Time to consider the Pareto Principle…

March 29, 2007 at 8:15 pm Leave a comment

Better known as the old 80/20 rule.  In the web world this still applies.  Read up on Italian economist Vilfred Pareto to get some of the history.  I haven’t directly discussed this principle here yet and how it applies to Community insights and research, but I thought it was about time.  This principle is often used in quality assurance or quality control planning and is a fundamental tool in Six Sigma.  Below is a sample Pareto Chart that looks at the hypothetical data relative to frequency of reasons for arriving late at work (thank you wikipedia for the exhibit). 

Simple example of a Pareto chart using hypothetical data showing the relative frequency of reasons for arriving late at work.

So, why am I talking about Pareto Principle?  I thought this a timely follow up to my post on Community Segmentation.  I don’t want anyone following my blog or thinking about Web 2.0 to think of it as a replacement for market research, user acceptance testing, focus groups, or anything else you may do today to aid in the decision making process.  Your communities can massively augment and improve your customer/user intelligence, but make no mistake it can’t be your only source.  Your community participants may represent a selection bias in your research.  Your elites are a selection bias.  If only a few % of your total users are active in your communities, is it a statistically significant sample? (I did NOT just say that the feedback/insights from these segments is NOT SIGNIFICANT!!!  It most certainly is.  It just isn’t the whole picture).   The largest source of “listening” for many companies is their call centers.  How do your # of callers and your # of community participants compare – are the insights gathered from these two sources different?  In what ways and what might that tell you?  This isn’t an either/or – it’s about building a strong story through all your insight sources. 

Consider these questions as part of how you think this through?

  • How will your online community investment inform your market and product research processes?
  • Do the users in your communities represent your broader set of users?
  • What user segments are not well represented?  Why not? How will you understand them?
  • Is your community insight capture focused only on “power users”?  If the BBQ company I love only listened to users like me, they would build an amazing BBQ for high end users, but may price or feature themselves right out of the market for the masses.  Who do you want to be?
  • When your elite contributors give you feedback, are they representing themselves or the users they are helping?  Ask them.  Generally they know the difference.

I worry about those talking about web 2.0 as the dream “listening system.”  If you are doing this right, you need to Pareto and consider all of it.  Most common sources of defects, types of defects, causes of complaints, recommended features, etc. against all your segments and your audience all up.  Then decide based on your goals how you prioritize.  Where Web 2.0 then circles back again is on the need for corporate transparency…sharing how and why you made these decisions.  This is where a bit of courage will be necessary as not all your users will agree with you and in particular, some of your most valuable users won’t agree – but you owe it to them to be open on your process.



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How do you segment your community? Community helping Community: SBSMigration…

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