How You Can Work Less & Achieve More by Mastering This ONE Key Principle with Perry Marshall

Check Out Perry's Epic Course on 4xing Your Productivity With 80/20
In this episode we look at what rabbit populations, craters on the moon, files on your hard-drive and the GDP of countries have in common, we discuss The power of fractals, the math of chaos theory, and what that all has to do with the 80/20 principle, How your understanding of the 80/20 is only the tip of the iceberg, how to generate 16x more leverage to achieve your goals, we go deep into sales wisdom from one of the world's top marketing consultants and much more with Perry Marshall.
Perry Marshall is a trained engineer and one of the world’s most sought-after business consultants, helping clients across 300 industries by combining sales, engineering, art, and psychology. Perry is the bestselling author of several books including The Ultimate Guide To Google AdWord, 80/20 Sales and Marketing and Evolution 2.0.
How Perry went from being laid off and surviving on ramen and bologna sandwiches to becoming one of the world's top marketing consultants
How your understanding of the 80/20 principle is only the tip of the iceberg
What Fractals and Chaos Theory have to do with the 80/20 principle
What the pattern that Earthquakes, volcanoes, tornados and hurricanes follow has to do with marketing strategy
Fractals are everywhere in your life, nature, and the universe
The raw power of the butterfly effect
How the 80/20 principles rules everything in your life and business
“Levers within levers, within levers” and how that can shape your focus
Where to find the tiny hinges that swing huge doors
What do rabbit populations, craters on the moon, files on your hard-drive and the GDP of countries have in common?
How to align yourself with the 80/20 principle and harness its incredible power
Do you want to live in the IS world or the SHOULD BE world?
If you deal with reality the way it is things become effortless
Once you understand the 80/20 principle, it transforms what you focus on
How most problems in life are a result of being on the wrong side of the 80/20 equation
What is “racking the shotgun?” and why is it so important
Don’t focus on fixing the bad 80%, focus on reproducing the successful 20%
One of the jobs of civilization is to mitigate the 80/20 principle
The world will always condition you to focus on the underperforms (the 80%)
You can get “A's" in six different subjects, but you’re gonna make a living in ONE
If you try 20 projects, the law of 80/20 says 1 should succeed!
Failure is OK, you only have to go get rich once
The 20% is 16x more leverage than the 80% that doesn’t generate results
Everyone is in sales in some form or fashion in their lives
Sales is not a convincing people process, sales and elimination process
First thing you should do in sales is disqualify people as quickly as possible
Never ask someone who can say no but who cannot say yes
The key questions you need to ask to disqualify sales leads
The story of the $2700 espresso machine
The 8 different modalities of selling and how you can thrive by embracing your own unique sales strengths
And much more!
Thank you so much for listening!
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SHOW NOTES, LINKS, & RESEARCH

Check out Perry’s Epic Course on how to 4x Your Productivity Using the 80/20 Principle
[Website] Fractal Foundation
[Website] 80/20 Curve
[Book] 80/20 Sales and Marketing by Perry Marshall
[Book] The 80/20 Principle: The Secret to Achieving More with Less by Richard Koch
[Personal Site] Perry Marshall
[Blog Article] How To Perform An 80/20 Analysis by Matt Bodnar
Episode Transcript

[00:00:06.4] ANNOUNCER: Welcome to The Science of Success with your host, Matt Bodnar.

[0:00:12.6] MB: Welcome to The Science of Success. I’m your host, Matt Bodnar. I’m an entrepreneur and investor in Nashville, Tennessee and I’m obsessed with the mindset of success and the psychology of performance. I’ve read hundreds of books, conducted countless hours of research and study and I am going to take you on a journey into the human mind and what makes peak performers tick, with the focus on always having our discussion rooted in psychological research and scientific fact, not opinion.

In this episode, we look at what rabbit populations, craters on the moon, files on your hard drive, and the GDP of countries have in common. We discuss the power of fractals, the math of chaos theory, and what that all has to do with the 80-20 principles. How your understanding of the 80-20 principle is only the tip of the iceberg. How to generate 16 times more leverage towards achieving your goals. We go deep into sales wisdom from one of the world’s top marketing consultants, and much more, with Perry Marshall. 

The Science of Success continues to grow with more than 800,000 downloads, listeners in over 100 countries, hitting number one in New and Noteworthy, and more. I get listener comments and emails all the time asking me, “Matt, how do you organize and remember all this incredible information?” A lot of our listeners are curious about how I keep track of all the incredible knowledge I get from reading hundreds of books, interviewing amazing experts, listening to awesome podcast, and more.

Because of that, we’ve created an epic resource just for you; a detailed guide called How to Organize and Remember Everything. You can get it completely free by texting the word “smarter” to the number 44222. Again, it’s a guide we created called How to Organize and Remember Everything. All you have to do to get it is to text the word “smarter” to the number 44222 or go to scienceofsuccess.co and put in your email.

