On this bonus episode of Honest Ecommerce, we have Claus Lauter. Claus is the producer and host of the Ecommerce Coffee Break Podcast. We talk about Pareto principle or the 80-20 rule, the importance of delegating and outsourcing tasks, assessing and doing more of what you’re good at, and so much more!
Claus Lauter is an entrepreneur with over 20 years of experience in eCommerce, SaaS, and marketing.
He’s an official Shopify and certified Klaviyo Partner, award-winning eCommerce store owner, and certified Google expert. He was named one of the Top 20 Shopify Experts to follow in 2022.
Claus is the producer and host of the Ecommerce Coffee Break Podcast, voted as a Top 20 Shopify Podcast on Feedspot. He has started and grown businesses in the USA, Germany, South Africa, and Singapore, and is a true enthusiast of entrepreneurship and digital marketing.
As an avid traveler, he has visited more than 60 countries and lived on three continents.
In This Conversation We Discuss:
Resources:
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Claus Lauter
Anything that's basically not contributing the best to your own time, to the results of your business - 20% should be with you and the other 80% vital parts of your business should go somewhere else.
Chase Clymer
Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game.
On this podcast, we interview founders and experts who are putting in the work and creating real results.
I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.
Let's get on with the show.
Hey everybody, welcome back to a bonus episode of Honest Ecommerce. Today, you're going to have not one but two podcast hosts on the show, going to be competing for attention obviously.
Today I'm welcoming the host of Ecommerce Coffee Break, Claus Lauter. Welcome to the show.
Claus Lauter
Hey, Chase. Thanks for having me on the show today. Really pumped.
Chase Clymer
Absolutely. I'm excited to chat. So quickly, before we get into what we're going to discuss today, spoiler alert, we're going to talk about the Pareto Principle, the 80-20 rule, which is super fun.
But before that, give a little bit about your background. What brought you to host a podcast? What were you up to in your life?
Claus Lauter
Well, it happened completely accidental. As many people are stuck in a pandemic, I was looking for new ways to market my services. And a podcast was one of the ideas.
I never planned to become a podcast host in the way that I'm running it right now. But over time, it just developed.
The show grew, and I love it. Gives me the chance to talk to interesting people like you. And that brought me into podcasting.
Chase Clymer
Absolutely.
Now, did the Pareto principle influence your decision to stop with the service offering and focus on just the podcast?
Claus Lauter
Oh, that's a very good question. I never thought about that. Maybe it did. I don't know. The Pareto principle came to me a few years ago.
I've been in digital marketing for, I don't know, 20-something years, so a very long time. And at some point, Pareto principle 80-20 rule came up and I tried to implement that into my business and figured out actually it's very, very helpful.
So since then, I'm using that in many, many ways on how to manage things. And probably podcasting, what I do right now is an outcome of that as well.
Chase Clymer
Yeah. Absolutely.
So let's just dive in a bit more about the Pareto principle for anyone listening that is unaware of this awesome concept strategy. I don't really know how to best describe it, but it's something very helpful.
Claus Lauter
100%. Yeah. I think most people know it under the 80-20 rule. I think that's the most common phrase.
The history behind it, and I had to look it up. So it's coming from Italian economist Wilfredo Pareto in 1896, a long time ago. And he observed that 80% of the land in Italy was owned by only 20% of the population.
So he was not really literally in digital marketing or running businesses. So he came from a completely different angle.
Then in 1941, Joseph M. Juren, a Romanian born American engineer, applied the opposition to 80% of the issues caused by 20% of the causes in quality management. Still completely different.
But then, basically, it got a life on its own. So people took it over, took it in other parts of businesses.
And it came out that it applies to a lot of different things. On product management, on your sales, on managing your staff members, and so on and so forth.
Chase Clymer
Absolutely. I've seen it applied in Ecommerce specifically.
I've seen it that 80% of your returns will come from 20% of your customers. 80% of your sales will come from 20% of your products.
I've even seen it even skewed and maybe it's just people using numbers that they're familiar with to where you want to budget 20% for creative and running ads and 80% for the actual ad budget.
So there's 80-20 rules used all over the place.
Claus Lauter
Absolutely right. I think the most common thing you just mentioned... There's a lot of other examples.
I think what you mentioned there, customer support. 80% of your customer support requests are coming from 20% of your customers. You can't go further.
