How The 80/20 Rule Together With Fractional Marketing Can Grow Your Business | #270 Torsten Lueddecke

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Claus Lauter: [00:00:00] This is episode 270 of the eCommerce Coffee Break Podcast. Today I'm joined by a friend and business partner of mine, Torsten Lueddecke, and we discuss how you can use the 80 20 rule together with fractional marketing to grow your business. So let's dive right into it. But before we get started, a big thank you to our sponsors for supporting today's episode.

Have you heard about Partner Hero? They're experts in support on the e commerce industry, known for their outstanding team building skills. Their main pillars, quality, people and culture makes them a great fit for your company. Learn more on partnerhero. com or click the link in the show notes. Are you feeling overwhelmed by marketing stress?

Say goodbye to pressure and meet your new secret weapon, a remote marketing assistant. Easily scale up your business, boost productivity and reclaim your time. The game changer, get your own marketing wizard at half the cost. Visit smart ecommerce marketing. com and discover the magic. Check out the link in the show notes now.

This is the e commerce coffee break. A top [00:01:00] 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 ecommerce world. With your host, Klaus Lauter, and get marketing advice you can't find on Google.

Welcome, 

welcome to the show. Hello, and welcome to another episode of the ecommerce coffee break podcast. 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 Ludwig 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. But the topic overall, the Pareto principle, 80 20 rule, also known as the law of the vital few, is just a reminder on 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, Klaus. And thanks for having me here. It's fun to talk to you in this setting [00:02:00] 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 growing your business, increasing your sales, and obviously digital marketing is an essential part of that. And so I'm glad to be here and talk to you about the Pareto Principle and how that can help, you know, people to grow their businesses at their online shops.

Claus Lauter: 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: So my name is Torsten. I'm actually a German entrepreneur, started my career in the recruitment industry. I set up one of the biggest recruitment companies in Europe together with some partners in Belgium and sold the company in the dot com boom in 2001.

And then I decided to move to Cape Town and start various [00:03:00] ventures all based on the idea that you can do Great jobs 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, subtyping, simple translations, or anything, they come to me, give us the job and we can deliver. 30 percent cost advantage compared to our competitors in Europe. That's basically what I'm doing here.

I've been in Cape Town for over 20 years now. I met you Klaus, I think it's like 12 years ago or 13 years ago here in Cape Town. And you brought in some great ideas to my business. And then we basically reconnected a couple of years ago to start something new together. But I'm sure we got to come. to that a little later.

On a personal, you know, I'm married, beautiful wife, she's a Qigong teacher. Most of you might not know what Qigong is. It's an [00:04:00] Asian form of healing and health, which also means it's greatly contributing to my quality of life. And I'm an avid traveler, just like you, Klaus. But I think it's, this is more about the business side 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.

And I think that's where the 80 20 rule plays in and is a huge part of it. For those who do not know, the 80 20 rule, also called the Pareto principle, it's coming from Alfredo Pareto. He was an 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 

Torsten Lueddecke: 20 rule.

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 [00:05:00] 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 the trees.

And he continued to look at various things. And this 80, 20 will seem to 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. 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.

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 the very, very limited results.

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 implement it accordingly to use your resources in the most effective. Wait, [00:06:00] this is a principle. You can do it on the tiniest scale. For example, if you just write a simple Facebook post, once you got the main message, right, 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, you know, 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.

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, implement it on a daily basis or go through life through business life with an awareness of the tool so that they continue to put their resources where it really matters.

Claus Lauter: Yeah, a hundred percent right. I think a lot of solo preternures, 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 a business that it's easy to get lost in the day to day. So [00:07:00] 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. So one thing for instance, is that you might have that 20 percent of software bugs. Cause 80 percent of customer complaints, for instance. So you need to find out how can I optimize that one?

You can have, for instance, outsourcing it at 20%. And you mentioned that 20 percent of your advertising generates 80 percent of your leads. So you want to focus on that. 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 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 [00:08:00] 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 and you're not good at it.

You still have to do it, but you need to find someone who's better than you and outsource the whole thing. Now, the 80 20 rule is not necessarily 80 20. It can be 70 30, it can be 90 10, 90 9 1, but you really need to find out what it is. Now, going through this process, what's your approach of sitting down and looking at the processes and then really making a decision, a call on what to change in a business?

How do you do this? You 

Torsten Lueddecke: 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 80 20 rule. So, for example, I'm very good at identifying where I'm wasting my time and where I'm effective in the areas where I'm good at.

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 know, you will understand what brings the result. What is more [00:09:00] difficult are these areas where you feel you've got not enough expertise anyway, 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. So again, you know, if you're smart like Klaus, and you're outsourcing 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. So, uh, we can't expect an all 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 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 [00:10:00] business.

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

Claus Lauter: And now a quick break to thank the sponsors of today's episode. As a prominent player in the e commerce support arena, Partner Hero specializes in delivering personalized customer experience solutions.

With a clear focus on helping you not just meet but exceed your goals and requirements, they have become experts in e commerce support. Their commitment to tailoring solutions to your unique needs ensures that your support experience is nothing short of exceptional. Partner Hero is more than a CX company.

There are your partner in success. Visit their website and learn more on partnerhero. com. Are you feeling overwhelmed by marketing stress? Say goodbye to pressure and meet your new secret weapon, a remote marketing assistant. Easily scale up your business, boost productivity and reclaim your time. The game changer?

Get your own marketing wizard at half the cost. Visit smart ecommerce marketing. com and discover the magic. Check out the link in the show notes now. Wow. Well, valid point that you mentioned there. Sometimes it's very difficult to see the forest because of the trees and [00:11:00] a fresh set of eyes will help you to find out.