In our previous episode, we discussed how you can create success by mashing two seemingly unrelated ideas together. We looked at why energy is the currency of the biological world and how that impacts the evolution of money within our society. We went deep into understanding money and its role in our lives and we looked at why you should investigate your own biases about money, with Kabir Sehgal. If you want to improve your understanding of money, listen to that episode. 

[0:02:27.6] MB: Today, we have another awesome guest on the show, Perry Marshall. Perry is a trained engineer and one of the world’s most sought after business consultants and marketing experts helping clients across 300 industries by combining sales, engineering, art, and psychology. He’s also a bestselling author of several books including The Ultimate Guide to Google AdWords, 80/20 Sales and Marketing, and Evolution 2.0.

Perry, welcome to The Science of Success.

[0:02:53.8] PM: Hey, thanks for having me on the show, and you guys got a big following and a lot of interesting guests that you had. It’s really an honor. We talked earlier and I think we’re going to have a rocking conversation today. 

[0:03:07.8] MB: I think it’s going to be great, and there’s so much that you talk about that I think the audience is really going to enjoy. Before we dig into that, tell us a little bit — I kind of gave a brief bio. Tell us a little bit about yourself and your story.

[0:03:20.1] PM: I was about 25 years old when I got laid off from my first engineering job and my wife was three months pregnant. I could have stayed in the same track I was on if I was willing to move, but I wasn’t willing to pull up roots, and so I ended up going into sales. I thought, “Well, this shouldn’t be too hard.” A couple of years of bologna sandwiches and ramen soup later, it’s like, “Wow! This is not for the faint of heart.”

I eventually did find my way and I eventually did find the groove, but really, there were some excruciating periods of time where the bills weren’t getting paid and I just try all these stuff and it wouldn’t work. I would spend all my time trying to pound through brick walls and everything. 

Eventually, 20 years later, writing a book that’s — The book that I wish I’d had when I was starting out, or for that matter, all the different marketing stuff, because any more — If you don’t have some marketing to back you up as a sales person, you’re screwed. That’s what that’s about. 

Life is a lot different now. Ironically, I’m a sales and marketing consultant. I think that actually goes back to the fact that it’s not hard to teach what was hard for you to learn. I had a huge learning curve. I think I can explain a lot of that stuff in ways that were never explained to me.

[0:05:02.2] MB: I know one of the transformational ideas in your life is the concept of the 80/20 principle. I’d love to kind of — Many people hear that and they think, “Oh, yeah. Of course, I know what he 80/20 principle is.” Your understanding of it is so much deeper than that. I’d love for you to kind of explain to the audience why the surface level understanding is really only the tip of the iceberg.

[0:05:25.4] PM: I heard about the 80/20 principle back when I was marketing manager and I thought, “Oh! That’s interesting. Okay, 80% of your sales come from 20% of your customers.” I actually printed out a QuickBooks report and I went through it and, “I’ll be darned. That’s pretty much exactly right. That’s interesting.” 

At that point, I thought I knew it. I thought I knew what it meant, and I really didn’t. I would politely suggest that most people have never really explored what it actually is and what it means. Let me tell you two little stories back-to-back that will kind of tie this together for you. 

The first story, it goes back to when I was in college and my wife went to the library and came home with a book on fractals and chaos. Hopefully, most people have seen fractals before, those computer images where there’s spirals, and there’s a spiral on the spiral, and there’s a spiral on the spiral on the spiral. If you haven’t seen this, you should type fractals in YouTube and just start clicking on stuff and you’ll quickly see it. 

She brought this book home and I was looking through it, and I discovered, “This isn’t just interesting shapes. This is actually a major way that the world works.” If you look at a tree, you see that branching pattern, but then you can zoom in and the branches have branches, and then those branches have branches, and you can get down the leaves and you could get a microscope and even the little veins that feed the individual cells are still showing that branching pattern. That’s a fractal pattern. It’s a pattern that repeats over and over and over again.

What the book explained is this is very closely related to the way that things like earthquakes, and volcanoes, and weather, and hurricanes, and tornadoes, and avalanches are all predictably unpredictable. They always follow certain patterns. It’s just the specific instance that you can’t quite predict. You can be sure that somewhere in the Rocky Mountains, if you clap your hand at the right place at the right time, you’re going to trigger an avalanche. It speaks to the way cracks travel through glass when a rock hits your windshield and cracks on the sidewalk, or sand dunes — Getting these whole new lens for the world. There had never been language for any of these. Of course, I had seen all my life, but suddenly, there was language. I thought it was all very interesting. 

Then, I went out to my car the next day, and it was as cold November day and there were ice crystals on my car, and I looked at those ice crystals and I go, “Oh my word. Those are little tiny fractals growing on the roof of my car.” They’re everywhere, and I couldn’t — From that point forward, I couldn’t not look out the window and see the pattern, the traffic is fractal, and rivers are fractals. 

