Question

According to the 80/20 rule:

A. Only 80 percent of a company's customers deserve good service
B. 20 percent of a company's customers produce 80 percent of the company's profit
C. 20 percent of a company's customers should be classified as defect-prone
D. Only 80 percent of a company's customers will be affected by service encounters
E. 20 percent of a company's customers will require little or no service

Answer 1

The 80/20 rule, or Pareto Principle, indicates that typically 20% of a company's customers produce 80% of its profits, guiding businesses to focus on their most valuable customers.

Step-by-step explanation:

The 80/20 rule, also known as the Pareto Principle, suggests that in many situations approximately 20 percent of causes lead to 80 percent of the effects. Applied to business, this often translates to 20 percent of a company's customers producing 80 percent of the company's profit. This principle is used to identify and prioritize the most influential factors in a variety of contexts, from sales and marketing to productivity and customer service.

The correct answer to the question is B. According to the 80/20 rule, 20 percent of a company's customers produce 80 percent of the company's profit. This rule is also known as the Pareto principle, which states that 20 percent of inputs or efforts result in 80 percent of outcomes or results. For example, in a retail setting, a small percentage of customers may contribute a large portion of the overall sales.