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14.5 Pareto Analysis

Pareto 80/20 Customer analysis

In the example above the "80" group has been expanded to show the members inside

The Pareto analysis is based on a common pattern observed in businesses: That around 80% of profits are generated by 20% of the customers. In the example above the pattern is even more extreme: 80% of profits is generated by 4% of customers (based on demo data).

How it works

Create a Pareto segmentation (see 14.3 How To Create A Segmentation)

image-20251028072915047

  1. Select a Metric from the list or by browsing the data model (click button with folder)
  2. If you know the name of the metric or need to use a metric expression you can just type it directly

Options:

  • Pareto threshold: The threshold between the two groups, which is usually 80% but you can choose any value between 1 and 99%.

As you can see it's very simple to create a Pareto segmentation!

Tips – Pareto Analysis

  • Use Pareto segmentations to analyze how dependent you are on few customers, vendors and/or items and make a diversification strategy accordingly.

Next Steps

14.6 ABC Analysis