eighty-twenty-funnel-economics

Business

Diagnose and prioritize sales funnel improvements by economics, conversion, split testing, and high-value customer potential. Use when optimizing funnels, deciding what to test, improving CAC or profit, evaluating upsells, or choosing the few metrics that matter now.

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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.