Anyways, that’s a little geeky. Of course, I know your audience probably enjoys things like that. Fast-forward to — Actually, this is more than 10 years ago, I was reading Richard Koch’s book, The 80/20 Principle. Early in the book, he just mentioned for maybe a paragraph or two that the 80/20 principle was closely related to fractals and chaos, and the butterfly effect which says that a butterfly’s wings can trigger a hurricane six months’ later half a world away, because that’s how weather actually works. That’s why you can’t predict it more than two or three weeks out. 

He made this comment, and all of a sudden, something clicked in my brain and I connected 80/20 to the fractals and the chaos. What I suddenly realized was 80/20 is the arithmetic of chaos and fractals. That means there’s an 80/20 inside every 80/20, and then there’s  another one, and another one, and another one, and this all just exploded in my brain in about 10 seconds. I was in a coffee shop and I jumped up and I drove home, and I ran home, and I got out my calculator, and I got all these pieces of paper.

At that time, I had been in my own business for about a year and a half. I had quit my job as a sales manager. Hang out my shingle as an independent marketing consultant, and I had a few clients, and I was selling some products, and I was little wobbly still, but getting going, and it was starting to go well. I realized, “Oh my word! This 80/20 thing, it applies to everything in my business, every just column on every spreadsheet, every web visitor. How many people fill out the form? How many people call on the phone? How many people buy a product? How many people turn into a good client?”

80/20 is predicting all of these stuff and I was just having this massive geek-out moment and I was realizing, “Hey, wait a minute. There are levers within levers within levers, and now that I can see them, I know exactly what to do,” where before, it was a mystery. 

It’s kind of like when I was a brand new guy and I get laid off my job and I found a sales job and I was kind of blissfully ignorant, I didn’t know where the levers were. Then, I don’t know what I don’t know. Then, I just keep getting kicked in the teeth and, pounded in the head, and clobbered by two-by-fours, and I never know when the next one is coming. 

Now, I’m actually — It’s like, “There’s really reliable ways to know that two-by-four is coming.” Also, there’s really reliable ways to know where there’s more business in a place where you just found a little bit versus other places where you’ve already found all that you can get. That was a huge, huge, huge thing for me. In fact, it might be the most significant moment I’ve ever had reading a book in my whole business career, and it totally tilted my world. 

Interestingly, during the following year, I started teaching Google AdWords. I started speaking at seminars. Since that time  I’ve written the world’s bestselling book on internet advertising, which is The Ultimate Guide to Google AdWords, and 80/20 was how I figured out Google AdWords. 

Back then, and I’m talking about 2003 right now, Google AdWords was this crazy, weird thing that most people didn’t understand. It was a wild west kind of a deal. It’s like, “Now, we’re bidding on positions in a search engine, and how does that work, and where the whole English language is up for sale, and how do you organize a campaign, and how do you write these ads, and how do you run these tests.” All of a sudden, I realized, “80% of this doesn’t’ matter. 20% of it matters a lot, and 20% of the 20% matters even more, and 20% of the 20% of the 20% matters even more,” and there’re these tiny little hinges that swing big doors. “I can figure this out,” and I did. In fact, a lot of the things that I figured out then have now become standard best practices in $100 billion industry, which we call pay per click marketing. 80/20 is really important, and I just want to say to everybody listening, if you’ll stick with us here and really get into some application, I think you’re going to find this really fascinating. 

[0:13:57.2] MB: I find it amazing that the 80/20 principle can describe everything from the GDP of countries, to the distribution of wealth of individuals, to craters on the moon, so it’s amazing. 

[0:14:09.3] PM: Yes, it does. Literally, it’s true. 80/20 describes rabbit populations, it describe the size of files on your hard drive. Let’s take your hard drive. 20% of the files take 80% of the space, and 20% or 20% of the files take 80% of 80% of the space. That means 4% take up 64%. You can have 80/20 squared 80/20 cube, 80/20 of the power of four. 

80/20 cube says that 1% of the files on your hard drive take up 50%. It’s also true of customers. 1% of your customers give you 50% of your money. 1% of the drivers gets 50% of the speeding tickets. 1% of the real estate owners own 50% of the real estate. 1% of the people own 50% of the wealth. This is a truism. It’s true regardless what country you go, of what state you’re in, or what kind of system of government that you have, and see, “This is extremely powerful, because if the same ratios hold for real estate in Belgium as for the size of craters on the moon, as for the size of pebbles on the beach, then it tells you that there’s something very, very fundamental that’s going on in the world and you either align with yourself with it, or fight it, and nature doesn’t care.” 

If you want to fight it and get your teeth kicked in, you can go right ahead and you can do that, and the universe does not care. On the other hand, if you align yourself with it and harness it, you can develop great wealth, you can achieve great things, you can have a very large disproportionate amount of influence. It’s really just a question of; who decides to live in the is world, versus who prefers to remain in the should be world? I just got to a point where I’m done living in the should be world. I’m going to sell and market the way the world really does work, and I’m going to harmonize with this.

