Applying the 80/20 Rule From Both Sides

The 80/20 rule is applied in countless ways and, when looked at from two points of view in product management, might better be thought of as the 20/60/20 Rule.

Example:
When specifying features for a product, I commonly consider whether or not to spec to the top 20% — the Power Users who will want a very full-featured product and pay a premium for it, or to the bottom 80% — the Masses, who won’t pay as much but require more basic functionality. But if you cut the market from the other side, you know that while 80% of the market might use your product under some set of conditions, there is 20% that probably won’t adopt it no matter what you do. This 20% is the absolute bottom 20% from the original perspective.

So, you end up with the 20/60/20 rule.

20%: Power Users
60%: Masses
20%: Non-adopters

So you can design to the Power Users for higher dollars at lower quantities. Or you can specify for the Masses and make sure you drop your volume projections to 75% of the original because you know you can’t get the Non-Adopters. And now there’s one more option to consider. Is there a different product that works from the other side — that targets the Non-Adopters — or do they simply have no need or interest?

In any case applying the 20/60/20 rule will give you a better model of your potential market adoption.