I talked to a guy a while ago, he said that he's basically firing his clients because 20% of his clients are giving him so much headache that he's trying to get rid of them. So you can really, really go granular on that one.
But I think it's also a big part of your own time management.
Because as an entrepreneur, as a solopreneur, as a startup founder, you're good in specific things and you're not so good in other things. So you want to focus on the 20% that you are really good at.
And the other 80%, which are still vital to your business, you basically find ways to better manage them, to outsource them.
So anything that's basically not contributing the best to your own time, to the results of your business - 20% should be with you and the other 80% vital parts of your business should go somewhere else.
Chase Clymer
Absolutely.
Let me translate that for all the American capitalists out there.
20% of your energy is going to be responsible for 80% of your income. So what you need to identify within your business is what are the actions that are truly strategic to moving the needle for your business, and you should double down on doing that.
And then the things that don't necessarily require you to be involved, they're important, but they don't require you to be involved, you should get them off your plate to open up more time for those actions that truly drive the business.
Claus Lauter
100% correct.
And I think you should always start with yourself when you're looking into optimizing. And then basically go step by step through your business, through every task that is in your business.
And you mentioned, for instance, paid ads. It’s a big thing, where do you put your money, where do you get the results from?
I mean, it's easy, specifically with Meta, Facebook, Instagram, Google, et cetera, to waste a lot of money with no results at all by not following the 80-20 rule.
So really, try to find out what are the 20% of marketing activities that I have on paid ads or in marketing in general, and then really focus on that one.
Chase Clymer
Absolutely.
Now, do you have any more examples of the 80-20 rule at work with either yourself or clients that you've supported?
Claus Lauter
Well, it started by myself. Basically, I did a time audit. So basically, the time that I'm spending working, building my business.
And then really looking, like, okay, what is bringing the results? Where is my energy, as you mentioned before, where is my energy put the best to get the most results out of it?
And then from there, I really try to outsource stuff.
For instance, bookkeeping is an integral part of every business. Am I my bookkeeper? No. Do I understand the basics? Yes.
So it's better to give it to someone who knows what they're doing. And they are much more efficient than I ever can be. So it's definitely not on my plate.
And that's where you basically start. It's like, OK, what am I good at? And then go step by step through all elements of your business and try to outsource.
Chase Clymer
Absolutely.
And I think outsourcing is… when you're looking at the activities on your plate, on your to-do list, the things that you're doing every week, there's three things that you can actually do. You can delegate it, you can automate it, or you can just stop doing it.
And I think people don't realize that that third option exists. And that goes back to really thinking about what actions are really driving results.
And sometimes you gotta do that with real data. You can see numbers like $50 here, results in a lead, or you can use gut principle.
Your gut feeling is like, well, every time I go to that marketing event, I usually get a client. So those have some data behind it.
But on the flip side, if it's like, I spend money here and I don't think I've ever seen a lead or I never get anything going to these meetups, stop doing them. You can stop.
You don't need to keep doing things that aren't getting you results. That's literally the definition of insanity.
Claus Lauter
100% right. Yeah, absolutely.
And it goes a bit on the tough side of being a business owner, it goes as far as firing people.
You might have people who are just not productive and effective enough, and that falls also under the 80-20 rule, so you want to get rid of the 80% or 20%–depending on your business–of people that are not contributing enough to the results.
And then obviously, you need to pull the trigger and get rid of them.
Chase Clymer
Absolutely.
And that starts to drift into the sunk cost fallacy. It's like, I've already invested so much time and energy in this person and it is really hard.
Once you do start delegating and you build a small team of contractors that are within your business that are taking care of important elements of your business, you have to be honest with yourself.
If they're not getting the job done within a week of hiring them after some corrective conversations, you should probably let them go. It's not going to get much better from there.
But if you think you're going to hire someone to take over a piece of your business, and this day one crushes it, you're insane as well.
I think a lot of people fail when they get into delegating stuff and outsourcing tasks within their business because they just assume the other person knows everything they know, which is not true. You have to over communicate how you do that process, what all the edge cases might be.
We use Loom all the time to walk through processes in real time. We try to call out any edge cases.
And then just accept work that maybe isn't there yet as they're learning on the job. I think that that will build a better relationship with any contractor that you're using, as opposed to being so cutthroat, like making one mistake and getting rid of them.
You're just going to be spending all your time firing people and not getting anything done.