[0:16:29.5] MB: Such a great statement, the distinction between the is world and the should be world. We talked about that a lot on the show and it’s something that definitely bears repeating. 

[0:16:40.0] PM: Trust me. I could live in the should be world for a really long time. I’m an idealistic person, and I get all these ideas. I don’t think any of us can afford to stay there. It’s fun for a while, but — Reality is actually a lot — If you just deal with the reality the way that it is, life is just so much easy.

[0:17:00.4] MB: Yeah, aligning yourself with reality whether or not you think that’s the way reality should be is how you achieve almost anything with these. It’s almost effortless once you feel aligned. You know that? That makes me think of the fact that once you understand this principle, it completely transforms what you think about and what you focus on, and you kind of hinted on that, talking about the tiny hinges and focusing on the wrong things. 

I think you’ve talked about in the past how — Or said something around the lines of, “Every problem in business, or most problems in your business, is because you’re on the wrong side of the 80/20 equation.” 

[0:17:40.3] PM: Yeah, that’s right. I’ll tell you a quick story. My friend, John Paul Mendocha, dropped out of high school when he was 17 and he hitched-hiked to Las Vegas and he decided to become a professional gambler, which his mother was, I’m sure thrilled with. That’s literally what he did. 

After a few weeks in Vegas of poker and black jack, he’s like, “Dang! This is harder than I thought it was going to be.” He was hanging out a gambling book store one day and he starts talking to this guy. He finds out this guy runs a gambling ring and he’s been doing it a long time. He’s like, “Hey, could we work something out?” and they agreed. It’s like, “Yeah, for a percentage of your winnings, I’ll teach you what we do.” They agree, “Jump in the jeep, John, we’re going for a ride.” “All right. Here we go.” 

John gets in the jeep and they’re driving down the highway and John goes, “Okay. How do I win more poker games?” The guy says, “You have to play with people who are going to lose, not people who are going to win. People who are going to lose are called the marks. You want the guy that just showed up from Wichita, Kansas with his grandmother’s inheritance money that thinks he’s going to get rich in Vegas. That’s the guy you want.” 

John goes, “Okay. Where do I find all these marks?” His friend says, “Here, I’ll show you.” He pulls in to a strip club parking lot and they walk into a strip club and there’s women, and music, and pounding rock and roll, and people drinking, and all these stuff going on in there, and it’s really loud, and Rob and John sit down at the table, and Rob always carried a sawed-off shotgun with him, which gives you a little hint of what kind of guy Rob was. 

He pulls his sawed-off shotgun out of his jacket and he holds it under the table and he says, “Watch this,” and he opens the chamber and then shuts it and he racks it, and makes this noise, and they look around and several people in the club, these biker-kind of-guys, are like, “Hey, what was that?” The club owner comes over and he says, “Hey, is everything okay over here?” “Everything is fine. Just teaching the lad a lesson. Don’t you worry about us. We’re not going to cause any trouble here.” 

He looks over to John and he goes, “John, did you see those guys that turned around when they heard that noise?” John goes, “Yeah.” He goes, “Don’t play poker with them. They’re not marks. Play poker with everybody else.” That is what — In 80/20 in marketing, that’s what I call racking the shotgun. Racking the shotgun is anytime you do something to a crowd, or somebody else does something to a crowd. 

By watching, you can figure out who’s the minority that’s paying attention and who’s the majority who’s not. It could be racking the shotgun is who searches for a certain keyword on Google and who doesn’t. Who clicks on an add and who doesn’t? Who fills out the form and who doesn’t? Who opens the email, who doesn’t? Who clicks on the link, who doesn’t? Who buys the stuff, who doesn’t? Who buys the upsell, who buys the super duper upsell? It’s all racking the shotgun. 

Everything we do in marketing is racking the shotgun, and all the time, 24 hours a day, 7 days a week, the world, the is world is telling you what people do, how they behave, and you have to expect totally disproportionate results. 80/20 says that if you hire 10 sales people, two of them are going to sell 80% of the stuff, and the other eight are going to sell 20% of the stuff, which means the two are 16 times better at selling than the eight. 

That is going to happen. If you go out and hire 10 sales people, it almost doesn’t matter whether you try really hard to find good ones or not. If you’re good at finding good ones, then you’ll get better ones. If you’re not, you’ll get worst ones. Either way, that ratio is going to be true. You’re going to have a disproportionate number of winners and losers, and what most people try to do is they try to fix the eight bad sales people. No. No. No. No. No. You get rid of most of them at last, and you put all your energy into supporting the good ones and finding more good ones, because, frankly, you’re going to sell more with three good sales people than with 30 bad ones. 

