10/02/2020
Looking to lean down your business overhead? Reduce cost per lead? Increase your sales team’s effectiveness? Well, the 80/20 rule might be the ticket.
So what is the 80/20 rule, It's known as the Pareto Principle, is attributed to the Italian economist, Vilfredo Pareto. In one of his papers, Pareto noted that about 80% of the land in Italy belonged to approximately 20% of the country’s total population.
In essence, the Pareto Principle infers that there’s an 80-to-20 relationship between effects and their causes. The Pareto Principle also applies to many other things. In sports, for example, you’ll find that at least 20% of athletes win 80% of the time, or that roughly 20% of training and exercise impact 80% of an athlete’s performance. Similarly, when it comes to healthcare, about 20% of patients depend on as much as 80% of the nation’s healthcare resources.
Applying it to the business world, the 80/20 rule suggests that 80% of your company sales come from 20% of your customers. Alternatively, you could say that 20% of what you do represents 80% of that particular activity’s outcome.
Applying Pareto’s principle to marketing:
• 80% of profits come from 20% of customers
• 80% of product sales from 20% of products
• 80% of sales from 20% of advertising
• 80% of customer complaints from 20% of customers
• 80% of sales from 20% of the sales team
So how can you make this work for your business? Here are some examples:
1. You probably have hundreds or thousands of contacts on your client and prospect lists from your website, and email and social media marketing efforts. Keep close tabs on which customers made a recent purchase, are frequent buyers, or which ones were generous in their purchases.
Once you’ve identified them, tag them as a top priority for your sales and marketing efforts and use their customer data to help you find and attract new audiences.
2. Take note of the top 20% of sales people in your organization. These are the members of your team who are closing more sales or are delighting your customers most effectively.
3. Managing your costs works on many levels: it helps you save by avoiding counterproductive measures and enables you to make good budget decisions. For example, you might decide to let go unproductive salespeople go while augmenting your remaining team’s daily meal allowance, thereby increasing your sales team’s productivity and efficiency at work.
It’s an underrated technique in the sales and marketing landscape, but one that has great potential in propelling your business forward.
If you're looking for more ideas give us a call or shoot us a message and lets chat!
