What are the best 20% of your sales team doing that the other 80% are missing?
Many of you will have heard of the 80/20 rule, also known as the Pareto Principle but have you ever thought about how it affects your business and especially sales?
This weird mathematical phenomenon was “discovered” in the early 20th century by Italian economist and engineer Vilfredo Pareto, when he realised that 80% of the land in Italy was owned by just 20% of the population, and that just 20% of his pea plants bore 80% of his pea pods.
Years later, American management consultant, Joseph Juran applied the principle to business, where he analysed the 80/20 relationship in multiple aspects of business and from there the 80/20 rule really took off to a wider audience.
In essence, whilst the 80/20 calculations rarely are exactly 80/20 ratio, the principle underlying the equation usually proves sound in that the majority of profit comes from a minority of sales.
Equally, the majority of work is performed by a minority of employees and the majority of consumer complaints come from a minority of around 20 per cent.
This formula should be applied to all businesses in order to boost productivity, and effectiveness.
Planning the future of your business is no easy task. For instance, many forecast future sales with historical data, predictions for industry business trends and other such information.
However, whilst analysing future sales bear in mind that in general 20% of your business activities are responsible for 80% of your revenue.
It is really worth time looking at that profitable 20 per cent of customers and finding how you can get more like them. Equally, working out what the most efficient 20% of your sales team are doing that the other 80 per cent are missing.
Use the 80/20 rule to work out who the cream of the crop are and reward them appropriately.
Also, when you’ve done your research look at the 80% of underperformers and see what can be done to see if they can be re-trained to succeed.
In sales it is also worth remembering that around 20% of your products or services are responsible for 80% of your sales.
Also, though, bear in mind that the top 20% of products may already be peaking so if this is so, the remaining 80% may need more looking at. Do these products just need a tweak using better strategies or perhaps they need to have a massive overhaul to make them more productive.
This fascinating mathematical formula also applies to your customer relations where your top 20% of customers are responsible for the huge majority of your sales. You should see if you can lever your relationships with these.
This doesn’t mean though that you should ignore the lower 80% of your customers, but instead look for those specific individuals or companies that you think can be brought into your elite.
We would also say, and let’s be honest, we all have them, think about the small minority responsible for most of your grief.
It might be time to say good bye. After all, problems customers are exhausting. It’s hard to turn work away, but sometimes it can be more trouble than its worth.
In short, look at Pareto’s rule in sales and then apply it in all areas, and spend the time, effort and resources on those bearing the most fruit.
It all makes perfect sense and using your SalesRadar correctly you’ll soon see what 80/20 rules work for you and against you.
Here is a little more about Pareto’s rule for those of you, who are new to it- it really is quite fascinating.