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Using the 80/20 rule to improve sales


Are all customers equal? Far from it! Some earn you a fortune, many make you a modest amount of money, and some downright waste your time.

Last week we introduced The Pareto Principle, aka the 80/20 rule, and discussed how it can be applied to goal setting and productivity. Today, we look again at the 80/20 rule and how it can be used to increase sales and grow your business.

Dave Lainsky, contributor at Forbes said “The Pareto Principle is an incredible tool for growing your business. For instance, if you can figure out which 20 percent of your time produces 80 percent of your business’ results, you can spend more time on those activities and less time on others”.

Likewise, by identifying the characteristics of the top 20 percent of your customers who represent 80 percent of your sales, you can find more customers like them and dramatically grow your sales and profits.

You can also use the 80/20 rule to determine what makes your best sales people incredible. Just as you study your customers to identify the profile that makes the top 20 percent, do the same with your sales force. Once you understand exactly what your best sales people are doing, you can either search for new team members with the same attributes, or train the remaining 80 percent of your team to take advantage of the best practices and boost their productivity.

Of course, the ratio is not always 80/20. Sometimes it is 75/25, 70/30, 60/40, or even 90/10. However the situation, the ratio described is always the same: the vast majority of sales people produce a fraction of what top performers on the very same sales teams produce.

“Those who ignore the 80/20 principle are doomed to average returns. Those who use it must bear the burden of exceptional achievement.” Richard Koch.

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Other source: How to Apply the 80/20 Rule to Improve Sales, by Steve Lander

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