The 80/20 Rule: Work Less, Earn More (Here's How) — Torsten Lueddecke | Why the 80/20 Rule Drives Business Growth, How to Identify Your Most Productive Activities, Real-world Examples of the 80/20 Rule, Cost Savings from Fractional Marketing Services

In this podcast episode, we explore how the 80/20 rule and fractional marketing can boost your business growth. Our featured guest on the show is Torsten Lueddecke, founder and managing director at meinteaminkapstadt.com.

Topics discussed in this episode: 

• Why the 80/20 rule (Pareto Principle) is crucial for business growth and productivity
• How to identify the 20% of activities that produce 80% of your results
• What fractional marketing is and why it's beneficial for small businesses and entrepreneurs
• Why a fresh set of eyes can help identify areas for improvement in your business
• How fractional marketing managers can provide expert skills at a fraction of the cost
• How the recruitment and onboarding process works for fractional marketing managers
• What potential cost savings businesses can expect when using fractional marketing services

Links & Resources

Website: https://meinteaminkapstadt.com/
LinkedIn: https://www.linkedin.com/in/torsten-lueddecke-125140a/
LinkedIn: https://www.linkedin.com/company/meinteaminkapstadt/

Get access to more free resources by visiting the podcast episode page at
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Transcript

Claus Lauter: Welcome to the e commerce coffee break podcast. In today's episode we discuss the 80 20 rule together with fractional marketing and how this can grow your business. Joining me on the show is Torsten Lueddecke, founder and managing director at My Team in Cape Town.Com. So let's get started. 

Voice Over: This is the e commerce coffee break.

Voice Over: A top rated Shopify growth podcast dedicated to Shopify merchants and business owners looking to grow their online stores, learn how to survive in the fast changing e commerce world Claus Lauter and get marketing advice you can't find on Google. Welcome to the show. 

Claus Lauter: Hello and welcome to another episode of the e commerce coffee break podcast.

Claus Lauter: Today I have a bit of a different episode than the usual episodes. We want to talk about the 80 20 rule and how it can grow your business. Now with me on the show I have Torsten Lueddecke and he is not a normal guest. He is a friend of mine and also a business partner of mine and he will introduce himself in a second.

Claus Lauter: But the topic overall, the Pareto principle, 80 20 rule, also known as the law of vital, of the vital view, is just a reminder on how, what you should focus into your business. So we will dive into this right now. Let me welcome Torsten to the show. Hi, Torsten. How are you today? 

Torsten Lueddecke: I'm very well, thank you very much, Claus.

Torsten Lueddecke: And thanks for having me here. It's actually fun to talk to you in this setting because as you just mentioned, we are friends. So normally it's a little different when we have a conversation together, but I'm glad that we can share some knowledge here and hopefully get some of your listeners inspired about, you know, how to move their business to the next level, because I guess, you know, From what I know about the podcast here, it is all about, uh, growing your business, uh, increasing your sales and obviously, uh, digital marketing is an essential part of that.

Torsten Lueddecke: And so I'm glad to be here and talk to you about the Pareto principle and how that can help people to grow their businesses and their online shops. Right. So about me. Yes. 

Claus Lauter: Yeah. Let me tell them. Usually I do the introduction of our guests, but as we have friends, I would like to leave that to you. So introduce yourself and tell our listeners a bit about your background.

Torsten Lueddecke: Perfect. So my name is Torsten. Uh, I'm actually a German entrepreneur. Uh, I started my career, um, in the recruitment industry. I set up one of the biggest recruitment companies in Europe, uh, together with my Some partners in Belgium and sold the company, uh, in the. com boom at 2001. And then I decided to move to Cape town and start various ventures, uh, all based on the idea that, uh, you can do.

