What is Pareto?

Pareto analysis is a statistical technique in decision-making used for the selection of a limited number of tasks that produce significant overall effect. It uses the Pareto principle (also known as the 80/20 rule) which states that, for many events, roughly 80% of the effects come from 20% of the causes. It's commonly used to identify the most important factors in a problem or situation, allowing you to focus your efforts on the things that will have the biggest impact. For example, in quality control, it can identify the most frequent defects. In marketing, it can help determine the most profitable customer segments.