Eighty Twenty Funnel Economics

80/20 Funnel Economics

Use this skill to find the few funnel improvements that multiply economic results. It is based on 80/20 Sales and Marketing by Perry Marshall.

Source Traceability

Primary source: 80/20 Sales and Marketing, chapters 6, 9, 12, and 22.

• Chapter 6 introduces traffic, conversion, economics as a linked system.
• Chapter 9 covers split testing and fixing funnels in pieces.
• Chapter 12 covers higher customer value and premium buying behavior.
• Chapter 22 covers identifying the few measurements that matter now.

Workflow

1. Map The Funnel Economics

Capture each step:

• Traffic source.
• Lead capture.
• Qualification.
• Offer.
• Purchase.
• Upsell or expansion.
• Retention or repeat purchase.

For each step, capture volume, conversion rate, revenue, gross margin, and customer quality where available.

2. Work Backwards From Economics

Before increasing traffic, answer:

• What customer value can the funnel support?
• What acquisition cost is acceptable?
• Which customers are worth much more than the median?
• Where is premium demand hidden?
• What offer or upsell could capture more value?

3. Find The Multiplying Constraint

Identify the smallest number of steps where improvement multiplies downstream results.

Prefer tests that affect:

• Qualified conversion.
• Average order value or expansion.
• Gross margin.
• Sales cycle speed.
• High-value customer capture.

4. Design The Next Test

Choose one test at a time. Define:

• Hypothesis.
• Funnel step.
• Variant.
• Primary metric.
• Secondary guardrail.
• Run time or sample size.
• Decision rule.

Output Format

# Funnel Economics Diagnosis

## Funnel Map
| Step | Volume | Conversion | Revenue/Value | Constraint |
|------|--------|------------|---------------|------------|

## Economic Leverage
- Allowable CAC:
- Highest-value segment:
- Hidden premium opportunity:
- Main constraint:

## Test Priority
| Rank | Test | Step | Expected Economic Effect | Decision Rule |
|------|------|------|--------------------------|---------------|

## Recommendation
- Run next:
- Do not optimize yet:
- Data needed:

Quality Bar

• Do not increase traffic before checking economics.
• Do not optimize vanity metrics.
• Do not run multiple ambiguous tests at once.
• Treat funnel improvements as multiplicative, not isolated.
• Include a decision rule before recommending a test.