Torsten Lueddecke: Great jobs. Um, uh, from Cape Town just as well as you can do them from Munich, Vienna or Berlin. So basically, as an entrepreneur, I developed various services that companies could easily outsource without compromising quality. My main business here in Cape Town is a language agency. So companies that have any language work from copywriting to voiceover, subtitling, simple translations, or anything, they come to me, give us the job and we can deliver 30 percent cost advantage compared to, um, our competitors in Europe.

Torsten Lueddecke: That's basically what I'm doing here. I've been in Cape Town for over 20 years now. I met you Claus, I think it's like 12 years ago or 13 years ago here in Cape Town. And, uh, you brought in some great ideas, um, into my business and yeah. And then we basically reconnected a couple of years ago, uh, to start something new together, but I'm sure we're going to come.

Torsten Lueddecke: To that a little later on the personnel, you know, I'm married, uh, have a beautiful wife. Uh, she's a Qigong teacher. Most of you Qigong is. It's an Asian form of healing and health. Um, which also means it's greatly contributing to my quality of life. Um, and yeah, and I'm an, uh, uh, average traveler just like you, Claus.

Torsten Lueddecke: But I think it's, this is more about the business side, uh, now. And so I'll probably leave the questions to you and we can see how we can move this forward. 

Claus Lauter: Yeah, let's dive right into it. So obviously, we're both entrepreneurs, both of us have started a lot of different businesses. And as an entrepreneur, you're always focusing on being more productive, on being more effective on optimizing things.

Claus Lauter: And I think that's where the 80 20 rule plays in and is a huge part of it. Now, For those who do not know the 80 20 rule, also called the Pareto principle, it's coming from Alfredo Pareto. He was a Italian economist in the 19th century and he came up with the concept. Maybe tell me a little bit about what you understand about the 80 20 rule.

Torsten Lueddecke: Yeah, the funny thing is he was an economist, but he actually, the insight came from something else. He just, you know, observed Italy and he found out that 80 percent of the land in Italy is owned by only 20 percent of the people. And then he looked in his garden and he said, well, if I look at my trees, he says that 80 percent of the fruits are carried by 20 percent of, uh, of the trees.

Torsten Lueddecke: And he continued to look at various things. And this 80, 20 will seem to pop up, uh, pop up in many, many spheres of his life. And then he and others looked at, you know, at business and they discovered similar things. Uh, I mean, most of you, your listeners will know that a lot of the marketing do they do a lot of the resources they spend creates very little results.

Torsten Lueddecke: And then there are the few things that they do that, you know, suddenly bring big results. And that is the 80, 20 rule. So it says that 20 percent of your activities are responsible. For 80 percent of your results. So you might wonder, you know, it's worth doing the other 80 percent of work if that only brings very, very limited results.

Torsten Lueddecke: And that is what we are also suggesting here to say, okay, look at your business, identify what does make sense, what brings the highest results and then implemented accordingly to use your resources in the most effective way. And, um, yeah. And I think this is, this is a principle, uh, yeah, you can do it on the, on the tiniest scale, for example, if you just write a simple Facebook post, once you got the main message, right.

Torsten Lueddecke: Once you've got the graphic, right. You've got your targeting, right. This is. 20 percent of the time and it's done. Now, if you want to continue forever to find the right color scheme, the perfect punctuation here or there, or tiny details, you will not attract much more attention, you will not attract much more business, but you're going to spend a lot of time trying to put the perfect things.

Torsten Lueddecke: So that is, I think in simple words, it's the 80 20 rules. I'm sure a lot of people have heard about it. But very few people, you know, interesting enough implemented on the daily basis or go through life through business life with an awareness of that rule so that they continue to put their resources where it really matters.

Claus Lauter: Yeah, 100 percent right. I think a lot of solo entrepreneurs, startup founders, people who are side hustlers going into business do not have that on their plan on their platter because obviously there's so many things happening every day in the business that it's easy to get lost in the day to day tasks that are out there.

Claus Lauter: So with the 80 20 rule, as you mentioned before, you really need to sit down and go through the tasks that you have in your business and find out. What is bringing the results and how can I restructure it? And I want to have a little bit on a couple of examples to make it easier for our listeners to understand what it is.