Claus Lauter
Yeah. Coming back to the Pareto Principle, 80-20 rule, standard operating procedures help a lot there.
And you should not only write them once, you should go back and optimize them all the time. And that's also 80-20.
So we want to get rid of steps in processes in helping your employee to get better at it by constantly cutting out things by optimizing.
And you're quite right, you should give a new employee enough time to get ready for the job and to learn.
But then there is a point that depending on the tasks on the job they have, where you basically need to make the call is like, is that the right person or not? Because sometimes you feel emotional about an employee, you like the person, and it becomes really, really difficult.
But at the end of the day, unfortunately, you need to be a bit unemotional about that. It's a business and you want to see results and then you need to pull the trigger if they do not comply or do not bring the quality or quantity that you're looking for.
Chase Clymer
Exactly.
And I think another area where I've seen the Pareto principle, the 80-20 rule, applied is within the work product of people you're delegating tasks to.
If they can get 80% of what you as a founder, a specialist, as an insane person can get, that should be acceptable to you because your client, your partner, whoever, is not going to notice that 20%.
And that's what you should be trying to get your contractors to do, doing the work 80% as good as you're going to do it.
And that's something that I don't... That's not something I'm saying. It's something I've seen all over the internet.
And it's something that's really hard for founders and first-time builders– to start delegating these things that they have this concept of perfection. Everything has to be perfect. And then perfection is the enemy of progress, you have to get over it.
Claus Lauter
Yeah. I'm personally not a perfectionist. But what I think is that if you concentrate on the 20% you're good at, and you probably... That is exactly also what you're like, you will be better than the rest of the bunch. But the other 80%, you should find someone who's better than you.
And because these are the things that need to be done and you are probably not the best person either from your skill sets or from your motivation to do so. So if you delegate or if you outsource, then that person should be definitely better than you.
Chase Clymer
Absolutely.
And a caveat here because I've done a lot of hiring and stuff. If you're hiring someone that's better than you, you need to have a working knowledge of what it is. And so you can talk about it and understand if you're getting a good result or a bad result.
If you're pretty much blind to that entire area and you're hiring for it, how do you know if they know what they're talking about or not?
So when you're in a situation like that, it might make sense to have a partner help you hire someone or another team member that's more familiar, get involved to make sure that you're making the right hires and not unfortunately getting scammed.
There's a lot of liars on the internet.
Claus Lauter
A very important point that you made there. I have seen that in the past in different businesses that I was involved in.
I’m a big fan of doing everything in your business, every task in the beginning by yourself, just to learn the process, just to learn the problem. You don't need to become an expert in that. And that's not the idea.
But you're 100% right in saying you need to understand what the process is and what the outcome is and what the steps are. Because otherwise people can just sell you anything because you take it for granted what they tell you.
And that's not only for hiring people, that's also working with agencies, that's working with external partners, and so on and so forth. So a very important point.
Chase Clymer
Absolutely.
Can you quickly talk about your podcast, the types of guests that you have, where people can go and check it out if they're listening here and they want to learn more about you?
Claus Lauter
Yes, of course. So it's called the Ecommerce Coffee Break. It's a 20-25 minute conversational style podcast.
I'm talking to marketeers, founders, app developers in the Shopify space, and everything around that might be interesting for Shopify and DTC brands with running their business.
So we are focusing on marketing. We are focusing on AI a lot of times right now. AI is in everyone's mind right now and it helps a lot with business.
And we focus on everything that in the long run will help you to grow your business or grow your revenue.
Chase Clymer
Absolutely. And everyone, you can check that out at ecommercecoffeebreak.com.
Claus, is there anything I didn't ask you about that you think would resonate with our audience today?
Claus Lauter
So if somebody's interested in outsourcing, then they can contact me. I and a business partner of mine have a business that's called Smart E-Commerce Marketing, and there we basically help DTC companies in outsourcing marketing tasks on a part-time basis.
So we are not a virtual assistant company or something like that, but we bring you a new team member, and there's a lot of cost savings in there because we're based in South Africa and Cape Town.
Chase Clymer
Thank you so much for coming on the show.
Everyone go check out his podcast. I actually was on an episode recently, so you can go find that one to get a taste.
Claus, thank you so much for coming on the show today.
Claus Lauter
Thanks, Chase. It was a blast. Thanks so much.
Chase Clymer
We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes.
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