The 80/20 Principle

A lot has been written about Pareto’s observation, commonly referred to as the 80/20 principle. It is a useful way of looking at many aspects of your business. While the ratios might vary from 70/30 or 90/10 the principle remains the same.  The principle quite simply is this: that a disproportionately small amount will return a significantly larger return. This can be applied across many aspects of your business and I want to look at it from a sales perspective in this blog. In sales, very often 20% of our efforts will give us 80% of our results. Classically, this will come down to our client contact time. 

When we look at what leads directly to sales, it will often be the number of phone calls we make, the number of visits that we do, and the quality of our follow up. Sales reps still have to do a lot of other activity; entering information into a CRM, attending sales meetings, driving to see customers etc. Another area where this 80/20 rule applies in 80% of businesses is that 20% of your client base will often give you 80% of your sales, and/or your GP, and/or your volume. Similarly, many reps will only sell 20% of the range of their company’s offerings, and this is typically because they have the most confidences, belief and passion in this 20% of their range. 

A great activity to do for yourself is to review where you are in these three areas and then do a start, stop and continue exercise. Look at where you are spending your time, which customers you are focusing on, and which products and/or services, and ask yourself: Is there any area you should start putting more focus into? Is there any area you should stop putting focus into? What is currently giving you the best results that you should continue doing?  Here’s to your success!