Claus Lauter: So one thing for instance, is that you might have a, um, that 20 percent of software bugs, um, cause 80 percent of customer complaints. For instance, so you need to find out, how can I optimize that one? Um, you can have, for instance, outsourcing it at 20%. And you mentioned that 20 percent of your advertising generates 80 percent of your leads.

Claus Lauter: So you want to focus on that. And I'm, I'm a big fan because. As an entrepreneur, you have to deal sort of with everything, but you have your personal strengths. So you might be good in marketing, you might be good in accounting, whatsoever. And that's what you should focus on because that helps you most in a business.

Claus Lauter: And the rest you should sort of outsource. And I'm a big fan of that. So I usually look at the 20 percent that I'm good in. And that brings the results and everything else, which is also necessary to do in a business. So you cannot just cut out accounting, for instance, because you don't think it brings any results and you don't like it.

Claus Lauter: And you're not good at it. Um, you still have to do it, but you need to find someone who's better than you and outsource the whole, the whole thing. necessarily 80 20. It can be 70 30, it can be 90 10, 90 91, um, but you really need to find out what it is. Now going through this, this process or what's, what's your approach of, um, sitting down and looking at the processes and then really making a decision, a call on what to change in a business?

Claus Lauter: How do you do this? 

Torsten Lueddecke: I think, I think you, you, you had a valid point there when you said there are certain things that you're really good at and others you're not so good at. And you will also find that this is true when you use the 20, the 80 20 rule. So, for example, I'm, I'm very good at identifying, um, where I'm wasting my time and where I'm effective in the areas where I'm good.

Torsten Lueddecke: Now, that is perfect. And I think all it needs is to go a little bit into the numbers, a little bit of analytics, and then you will understand what brings the result. What is more difficult are these areas where you You feel you've got, uh, not enough expertise anyway, and, um, and where you struggle to understand, that's going to be very, very tough for you to identify the areas where you're wasting your time and resources.

Torsten Lueddecke: So, uh, again, you know, if you're smart like Claus and you're outsourced these things, it is time to talk to the people you're working with, you know, the people you have outsourced to work with and ask them to look at what they are doing. And ask them to identify where they think their contribution brings the highest results.

Torsten Lueddecke: So we can't, we can't expect a solo entrepreneur or a small medium sized enterprise, the owners, the entrepreneurs, we can't expect them to be able to analyze all areas of their business that way, but they can at least do the ones that they are responsible for and that they are good at. So it is, uh, you know, looking at numbers and we, today, the internet and the tools we have on the internet offer a lot of analytical tools that we can use to identify, um, the, um, uh, which, what makes sense and what doesn't make sense, but do it for the stuff that you are doing and don't try necessarily to understand all areas of your business.

Torsten Lueddecke: Leave that to the people that are doing the job, whether it's your own employees in the, in your business or the people you've outsourced. 

Claus Lauter: Hey Claus here, just a quick one. If you like the content of this episode, sign up for our free newsletter and become a Smarter Shopify Merchant in just 7 minutes per week.

Claus Lauter: We curate content from more than 50 sources, saving you hours of research and helping you stay on top of your e commerce game with the latest news, insights and trends. Every Thursday in your inbox, 100 percent free. Join now at newsletter. ecommercecoffeebreak. com. That is newsletter. ecommercecoffeebreak.

Claus Lauter: com. And now back to the show. Wow. Well, the point that you mentioned there, sometimes it's very difficult to see the forest because of the trees and a fresh set of eyes will help you to find out just a person that might be another one person in your organization, in your company, looking at a different aspect of your business and telling you what's working and what's not.

Claus Lauter: And then from there going in the 80 20 rule. Or someone external looking into that. Now, the two of us have come up with a solution on that because specifically in certain areas, it's just easier to outsource things and to give it someone else who's either more specialized or just because time is money also can do things cheaper.