[0:22:53.5] MB: That’s a great lesson, and it’s so important. You made two really, really key points there. One is that the 80/20 curve and kind of the whole model is sort of an inescapable patter. It doesn’t matter if you think it should be that way or want it to be that way, or even try to kind of wiggle out of I in some way. It’s going to continue to repeat itself in whatever sample of data you’re looking at. 

The second piece is that you shouldn’t focus on fixing the bad or the kind of mediocre performing 80%. You should really focus on all of your attention on the 20% that is producing and how can you do more of that. How can you support that? How can you add on to that? I think it’s a critical lesson. 

[0:23:37.1] PM: Exactly. Let’s just take a step back and let’s acknowledge that one of the jobs of civilization is to mitigate 80/20. There’s always going to be kids that are slow in school, and there’s always going to be people who can’t pay their bills, and there’s always going to be an old person who needs medical care. That’s always going to be true. Yes, we need to take care of the disadvantage and — Okay. That’s understood. 

However, beyond that, you really have to fight almost everything you’ve been taught your whole entire life in school and everything else if you want to be excellent and achieve things, because the world will always — Even your training and your conditioning will always condition you to go fix the under-performer. When, actually, what you should be doing is you should be super-charging the few things that work. Like in school, the very best students are supposed to get straight As and it’s like, “Well, did you get an A in everything?” You know what? You can get As in six different subjects, but you know what? You’re going to make a living in one subject.

You could be a savant and probably be more successful than if you’re well-rounded. If you’re terrible in English and you’re terrible at social studies, but you’re really good at math, there’s some place that will hire you to do really amazing math. They don’t really care how good your English or your social studies. 

Another thing is that, a lot of the times, you never get to what’s really successful until you’re willing to fail, because failure is a rack the shotgun. If you’re an A student, is conditioned to never fail. Therefore, an A student will almost always be mediocre unless they unlearn the A student instincts and relearn — Because here’s the thing. One of the things that 80/20 says is that if you’re willing to fail 20 times, one will be a slam the ball out of the park home run even if the other 19 are total dogs. It always guarantees it. In fact, it puts a whole different perspective on failure if you expect to fail 80% of the time. It gives you more courage to put yourself out there. It’s like, “Okay. We’re one closer.” 

You can use 80/20, fortunately, to eliminate a lot of things like, “I’m not diving in that swimming pool. There’s no water in that.” There’s a lot of failure that goes on that’s unnecessary, and I’m not suggesting you should do that at all. I just think the world has this very warped idea. If people knew how many things we try, how many experiments. We’re always trying stuff. You know what? Most of the time the results are disappointing. You know? You don’t need that many victories to have a successful life. You don’t. 

[0:27:04.5] MB: That’s another great conclusion of the 80/20 principle. You don’t have to be successful. I think, actually, Charlie Munger who — I don’t know if you’re familiar with, but we’re a huge fan of him here on the show. 

[0:27:15.6] PM: It’s on your website. Yeah. 

[0:27:17.1] MB: Yeah. He says the same thing, which is you only have to get rich once. Which is the same idea, essentially, is that you can fail a bunch of times, but if you succeed one of those times, that’s the only time that matters. 

[0:27:28.8] PM: That’s right. Then you just need to not lose it. There’s an 80/20 strategy for that, and that’s probably not where we’re going to go today, but absolutely. If you know that there’s levers within levels within levers, so 80/20 of the power of four says that .2% of what you do gets you 40% of your results. 

If you’re in any performance-oriented profession, so you could be a computer programmer, or you could be in sales, or you could be in some kind of negotiation. If you stop and think of last year, what’s .2% of your 250 days that you’re working? Let’s say one day, I’m going to submit to you that 40% of what you accomplish last year happened in one day, and you probably never really realized it. If you really zoom back and you go, “All right. What did we really accomplish?” Most of us have 100 days a year where we really accomplished nothing at all. What this really means is most people are doing way too many trivial things. Most things people do they know aren’t going to create anything big, so why are they doing them? 

[0:28:54.2] MB: Yeah. That reminds me, I would have to paraphrase a quote, but there’s a great Tim Ferriss’ quote that’s very similar that’s essentially the vast majority of what everyone does it totally worthless. It’s those few random things — It’s very hard to find what they are, but it’s those few random things that happen to create almost all of the positive outcomes in your life. 

[0:29:17.5] PM: Yeah. If you start to recognize the pattern and to realize how disproportionate they are — I said this before, but I should really emphasize it again. The 20% that generates results is item for item 16 times more leverage than the 80% that doesn’t. When you start recognizing those levels, they’re laying all over the place. They’re right in front of you all the time. 

It’s just like the biker bar story. 20% of the people in that bar were bad ass guys that you don’t want to play poker with them, but I guess if you wanted to go rob a bank, or sell cocaine, or ride Harley’s, or whatever, then you get 16 times more attraction with those guys than you would with anybody else, of course. Then, if you’re trying to win poker games, there’s 20% of that room that’s going to be far easier to win a poker game than everybody else. You just have to figure out who it is. 

