The 80-20 principle is the general observation that, in many markets, the vast majority (80 percent) of sales and/or PROFITS come from a small percentage (20 percent) of a firm’s customers. Likewise, 20 percent of a firm’s sales and/or profits come from 80 percent of its customers. Italian economist Vilfredo Pareto first articulated the 80-20 principle in the 1890s. Pareto observed that 80 percent of the WEALTH in Italy was owned by 20 percent of the population. More recently marketers have utilized the 80- 20 principle to evaluate and design marketing strategies. One example is the growth of affinity programs. First developed nationally by American Airlines, frequent-flyer programs reward the small percentage of customers who generate a large percentage of sales. Recognizing the benefits of catering to their most important customers, other airlines, hotels, and auto rental companies quickly adopted similar programs. With today’s CUSTOMER-RELATIONSHIP MANAGEMENT systems, marketers can better evaluate which customers are generating the lion’s share of their profits. Personal sales efforts, customized products, specialized services, and alternative delivery systems are just a few of the many marketing strategies that can be used to retain and cultivate relationships with a firm’s most important customers. Ultimately, the goal is to win and maintain the trust of valued customers. Another example of the 80-20 principle can be used in MARKET RESEARCH surveys. Sometimes a marketer may not want a random sample of all of their customers. Instead, the opinions of their important customers (the 20 percent generating 80 percent of the company’s profits) may be needed. Marketer Tony Cram makes an important insight about the 80-20 principle. Some customers may not generate significant sales or profits but may benefit a firm by sharing its planning process, collaborating on NEW PRODUCT DEVELOPMENT, or being a source of referrals and recommendations; they thus also prove valuable to a marketer. Like many aspects of business, the 80-20 principle should not be taken as an absolute guide for MARKETING STRATEGY decisions. Of course, the 80 percent of customers who generate 20 percent of sales or profits should not be ignored. Manufacturers often use independent representatives to call on small customers. Catalog companies change the size, composition, and frequency of mailing depending on past customer purchases. College textbook publishers provide 800-number services for small campuses while sending sales reps to major institutions. The INTERNET allows companies to customize offerings for different customer groups.