Claus Lauter: Um, tell me a little bit about the solution that we came up with. 

Torsten Lueddecke: Okay, well, that's a complex question because it covers a couple of your ideas that we have put together to make it worthwhile for, you know, young entrepreneurs or shop owners, um, to use this service. Now, the first idea is obviously, I mentioned earlier, I live in Cape Town.

Torsten Lueddecke: So all my businesses are operating from Cape Town and Cape Town has a smart and better cost base. So roughly 50 percent of the expenses that you would, you know, usually have In, uh, in Western Europe, which means the office, uh, spaces are cheaper. Uh, the, uh, the, uh, the salaries are cheaper. Uh, everything is really just like half the cost here.

Torsten Lueddecke: Uh, so that is one, one pillow of what we are offering. We say, okay, let's operate from Cape Town. The second point is, um, that we have observed that a lot of companies feel When it comes to outsourcing to some random freelancer that they have no control over, or just a BPO company where they talk to a client relationship manager, but they don't talk to the people that are actually doing the job.

Torsten Lueddecke: And this is why Claus and I started a separate business line called My team in Cape Town, where we basically say, Okay, you have a certain profile of people or person you want to recruit. We will find them for you. We will employ them at our company. They would sit in our office, but they are part of your team.

Torsten Lueddecke: So you've got complete control of them. You integrate, integrate them in your, in your meetings, in your online meetings, talk to them on a daily basis. But they are in a fixed office structure under supervision. So if you've got a freelance in India, you've got no idea what this guy's doing all day. Maybe sitting in our office, you damn know what's going on.

Torsten Lueddecke: And you always have someone to refer to if there are any issues. It also means you have no problems. So if you're unhappy with this person and we need to go to the retrenchment phase or something like that, that's all our responsibility. You just basically have the benefit of having someone. Working for you exclusively in a low cost destination.

Torsten Lueddecke: Now, that is the idea that Claus and I had, you know, a couple of months ago. Well, actually, it's a year and a half ago now, and it's flourishing very well. Now, then Claus came to me and said, look, my clientele. They, they are usually smaller companies or just, you know, solo entrepreneurs and they don't have the resource, the money to pay a full time marketing manager.

Torsten Lueddecke: And that is where the Pareto principle came on. And we said, well, there's no need to have a full time marketing manager because 80 percent of the results are done in 20 percent of the time. So rather than hire someone full time, let us take on, you know, experts in their field and their work is fractional.

Torsten Lueddecke: Marketing managers. That's how we call them. So you buy a fraction of the time, like 20 hours a week or 15 hours a week. And it is 15 hours. They work exclusively for you. Now, what does it mean financially financially? It means you pay only the share of the time that they are working for you. You're also paying far less because they are based in Cape town.

Torsten Lueddecke: And you have an expert, you know, in their field that is supervised. And that is the last bonus that I bring in by our friend and podcast host, Claus Lauter, who obviously knows a lot about digital marketing. So he is actually looking at the team. He is taking care that everything is fine. He's bringing the great ideas into it.

Torsten Lueddecke: And so, you know, it's not just someone, you know, working in an empty space. It's someone under great supervision. So that is the concept that we came up with. And the basic idea is the 80 20 rule, because we say you don't need someone that does the stuff that, you know, a multinational does. You need limited stuff that creates results.

Torsten Lueddecke: You need to do the basic thing that is absolutely necessary to drive your sales. And a fractional marketing manager is more than enough for that. So this is the kind of, you know, idea that we think is working and, uh, the fractional marketing manager, because he or she is an expert in their field also will be able to identify very well, you know, what are the things that create results here?

Torsten Lueddecke: And what is other things that I'm just doing because, you know, I paid 40 hours a week and I have to do something and present something in front of the board. So the idea is we do only what matters. We do it at a fraction of the cost that you would usually pay. And then hopefully we get your sales up and, uh, and, uh, And you will recommend us to your friends and business partners.