That’s what a professional really does. This actually leads to something very important about sales, which is sales is not a convincing people process. Sales is an elimination process. Before you try to convince anybody to do anything, you should figure out, “Should I not even be talking to this person at all?” When you do that, that takes so much pressure off of the situation and it makes you not seem like at times you’re a salesman. 

I know a lot of people that are listening here, they’re not even in sales. The fact is, is everybody has to convince somebody to do something for a good portion of our life. We got to get coworkers, there’re departments, you got to get buy-in on some project. We all have to get cooperation, and if you understand that — If you start within a question, “Well, do they have the money or the resources to do this in the first place? Do they have the ability to say yes, or they actually only have the ability so say no?” 

I think, a lot of times, when we ask for stuff, we’re asking people who can say no, but we can’t say yes. If you’re trying to get a job, don’t go to HR. HR cannot say yes. They can only say no. You go to a department head. If he likes you, he’ll get you through HR. Do they agree with your fundamental selling proposition in the first place, or not? A lot of times, you actually know, or you can ask them before you try to get into this. 

You can just save so much time, and if the other person knows that you’re not going to try to ram anything down your truth, if they know that you’re going to figure out if it’s a fit before you attempt to sell them, then they actually come towards you, because you’re disqualifying. It’s kind of reverse psychology. Really, you’re just basing it in the truth. The truth is 80% of the people, I might consider for this, not my customer. 

[0:32:37.0] MB: Tell me the story of the $2,700 espresso machine. I love that example.

[0:32:44.5] PM: One of the things — When I have the epiphany about 80/20, and I realized there was an 80/20 inside every 80/20, I immediately realized, “This tells me that 20% of my customers would spend four times the money, and 20% of them would spend four times the money, and 20% of them will spend four times the money,” which is really just another way of stating 80/20. 

I went home to look it was true, and already with a 18-month-old business, I could already see that was true.  Let me give you a hard example of this. If let’s say that a Starbucks store sells a 1,000 $4 lattes every week, and they’re at Starbucks, and they’re going to buy their stuff and you say, “All right, 4,000 people a week are buying these lattes.” That pretty much guarantees you almost like a law of physics that every week one of those 4,000 people is going to buy a $2,000 stainless steel espresso machine. In other words, all those people, they have a coffee-itch, and they are there to scratch it, and 20% of them have 16 times more itch than the other 80%. Then, 20% of those have four times more itch than that 20% that we just talked about, and on and on it goes. 

You can start doing the math, and you can go, “All right. For every thousand cups of $4 espresso, I’m going to sell one $2,000 espresso machine. By the way, I’m also going to get — I’m going to get 10 people that come in here and spend $300 or $400.” What are they spending $300 or $400? Maybe they come in once and they buy a whole bunch of stuff. Maybe they come every day and they buy CDs, and they buy coffee mugs, and they buy bags of coffee, and maybe they buy the $200 espresso machine, but they are going to do that. 

I guarantee, if you give them the opportunity to spend that money, they will spend it, and the amount of money they spend will fit something you referred to earlier, which is called the 80/20 curve. If you put 80/20 on a graph and you get the least interested people on the left and the most interested on the right, that graph — It looks like a ramp that goes up, up, up, up, up, and it just goes infinitely towards the top right side and it never stops, and it goes until you run out of people.

80/20 will reliably predict how many espresso machine Starbucks is going to sell. 80/20 says there’s 7 billion people in the world, and this is how much money they’re all going to make at these different levels. It’s also going to say, “Here’s the top 10 people in the Forbes 400.” Guess what? Even when we’re in the Warren Buffett-Bill Gates stratosphere, 80/20 is still true at the very tippy-top of the world. It’s true everywhere. It’s fractal. It’s macro. It’s micro. It is everywhere.  

[0:36:09.9] MB: I think even once you have sort of a cursory understanding of the 80/20 principle, the espresso machine example, for me, was so interesting, because you think of it sort of vertically kind of going out in sideways in terms of smaller and smaller piece of the population. But that really turns and it also goes vertical, and I think it’s so interesting, and I know it’s hard to kind of visualize it on just listening to this. But you have a website, where it’s 8020curve.com that you can kind of plugin some numbers and see all the different examples. 

[0:36:43.1] PM: Yes. We have examples there. It also means that if 50 people a year each buy a $2,000 espresso machine, it means one of them wants to spend $100,000. At that point, most people, they’re like, “What?” You know what? Maybe they spend a million. It might be the guy that buys a Starbucks store, or a franchise, or something like that. The math works all the way up to things like that, because they’re still scratching the coffee-itch. 