Or 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. 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.

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 young entrepreneurs or shop owners to use this service. Now, the first idea is obviously I mentioned earlier, I live in Cape Town.

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 [00:12:00] expenses that you would usually have. Which means the office spaces are cheaper. The salaries are cheaper. Everything is really just like half the cost here. So, that is one pillow of what we are offering.

We say, OK, let's operate from TechDoc. The second point is that we have observed that a lot of Companies feel uneasy 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.

And this is why Klaus 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 will sit in our office, but they are part of your team.

So you've got complete control of them. You integrate them in your meetings, in your online meetings, talk to them on a daily basis, but they are in a fixed office structure [00:13:00] under supervision. So, you know, if you've got a freelance in India, you've got no idea what this guy is doing all day. And if he's sitting in our office, you damn know what's going on.

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, you know, basically have the benefit of having someone.

Working for you exclusively in a low cost destination. Now, that is the idea that Klaus and I had a couple of months ago. Well, actually, it's a year and a half ago now, and it's flourishing very well. Now, that Klaus came to me and said, look, my clientele, 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. 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, [00:14:00] you know, experts in their field and their work is fractional.

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 means you pay only the share of the time that they're working for you. You're also paying far less because they are based in Cape town.

And you have an expert, you know, in their field that is supervised. That is the last bonus that I bring in by our friend and podcast host, Klaus 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.

So, you know, it's not just someone 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 a multinational does. You need limited stuff that creates results.

You need to do the [00:15:00] 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 idea that we think is working and the fractional marketing manager because he or she is an expert in their field. Also, we'll be able to identify very well what are the things that create results here and what is other things that I'm just doing because, you know, I'm 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 you'll recommend us to your friends and business partners. The 

Claus Lauter: fun part of is that we are clients of our own company because we, we had this pain point. We had this pain point.

Okay. We have identified according to the 80 20 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. So we're not only running the business, we're clients of ourselves because we still have people that [00:16:00] 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 

Torsten Lueddecke: day? I would say the perfect customer is any company that has a high awareness that it's important to drive sales through digital marketing, that they understand 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.

And it's a company that says, I'd love to do it, but I've got limited resources and 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.

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

You know, I'm just a small business. I would love to take [00:17:00] 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. 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. Okay. 

Claus Lauter: 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, 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. Then we would present them, you know, CVs, possible candidates, and the recruitment decision is the joint decision. [00:18:00] So we do the pre selection here and the search, but it's ultimately the client that says, this is the man or the woman I would like to work with.

The whole process can be pretty fast. And 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.

But, you know, hopefully we've done the regrouping process well enough that we can evaluate the expertise of that person. And that is a great player. It fits well into the team of the client. Stay Forever 10 

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

The cost 

Torsten Lueddecke: 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 Spain or if you're, you know, a listener that sits in Spain or in Germany and they want a German or a Spanish speaking person, it can be a little more difficult because we have less people.

Let's speak these languages here. And usually there's a little premium if they're looking for other [00:19:00] languages than English, but there are huge international communities here. So it is absolutely possible to find a great online marketing manager with other language skills than English. But if it's a native speaker, 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 so there is a big market and other than in Europe, there is quite a bit of supply here for these profiles. Uh, so I would say if it's an English speaker.

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 pension schemes or whatever is necessary. They participate in our Christmas party. So they're really integrated in a proper working environment.

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 [00:20:00] 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 a real difference in your online marketing for a very reasonable amount of 

Claus Lauter: money.

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 cheaper price point that delivers a lot of results for you. Then it's a win win situation. You win on the productivity side of things, and you win on the timing side of things.

It's just a massive cost and time saving task 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? Maybe something that 

Torsten Lueddecke: just came up to mind when you spoke about 80 percent of the team creates 20 percent of the results.

What is also very advantageous is that this person is not isolated here because you know, this is, we have a couple of online managers that work on different clients, but they obviously inspire each other. They talk to [00:21:00] each other. So any learning that one has. It can easily be implemented for others, which means the learning curve is very, very fast and any new ideas and new concepts will be shared.

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. So that's another added advantage rather than having someone sitting there all by himself.

One more point. 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 man. So I think that is another advantage. We've got beautiful, beautiful, beautiful nature here. Incredible wine farms. We've got two oceans and Taylor Mountain.

So don't miss out on that opportunity as well. It's a good point for anyone who's working hard to also think about that side of the business. 

Claus Lauter: Yeah. A hundred 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. [00:22:00] Torsten, I will put links to the services in the show notes and you're just one click away.

And as I'm part of that business, big disclaimer here, 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. 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, Klaus, and 

Claus Lauter: hope to see you soon. Hey, Klaus here. Thanks for joining me on another episode of the eCommerce Coffee Break podcast. Before you go, I'd like to ask two things from you. 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. Secondly, please take a moment to check out today's episode sponsors. They play a crucial role in keeping the show and our newsletter available to you for free. Thanks again and I catch you in the next episode.

Have a good one. Before you leave, don't forget to visit the sponsor of today's episode. [00:23:00] Are you feeling overwhelmed by marketing stress? Say goodbye to pressure and meet your new secret weapon, a remote marketing assistant. Easily scale up your business, boost productivity and reclaim your time. The game changer?

Get your own marketing wizard at half the cost. Visit smart ecommerce marketing. com and discover the magic. Check out the link in the show notes now. Have you heard about PartnerHero? They're experts in support on the e commerce industry, known for their outstanding team building skills. Their main pillars, quality, people, and culture makes them a great fit for your company.

Learn more on partnerhero. com or click the link in the show notes.