Have you ever thought about the Pareto 80/20 principle and how it could be applied in the world of sales? Think of how 80/20 could be useful as possible new rules for sales professionals regarding customers and products. These sales principles can affect how and where a salesperson meets a new prospect, with whom he builds lasting relationships and why, what other products he can sell, and when is the best use of his time to do his core job.
Before discussing how the Pareto principle applies to sales, it may be helpful to see how it has been interpreted throughout history. The Pareto principle began as a simple statistical analysis that looks at the vital few (20%) versus the greatest number (80%) and originally looked at population rather than labor. In Juran quality terms, the principle was used to mean that 80% of the effects of the problem come from only 20% of the possible causes. Whereas time management expert Lakein translated it to mean that 20% of the work people do is important and the other 80% is usually mundane or trivial tasks because people tend to do work in a certain order rather than to prioritize.
prospect meetings
Before explaining the 80/20 to meet the customer, understand that the salesperson should always go to the customer. This makes doing business with the selling company easier for the potential buyer. If buying is easy, orders are more likely to be placed.
Now the rule of thumb, when having a conversation with a potential client, they should be the ones doing the talking 80% of the time. The seller is only required to provide 20% of the words spoken during the meeting. And those words should be questions that get the customer talking even more. Every sales person needs to practice good listening skills and use those skills as much as possible. After all, it’s impossible to ask good questions and learn a buyer’s true needs without first hearing what the customer wants in a service or believes about a product line. When presenting a sales pitch, pause frequently for feedback and read the prospect’s body language to ensure they understand the concepts and have an opportunity to agree or disagree with any points that have been raised.
customer relations
Business studies have shown that 20% of a company’s customer base typically represents 80% of its business. What that means for the seller is that these great customers are the ones they need to work the hardest to maintain a relationship with in order to keep them coming back. Check in with them to see if all your needs are being met, and ask them for suggestions on ways to improve the current product or service. Never let a competitor take a “better customer” because the other company was willing to spend more time meeting your needs.
Of course, that doesn’t mean smaller customers can be ignored. For smaller clients, salespeople need to better understand the client’s business so that when they meet, solutions can be offered to help with their particular problems. The more customer solutions that can be provided, the larger or more frequent orders can be from them.
product promotion
Look at the company’s products that are most bought. Chances are only 20% of the product line is what sustains 80% of the business. Why could this be the case? Have marketing and advertising review materials for those other products. Do materials need to be updated? Are there upsell alternatives and trial discounts that are not being explored?
Do salespeople need to be better educated on the benefits that different products can offer their existing customers? It could be that your customers are already using a similar product from a competitor but are unaware of the alternatives offered by their preferred vendor. Being the preferred supplier, knowing all possible customer needs and offering the best solutions. Don’t be pushy even when presenting a particular product the customer has expressed interest in, and don’t forget to mention other available options. Or at least leave a full product line brochure or data sheet as part of the customer’s package.
sale time
Salespeople should review their “to do” list and prioritize using an 80/20 time management rule. 80% of the time you spend at work should be fulfilling your top priorities. For sales staff, these are: prospecting, meeting with clients, presenting, and selling. In the book “The Sales Messenger” this is referred to by using the phrase “the day is selling time”, which means approaching current and potential customers during their office hours. Spend time selling smartly by scheduling customer meetings, building those relationships, and exploring all of their needs.
Then, for the other 20% of the work week, do the lower priority tasks that fall under the business administration category. Perform administrative tasks before customers open their doors or after the store closes. Ask any sales manager if they’d rather see a monthly sales statistics report or expense report before 3 pm or find out if the company got a new order that day. Or better yet, find someone who is willing to do reports and other administrative tasks at an affordable price so you can spend more time selling.
After seeing how the Pareto 80/20 principle can be applied to the world of sales, you can gain a better understanding of what may be most relevant for the time and effort invested. With professional 80/20 efforts, sales people can better focus on: prospects, current customers, learning other products, and how to prioritize their time.