ROI

Dec 28 2025

What Is ‘Price’s Law’?

This post originally appeared on Dave’s Substack in March 2024. It has been lightly edited and updated.

If you’ve been anywhere around business or business books or hustle culture or anything related to GSD (“Getting Stuff Done”) at work, you’ve heard of the Pareto Principle.

The 80/20 Rule.

80 percent of [THING] will come from 20 percent of [GROUP]. Simple, really: if you sell something, 80 percent of sales will come from 20 percent of your customers. If you take a category — like, for instance, music — you’ll find that 20 percent of the artists produce 80 percent of the songs that actually get listened to.

For a while, this was canon in business and you couldn’t go into a work meeting without trying to use that to sound smart. “Boss, why don’t we fire 80 percent of our clients so we can just sell to the 20 percent that we spend all our time with?”

This ignores…well…EVERYTHING about whatever business you’re in, but points scored for simplification!

Introducing Price’s Law

THE ECONOMY is in weird shape; Note that your job might be at risk if you aren’t deemed to be productive. However you slice that at work — look busy! be at your desk! — at some point you’re gonna start looking around and asking the question: Am I Getting Stuff Done?

Price’s Law is “stupid simple:”

The square root of the number of people in any enterprise will produce 50% of the results.

The credit goes to Derek J. de Solla Price for coming up with this scientific analysis.

Let’s apply this to your (hypothetical) team at work and figure out what that means for you:

If it’s a small team, it of course makes sense: in a team of 4, the square root of 4 — which is 2 — will do half the work. (I was told there would be no math.)

But in a bigger team Price’s law starts to have…bigger impact.

Raising Your Hand At Work

In a (hypothetical) team of 50, let’s call the square root 7. 7 People are getting stuff done, the other 43 are working at roughly 50% capacity. In a sales-driven organization, that doesn’t bode well for the other 43.

Now start to look around: are you one of the 7?

Probably pretty easy to answer that question in a lot of organizations. You have a little success on a project and then you have another project assigned to you. You open the door to sell something to a company and all of a sudden that company asks you to help them solve a different problem. You write a piece for the company blog and it clicks and then management realizes you should do more blog writing.

You are pretty obviously one of the 7.

Making Sure Your Department Is Productive, Too

Your job as “one of the 7” is pretty important when management starts to look to…well, how do we say this…cut the dead weight. These are sometimes the “get me the low performers” discussions, but they, too, are sometimes the “which departments can we do without?” discussions.

Yeah, that’s right. If marketing isn’t producing, marketing can easily be cut. Well, let me edit that: If marketing isn’t seen to be producing, marketing can easily be cut.

Your goal, then, as one of the 7 is to make sure that your department works on — and ONLY on — high-impact projects. If 20 of the other 43 are assigned to the Penske File and all they’re doing is moving the contents to an accordion-style file folder, that’s a low-impact project. If the other 23 are working on monthly TPS reports that don’t go anywhere, that’s a low-impact project.

Your Book of Business

It’s an insurance industry thing: the Book of Business. Or your portfolio. You should have a sense at all times of what that means for your personal situation: what are the clients you’re bringing in and/or responsible for? What are the projects that you are working on and how are they tied to the business and its bottom line?

What is your department doing on those days when they’re not planning or navel-gazing or working on Penske Files and TPS reports?

Your Book of Business should actually be yours. You should be able to discern where you have the most impact, and, if they show you the door, you should be able to say “hey, I was one of the 7 and here’s how.”

Or you should be able to say “here’s what the other 43 were working on, it added no value, I helped with the things over here that did add value, and I’m indispensable.”

You can thank Mr. Price.

May 29 2012

Social Media Real Estate

Does your Real Estate Agent use Social Media? Should you care?

Real Estate Yelp Sign — Image is modified based on original, Creative Commons work of ThinkPanama

An article in the Sunday Chicago Tribune made me want to throw up on my shoes.

Here’s a link to to the article, which was entitled “Home Tweet Home: Agents turn to social media“.

It’s not a bad article – IF you’re someone who is in the business of selling the real estate industry on having more agents and brokers using social media tools – and using their mobile phone, too.

But it’s not a great article – because the takeaway is all wrong. From the headline, you’re going to guess that you should be using Twitter if you’re a real estate agent who wants to sell more houses. NO. That shouldn’t be the takeaway…

So, we’re first going to talk about some of the things we disagree with if you’re using social media for real estate. THEN we’re going to give you a brand new takeaway. Here goes:

1. It’s Not All About the Numbers

Here’s a quote from the article:

“Gregg Slapak, a real estate broker with Exit Realty Redefined in Wheaton, has close to 5,000 Facebook friends — the maximum for the social networking site. On his recent birthday, more than 1,100 well-wishers from all over the world sent him greetings.”

Awesome. Gregg is popular and he’s so busy on his birthday that he can’t possibly respond to every well-wisher.

And does this make you want to buy a house from this guy?

Gregg goes on to say that “70 percent of his clients find him today using their computers.”

I’m not picking on Gregg here – have never met him, and maybe he is darn good at his job. But let’s continue…

2. The misnomer is that it’s a “tech-only” business

The article went on to say that the new generation of buyers want to text message with their real estate agent. They want instantaneous communication. They’re using social platforms first and foremost – a fact I won’t argue with. But here’s where the article’s premise – that you have to be “social” first – goes off the rails:

“Terri McAuley, a broker with Koenig & Strey Real Living in Chicago, estimates that 75 percent of her new clients have never met her in person.”