What this means, practically speaking, is it means that if you have a bunch of customers that all did one thing, there’s a bunch more money in your list, and it’s the existing customers. You don’t need to go get a bunch of new customers to sell the espresso machines. If you didn’t have an espresso machine before, and now you do, you can go back to that crowd and sell espresso machines. It means you can have the junior espresso machine. You could have super-super-deluxe espresso machine. It means that an awful lot of small companies and freelancers can make a huge increase in their income just by inventing an espresso machine version of what you sell. You go, “Okay. What would make this really deluxe, really special, much easier to use, or much bigger of an experience?” You don’t just slap a big price on something. It needs to be worth the money. If it’s worth the money, they will buy it.

[0:38:23.9] MB: So many people fail to think about the opportunity to create these upsells kind of within their existing audience, and I think that’s what’s so fascinating. In the book, you also mentioned things like you have a coach ticket for $300 and you have a first-class seat, or a luxury seat on some of these international flights that can go for, literally, $10,000 or more.

[0:38:47.1] PM: Yes. Yes. Yes. Yes. That’s a perfect example. In some of the really nice airlines, like Singapore Airlines, or Emirates, yeah, they’ll have these little pads in $15,000 and they have the most expensive vodka, and the most expensive sushi, and the most expensive caviar. If you do the math, they can totally go all out on the food and it’s still only a few hundred dollars. 

The fact is, for every hundred people that want to fly coach, there’s that one guy, and he’s got the alligator shoes and all of that, or he wants to sleep because he’s a got a meeting when he arrives, and it’s a super important meeting. Frankly, if he’s 10% better at his meeting, it’s worth the $15,000, because he’s working on a $10 million, or a billion dollar deal. It’s totally worth it from the customer’s perspective.

[0:39:46.5] MB: You touched on earlier the idea that everybody, to some degree, has to sell, or is in sales, even if they don’t realize it. I’d also be really interested for you to share the marketing DNA concept that you have and the idea that everyone has a unique sales style. 

[0:40:04.7] PM: My first sales job was at this rep firm, and the people there, they were great people, they were great human beings. I loved them. There was Wally, and there was Fred, and there was Mike, and there was Steve. They were all great folks. One guy in particular, Fred, he was really successful and he had a lot of accounts, and he sold these really big deals. I would watch him in action. He would say things that I can’t figure how he got away with them. Do you ever know a salesperson like that? They could just kind smack a customer on the side of their head and get to guy to smile and say thank you. 

Fred just mystified me. I was like, “How can I be as good as Fred?” On top of that, to make matters worse, Fred had a very hard time explaining what he did in words. He wasn’t actually a very articulate person and he could barely spell, but he could still sell like crazy. 

It was like I was trying to be Fred. Actually, there were a lot of people I was trying to be like. I listen to these motivational tapes and stuff, and later I started to figure out why he was selling like crazy and why I wasn’t. It was because I had a fundamentally different style of selling than he did. All of my instincts ran totally counter to how he did his job. 

I figured out enough of that, that when I got fired from that job and got a new job, that the new job was a much better fit. In fact, it went really well, and I worked there for four years, and I made good money, and they sold the company, and I got stock options. It was a really happy story. 

Then, fast-forward another 10 years later, and at that point, I’ve been a marketing consultant for years and I’ve worked in 300 industries, and I have dealt with every kind of marketing and salesperson you can imagine. I started to realize the people’s selling styles can be extremely, extremely different. How one of them sells, has nothing to do with how somebody sells. 

Let me give you some examples. In fact, I’ll tell you what I ultimately concluded. I came up with — There were eight different modalities in selling, and I’ll tell you what they are. One of them is the alchemist. The alchemist wants to sell by showing you something that got invented yesterday that is super new and super cool that you have never seen before. It’s all about the new. 

A producer is somebody who sells you based on it’s reliable, it obeys the rules, it’s proven, it follows the 146 steps. Now, you’ll notice that an alchemist is almost the complete opposite of a producer. 

Here’s another one; is live versus recorded. Some people thrive in the moment, in gun fire, hostage and negotiator, throw him into a situation, and this Fred was the hostage negotiator. I am not. I was more like the recorded, which is whether it’s video, whether it’s audio, whether it’s in print. I want to sit and I want to perfect that message before I put it out there. That’s why I write books. Fred couldn’t write a book to save his life. I could negotiate a hostage situation to save my life. Do you know what I’m saying? 

Then, the next one is images versus words. There are people that sell you by showing you stuff, “Look at this.” “Look at that.” “Look at this.” “Look at that.” Maybe they sell bright, yellow Corvettes, or something. Then, there’re people they sell with words. They sell with stories. They sell with descriptions. They write catalogs. They write copy. They write the big, long webpages that are ugly, but they sell a lot of stuff. 

Then, there’s empathy versus analytics. Some people pluck your heart strings and they tell you a really moving story, they make you laugh, the make you cry. Other people sell with proof, and data in spreadsheets, and graphs, and numbers. 