Claus Lauter: The fun part of it is that we are clients of our own company because we had this pain point. We had this pain point. Okay, we have identified. according to the 8020 rule, certain areas where we needed help with, but not a full time person. So we started with that. And now we basically bringing it out to the world, to other entrepreneurs doing the same.

Claus Lauter: So we're not only running the business, we're clients of ourselves because we still have people that work only part time for ourselves, but we are offering these to others as well. So who's our perfect customer at the end of the day? 

Torsten Lueddecke: I would say the perfect customer is any company that has a high awareness that is important to drive sales through digital marketing, that they understand, you know, no matter how good their products is, they need to sell, sell, sell, and they need to do something in order to get these client leads and to get the sales in.

Torsten Lueddecke: And it's a company that says, I'd love to do it, but, you know, I've got limited resources and, uh, I don't have the expertise to do it myself because I'm very good at other stuff, but you know, I know very little about digital marketing. So they don't have the expertise themselves and they don't have the resources to hire someone expensive full time at their own office.

Torsten Lueddecke: That is a perfect customer because, uh, they can, they can get the talent here in Cape Town at a fraction of the cost and, uh, they don't need a full time person because, uh, as we all know, it's very few things that actually make a difference. And that is what the, uh, the marketing manager here will, will focus on.

Torsten Lueddecke: There's also companies that think, well, them. You know, I'm just a small business. I would love to take advantage, like all the global players. I mean, all the global payers are here in Cape Town, like Amazon. They are huge centers here. They take advantage of the low cost base and the small entrepreneur does want to do the same.

Torsten Lueddecke: So if they want to take advantage of their low cost base here, that is an ideal customer. So I think, you know, companies that say, okay, I have a limited resource, a limited budget available, and I don't have the expertise to do it all myself. They should be in touch and they should talk to us and what we can do, how a package could look like, and then we can take it from there.

Claus Lauter: Okay. Walk me through the typical onboarding process for a new client. What steps are involved? How long does it usually take to get up and running? 

Torsten Lueddecke: Well, basically it's a call like we are having now and only with the third person on board, which is the potential client. So they will talk to you and me about their business, about their needs, about the profile of people they are looking for.

Torsten Lueddecke: And they explain a little bit of what they've been doing so far in their marketing field. No worry if they have done very little. We understand that. Um, and, uh, then we would, we would present them, you know, CVs, possible candidates. And the recruitment decision is the joint decision. So we do the pre selection here and the search.

Torsten Lueddecke: And, but ultimately the client that says that this is the man or the woman I would like to work with. Uh, the whole process can be pretty fast. Um, and, uh, then we get started and, you know, obviously if we do good work and the client is very happy, then it can be a very long relationship. Now, if the client is unhappy for whatever reason with the actual person we took on, it's also easy for us to replace and to come up with an alternative.

Torsten Lueddecke: But, you know, hopefully we've done the regrouping process well enough that, um, you know, we can evaluate the expertise of that person and that it's a great player and fits well into the team of the client. 

Claus Lauter: Tell me a little bit about the potential cost savings and the pricing structure that's behind that.

Torsten Lueddecke: Well, it's, uh, the cost saving depends a little bit on the language of your clients. Now, if it's English speaking, it's easy because everybody here speaks English. Now, if you've got clients in, uh, in, uh, in Spain or if you're, you know, a listener that sits in Spain or in Germany and there was a German or a Spanish speaking person, it can be a little more difficult because we have less people.

Torsten Lueddecke: Uh, that speak these languages here. And usually there's a little premium if they're looking for other languages than English, uh, but there are huge international communities here. So, uh, it is absolutely possible to find a great, uh, online marketing manager with other language skills than, uh, than English.

Torsten Lueddecke: But if it's an, a native speaker, uh, I don't know whether any of your listeners ever looked into Cape town. It is the creative hub here in Africa. For a reason, because the atmosphere is extremely creative. People love Cape town. A lot of young, innovative people are living here. And, uh, so there is a big market and other than in Europe, there is quite a bit of supply here for these profiles.