Maybe I’m missing something here – buy those shopping for a home haven’t met their broker in person?

I’m left with a very shallow opinion of both sides of this equation: the agent will take any business they can find without so much as a handshake – and the buyer would rather see that there’s a Facebook presence or that the broker can use a mobile phone to send a text message. ACK.

3. Google and Yelp. Google and Yelp.

I can’t stress these two things enough – but they are afterthoughts in this article:

Remember our example above, Ms McAuley:

“…Instead, they rely on Yelp reviews or Google searches to find her.”

As well they should. As well they should.

I’m going to go out on a limb here and say that, if you are a real estate agent or broker, focus on Google and Yelp FIRST.

These should not be afterthoughts in your “social media strategy” – actually, they are the table stakes in your marketing – which is on- and off-line these days. You could spend hours learning how to do this right – and you SHOULD.

Because if someone finds you on Google or Yelp and reads up on you and decides that they don’t want to work with you because you DON’T HAVE 5000 FACEBOOK FRIENDS…you didn’t want to work with them anyway.

4. When Your Agent Has a Social Media Consulting Business – BEWARE!

This is a serious pet peeve of mine: the agent or broker should be working for you – and real estate should be their one and only profession.

You’ll find some dynamite speakers out there in real estate land – but the second someone crosses over from “agent” to “social media consultant” – you are no longer their focus. That sucks for you if you’re their client.

Real Estate Professionals: What Are You Leading With?

When we “wrote the book” on Social Media for Real Estate a couple years ago (and then rewrote the book again), we knew that a lot of this stuff would change. That’s why we focused on things like “knowing your target market” and “going where the buyers are.”

This doesn’t change; but the overarching theme of our work – then and now – is that you need to “be the kind of agent you would want to work with.”

Information is everywhere: and maybe you can find out more than enough about Gregg and Terri to decide that they’re the person you want to work with for your next real estate transaction.

AND, maybe it IS important to you to create a kicking Twitter presence and a dynamite list of Facebook friends.

AND…leading with the real you – Hey, Authenticity!!! – is never a bad thing to do. But here’s the thing, and here’s your takeaway from this article:

Location, Location, Location – Where is it?

This is the thing you should be leading with, real estate professional. We said it in the book, we’ll say it again, and here’s where you should build your online strategy:

Take a Look at Your Last 10 Transactions

There’s a theme there. Right?

If you found all ten people you sold homes to from Facebook, that’s great. Keep at it.

If all ten people found YOU through a Google search, maybe that’s where you should be spending your time.

Better yet – if all ten found you through a common thread, like a work or school group, or a club, or your referral network – isn’t that the thing to cultivate even more?

Jan 12 2012

Let’s Talk About ROI, Baby

New Here? Great to see ya! May want to start by downloading our Uber-Cool Book: Social Media for First Graders.

I’ll be direct – there are some people you want to have around AFTER the Social Media Bubble Pops. (And it will…more on that in the weeks to come.) Olivier Blanchard is one such individual – and I think I set off a Facebook Firestorm yesterday, when I shared with him an interesting piece: 101 Examples of Social Business ROI. That blog post was authored by a chap named Peter Kim.

Peter Kim may be the smartest man on the planet, may have cured cancer in laboratory animals, may have launched unmanned spacecraft that are headed toward Mars. Or maybe not – that’s not what we’re discussing here.

What we are discussing here is ROI. “Return on Investment.” Especially in the context of Social Media; so we can say this is a post on Social Media ROI, which happens to be the name of Olivier’s book. (NOTE: I live in Illinois and we can’t get Amazon Affiliate Credits…so there’s no Affiliate Link here.)

In order to get a Return on Investment, you must have an INVESTMENT. Here’s an example from Peter’s blog post.

“AT&T. Community: 21,000 customer issues resolved, driving 16% improvement in call deflections year/year. (Lithium Technologies, 2011)”

This is like one of the Wonderlic tests where you’re missing some really key data. For instance, a test question on Social Media ROI using the above example could be phrased like this.

Assume the following phrases are true: 1. All companies that invest in social media will see a Return on Investment. 2. AT&T invests in Social Media through its Community, and the company resolved 21,000 customer issues and drove a 16% improvement in call deflections year/year.

Question: AT&T’s Return on Investment from its Social Media is:

A) 21,000 customer issues

B) 16% improvement in call deflections

C) We don’t have enough information to make that determination

If you answered “C,” give yourself a Gold Star.

The list from Peter Kim is filled with examples like that. More sales, less complaints. More Facebook friends, less emails sent over the wall to customer service. Etc., etc.

ROI means Return on Investment. Investment means Spending Dollars.

Now, there are other metrics that may be really important to your business. Measure those. Measure them some more. But, for the love of Mike, do NOT, repeat, do NOT confuse “Social Media” with “Return on Investment.” It’s not that easy.

Satisfaction Guaranteed — Social Media ROI Guaranteed, Too?

Marketers (which, these days, and especially in the Post-Social Media Bubble economy, will be just about everyone) need to understand the hard- and soft-dollar costs behind what it is that they are spending time on BEFORE they can actually quantify the Return on Investment. Just saying “we have a Twitter account” and “we get leads from Twitter” doesn’t mean that “we have a positive ROI from Twitter.”

Measure Everything. Manage What You Measure. But Don’t Casually Throw Around “ROI of Social Media” and Expect Management to “Get It.”

Thanks.