Businesses need to have different plans for contributors and consumers
What does it mean, and why does it matter?
A friend of mine is in the networking business. He has set out to build a platform that helps people connect with like-minded individuals (among other things). The business is still in the process of trying to find product-market fit, but that’s to-some-extent immaterial for this discussion. This topic of contributor vs consumer is about him, and probably most businesses out there.
Take any platform that thrives on community-generated content. Whether it is Medium, Quora or any such platform. The platform by itself has no content. It is the users who bring the content onto the platform — which is consumed by other users of the community. If you look at the stats, you will find that a good majority of the users are consuming that content, and it is a very small percentage of users who are creating that content. In business, it is popularly known as the 80/20 rule.
THE 80/20 RULE OR THE PARETO PRINCIPLE
The rule by itself is quite simple:
80% of your results would be generated by 20% of your activities.
In the case of platforms like Medium and Quora, you could look at it in any of the following ways:
- Only 20% of users would be creating content. If you look at the followers on any profile, you will find that a good percentage don’t have a single post. Granted, many of them would be inactive/dormant/dead accounts, but even if you could have looked at the active ones, you would have found that only a small percentage of them are actually producing content. Which makes them content consumers.
- Out of all the users who are creating content, only 20% of them would be accounting for 80% of the engagement your platform would be experiencing. Think claps, responses, comments, upvotes. Most of them would be centered around a small percentage of the content producers. I, unfortunately, am in the 80% bracket — the one that doesn’t bring in a lot of engagement. :-)
- Even the users who are consuming the content, practically speaking — only 20% of them are actually engaging with the content. Sharing it, commenting on it, liking/upvoting/clapping on it. Less than 20% of them account for more than 80% of the engagement numbers you see.
So, it is not just one level of 80/20 rule at play. Every interaction matrix you would think of, you will find a 80/20 rule in effect. Actually, if I were to be honest, I would assume that the numbers are much more skewed than just 80/20. It would be more like 90/10, maybe even 92/8, so hey — if you are a part of Medium/Quora analytics team, would love to take a sneak behind the curtain.
80/20 RULE IS TRUE EVERYWHERE. IN ALL BUSINESSES
- Less than 20% of the catalog of a retailer contribute to more than 80% of the revenue.
- Less than 20% of shoppers on Amazon leave a review on the product they bought.
- Less than 20% of the experiments you will do in your startup will contribute to more than 80% of the impact your experiments have on your growth.
- A bit controversial, but here it is — Less than 20% of your workforce will be as passionate (if not more) about the business as you are. For the rest, it may just be a paycheck.
You get the idea.
WHY DOES IT MATTER?
It matters because you need to have a different gameplan for these different segments. You can’t have a one-size-fits-all approach — whether you are looking at your customers or vendors. They all need to be handled differently.
- When you keep the fact that only 20% of your customers will be actually leaving a review on the products they buy, you will be able to devise the right strategies to incentivize them to keep on doing so, and micro-strategies to help convert a part of the remaining 80% in leaving reviews every once in a while. The same email won’t cut it for both segments. It will either turn out to be ineffective, or you will end up spending more money, rewards, and bandwidth on the activity than you needed to. Either way, it is an inefficient way to go about it.
- When you start segregating the 20% segment that contributes to 80% of the engagement on your platform, you get in a better position to analyze and identify the reasons behind the engagement they witness. You can then use this information to ensure that the 80% group that doesn’t see much engagement move to a point where the engagement their content witnesses keeps on improving month-on-month. After all, the only way for you to make sure that more and more of your content producers keep on doing so is for them to see some sense of gratification. Otherwise, sooner than later, they will start running out of steam and you will start losing out on your creators. And without your creators, you will end up losing on your consumers as well. And without the richly dense engaged community, the entire business starts crumbling down.
- Same as #2. When you identify what makes people engage with the content they are consuming, you can make sure that a broader base of consumers is engaging with the content. Sharing it, upvoting it, clapping on it, commenting on it. You know, the works. This helps you drive more engagement, and your system starts becoming more vibrant than it possibly is today. Just think about it — if 80% of your audience base is simply consuming the content, and if 80% of that 80% are just passive consumers of the content, that means a good 64% of your overall audience base is not yet engaging with the content in any way whatsoever. What a waste! Wouldn’t you agree?
Food for thought, wouldn’t you agree?
So, where do you go from here? Well. That’s completely on you. Figure out on what all manner Pareto’s principle is getting applied in your business, identify and isolate the different groups you can think of, and start formulating and executing the strategies to get the best out of each group.
There is a 64% audience base you have that is completely untapped! Put some life in them.