The Pareto principle states that 80% of effects come 20% of causes. So for example 80% of sales come from 20% of clients. The rule is named after the Italian economist Vilfredo Pareto who wrote that 80% of the land in Italy was owned by 20% of its people. Please see our Excel Dashboard training course if you would like this training delivered at your place of work.
A Pareto chart contains columns sorted in descending order together with a line displaying the cumulative total. Pareto charts are good at showing the most common factors whether that be the most common types of defects, your most profitable products or as in our example sources that deliver the most web traffic.
Watch our video tutorial on creating Pareto charts and download the featured file.
See Microsoft’s page on Pareto charts
Example Pareto chart.