Those are eight components. What I did was I devised a profile test online where you can go take it and it will tell you, “This is how you naturally sell.” Do not try to take a job, or a function, or an entrepreneurial adventure that forces you to sell outside your style. Do it within your style, because that’s the 80/20 of your skill set. The 20% of your skills that will produce 80% of all of your results are probably concentrated in one, or two, or three of these areas, and then you have these others that are weaknesses. 

For example, we’ve got a guy, his name is Joshua Earl. He was a computer programmer. He took the marketing DNA test, and the marketing DNA test said, “You are a copywriter.” 18 months later, he had quit his job and he was a full time copywriter, and he loves what he does. He didn’t really enjoy computer programming. 

I think if you’re going to sell anything. I don’t care if you do sell for a living, or if you don’t sell for a living. If you have to persuade people to do stuff, you should figure out what is your persuasion groove? What is your natural way that you can convince people to do stuff, because it’s already there, it’s already been present in most of the interactions that you’ve been successful with. Now, you just need to build on it. 

[0:46:26.8] MB: for listeners who want to take kind of a concrete first step to implement the 80/20 principle in their lives, what’s a piece of homework that you would give them as a starting place? 

[0:46:37.9] PM:  I would respectfully suggest that you read my 80/20 book, it’s called 80/20 Sales in Marketing. In fact, it has a link to the marketing DNA test inside which is normally $37, so it’s a really nice discount. I would encourage you to read that. 

As far as specific actions — I want you to think about — Think about how somebody gets to you. Let’s say that you’ve got certain keywords, or ads, or whatever, that are on the internet, and people. Think how 80/20 applies to every single step. 80% of the people search — Or 100% people search, 80% don’t click on your link, and 20% do. 

Then, the ones that come to your website, 80% leave without doing anything that you want them to do, and 20% do what you want them to do. Then, the 20% that filled in the form, the 20% of them actually get on the webinar or talk to you on the phone, and 20% of them buys something. 20% of them actually buy something else. 

What I want you to do is I would like you to sit down with a piece of paper, go to Starbucks, or wherever your favorite thinking place is, and just sketch it out and realize that, okay, you’re dealing with 20% of the 20% of the 20% or the 20%, which is some tiny fraction. What I want you to do, starting from now, is instead of beating yourself up for the apparent massive waste, because, hey, it’s true. 99.5% of these people never do what you want them to do. Instead of lamenting over those, I want you to focus on the fraction that do it, do what you want to do, and I want you to ask yourself, “What’s the next 20% —  What’s the giant step that 20% of these people would take that’s four times bigger than the step they took before that I haven’t asked them to take? How do I even get bigger doors on these tiny little hinges.”

Sure, you can improve your ratios everywhere else, but you’re not usually going to improve them by a huge, huge amount. Most of steps, you’re not going to improve 10-X. You might improve 50%, or you might double them, or something like that. Either way, most of the money, most of the success, most of the whatever you are after is in this small number, and there’s a bunch of stuff you’re doing now that you don’t actually have to do. 

[0:49:33.1] MB: Great advice, and we’ll be sure to include links to all of these in the book, the 80/20 curve, everything in the show notes so listeners can get access to all of that. 

Perry, where can people find you and find your books line?

[0:49:47.0] PM: You can go to perrymarshall.com. In fact, we sell the 80/20 book for $7 including shipping in the United States. It’s an incredible loss leader but we do that for a very particular reason. You can also find my other books, and we’ve got a lot of things and you can get on our email list, and you can study what we do and how we do it. 

In fact, what I would suggest you do, if you want to see 80/20 sales in marketing being done as opposed to just describe, just go buy the book for $7 and see what happens. We use 80/20 all over the place. It’s layered in into what we do. The up-sell is from the book, and the emails that you get, and whether you get a lot of emails or only a few based on what you respond to, or whether you respond to things, whether you opened the emails or not. All of that is self-adjusting. 

Again, you can go to perrymarshall.com and you can see all of that happen. It’s one thing to read about it, but it’s another thing to have it done to you and see how that works. I actually have a lot of people that get on our email list just to see what we do.

[0:51:04.2] MB: Perry, this has been a fascinating conversation. I really, really enjoyed digging into the 80/20 principle and some amazing stories and examples and some really concrete ways to apply it and think about sales and marketing. Thank you so much for being on the show.

[0:51:19.4] PM: Thank you for having me and thank you for going on all these weird little nooks and crannies of the universe as I try to stitch and saw together and help people be more effective and persuading. 

[0:51:31.0] MB: Thank you so much for listening to The Science of Success. Listeners like you are why we do this podcast. The emails and stories we receive from listeners around the globe bring us joy and fuel our mission to unleash human potential. I love hearing from listeners. If you want to reach out, share your story, or just say hi, shoot me an email, my email is matt@scienceofsuccess.co. I’d love to hear from you and I read and respond to every listener email. 

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