(24:46):
I would admire them and theywere on stage or they were on
tapes or books or videos.
I was trying to be like themand I didn't understand no, how
do you sell?
And then, later on, I got moresuccessful and I started
consulting.
I've worked with thousands ofentrepreneurs and sales and
(25:07):
marketing people and over andover I've seen people try to
shove a square peg in a roundhole.
Maybe they're a really goodnegotiator and they're killing
themselves trying to make aYouTube channel.
Or maybe they're a really goodcopywriter and they're trying to
be a social media diva orwhatever, if you can figure out
(25:29):
what your strengths are.
Those are huge multipliers.
If you're a really good writer,the best investment you can
make is to go to a writing classthe right one and get even
better.
It's not.
Oh, I'm going to go to.
I'm going to learn how to runvideo cameras.
(25:50):
Now, because YouTube is popularis now, because YouTube is
popular, people get on thesebandwagons and they don't value
what they bring.
That is a huge multiplier, Ithink.
Tom DuFore (26:04):
for sure, most of us go through that, or some of us
get stuck in that and finddifferent versions of that as we
go through life.
So I think that's a great,great multiplier there.
Well, the final question we askevery guest, perry, is what
does success mean to you?
Perry Marshall (26:21):
I think success means if you got a terminal
diagnosis, you wouldn't changevery much of anything that
you're already doing.
You know, we've all heard thestories of you know, my life
flashed before my eyes.
What am I doing?
What am I up to?
Totally changed my priorities.
I think success is you don'tneed to change your priorities
(26:45):
because you already got themfigured out.
Tom DuFore (26:47):
That's powerful, very, very powerful.
Well, as we bring this to aclose, perry, is there anything
else you were hoping to share orget across that you haven't had
a chance to yet?
Perry Marshall (26:57):
I think that if you think things are choppy now,
just wait a little while.
2025 is going to be a choppyyear, and that means it's going
to be increasingly tough forpeople who are hanging on to
whatever the way things were,because I think normal just went
(27:19):
out the window.
I think there is no normal.
You need to let go of yournotion of normal.
There is big opportunity inembracing the new and the
strange.
In hindsight, there is noquestion that 9-11 had a lot of
opportunity in it.
There's no question that COVIDhad a lot of opportunity in it
(27:42):
and we could go over that indetail that would be a whole
other conversation but we canall agree that those
opportunities existed and thatmost people didn't seize them.
And so how are you going to dothis different than most people
did the last couple of scarytimes in life?
That's what I want to leave youwith, because the future
(28:04):
belongs to the bold.
Tom DuFore (28:06):
Perry, thank you so much for a fantastic interview,
and let's go ahead and jump intotoday's three key takeaways.
So takeaway number one is justabout the 80-20 rule in general
and how Perry talked about.
He didn't really trulyunderstand it until he had this
connection point with the chaostheory and how he saw it can be
applied to every industry andevery area of life.
(28:29):
Takeaway number two is how he'stalked about applying it to
your own business.
For example, looking at yourGoogle ad spend and Facebook
advertising and looking atprobably 80% of your keywords
and spend is not producing thekind of results you're looking
for, that it's the 20% that'sdriving most of your results and
(28:51):
keywords, et cetera, and hegave another example of how it
may be applied to yoursalespeople or to your profit in
your business.
Takeaway number three was justapplying it to your life in
general or personal life, and hesaid, for example, 80% of the
traffic likely runs on 20% ofthe streets and, thinking about
(29:12):
your own personal relationships,that you're probably your top
20%.
The top 20% of yourrelationships generate 80% of
your happiness.
I thought that was a reallyunique way to think of it, and
now it's time for today'swin-win.
So today's win-win comes fromthe tail end of the conversation
(29:34):
.
I thought this was a greatlittle nugget that Perry shared
with us.
He said with the changingenvironment that we're in, he
said, think about the newopportunities that are in front
of us and it got me thinkingokay, well, how can we apply
this 80-20 principle he wastalking about to new
opportunities for your businessor for your personal life in
this changing business climatethat we're living through?
(29:57):
So that's the episode today.
Folks, please make sure yousubscribe to the podcast and
give us a review, and rememberif you or anyone you know might
be ready to franchise ourbusiness or take their franchise
company to the next level.
Please connect with us atBigSkyFranchiseTeamcom.
Thanks for tuning in and welook forward to having you back
next week.
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