Torsten Lueddecke: And so I would say if it's an English speaker, Um, you know, everything included. If you take the salary of the English speaker, if you take the office space that we provide, the IT support that we provide, the management support we provide, you know, we pay into the pensions team. So whatever's necessary, they participate in our Christmas party.

Torsten Lueddecke: So they're really integrated in a proper working environment. Yeah. If you add all of that up, you know, the cost saving compared to taking on someone like this full time would be something like 30 to 50%. Now, if you then don't take on this person full time, but maybe only half time, you know, you can do the math and you can see that you can get, can get a real difference in your online marketing for a very reasonable amount of money.

Claus Lauter: Yeah. And maybe to add to that, the Pareto principle tells us also that 20 percent of any team will deliver 80 percent of the results. So if you can find a high productive team or a much better team, cheaper price point that delivers a lot of results for you. Then it's a win win situation. Um, you win on the productivity side of things and you win on the timing side of things.

Claus Lauter: It's just a, a massive cost and time saving, um, tasks that you have onboarded in your business there. Before we come to the end of the coffee break today, Torsten, is there a final thought that you want to leave our listeners with? 

Torsten Lueddecke: Well, maybe, maybe something that just came up to my, uh, up to mind when you spoke about, uh, that 80 percent of the team creates 20 percent of the results.

Torsten Lueddecke: What is also, uh, you know, very advantageous is that this person is not isolated here because, you know, this is, we have a couple of online managers that work, you know, on different clients, but they obviously inspire each other, they talk to each other. So any learning that one has can easily be implemented for others, which means the learning curve is very, very fast.

Torsten Lueddecke: And any new ideas and new concepts will be shared. So you don't have, yeah, imagine you've got an online manager sitting alone in his office, you know, at your place in Frankfurt, you know, where does he get his inspiration from? Now here, the inspiration is. Continuously flowing and new ideas and improvements are happening all the time.

Torsten Lueddecke: So that's another added advantage rather than having someone sitting there all by himself. Uh, I think that's the final thought. Uh, other than that, uh, Oh, one more point. Uh, if you have someone working here in Cape Town, it's a great excuse to travel down here, have a fantastic time and make it deducted from the tax.

Torsten Lueddecke: Man. So I think that is another advantage. Uh, we've got beautiful, beautiful, beautiful nature here, incredible wine farms, but two oceans and Taylor mountain, so don't miss out on that opportunity as well. I think it's a, it's a good point for anyone who's working hard to also think about that side of the business.

Claus Lauter: Yeah, 100 percent true. Even if Torsten and I are biased because living for a long time in Cape Town, it's definitely a place to visit there. Cool. Um, Torsten, I will put links to the services in the show notes. Then you're just one click away. And as I'm part of that business, Big disclaimer here, um, you also can reach out to me directly and I will give you some more information on how we can help you in using the 80 20 principle in your business.

Claus Lauter: And then on the other side, outsourcing things to us to make your life easier. Thanks so much for your time today. 

Torsten Lueddecke: Thank you very much, Claus, and hope to see you soon. 

Claus Lauter: Hey, Claus here. Thank you for joining me on another episode of the e commerce coffee break podcast. Before you go, I'd like to ask two things from you.

Claus Lauter: First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast. Simply like, comment, and subscribe in the app you're using to listen to the podcast, and even better, if you could leave a rating. And finally, sign up for our free newsletter and become a smarter Shopify merchant in just 7 minutes per week.

Claus Lauter: We create content from more than 50 sources, saving you hours of research and helping you stay on top of your e commerce game with the latest news, insights, and trends. Every Thursday in your inbox, 100 percent free. Join now at newsletter. ecommercecoffeebreak. com. That is newsletter. ecommercecoffeebreak.

Claus Lauter: com. Thanks again, and I'll catch you in the next episode. Have a good one.