Pareto Effect Or The 80/20 Rule - Where To Focus Your Efforts

Have you ever heard of the Pareto Effect? The other name for it is the "80/20 Rule". Basically it states that 80% of your results come from 20% of your efforts.

This is extremely true in Sales. If you can figure out the 20% that will give you 80% of your results, then you can focus on the 1/5th of your responsibilities that give you 4/5ths of your results.

Below you will find a couple of examples:

Example 1 - 80% of your sales will typically come from 20% of your clients: This rule depends on how many customers you have. If you have one client, then it obviously isn't true, but if you have 100 clients, chances are that you will get 80% of your business from 20% of them. Do an analysis and figure out who is giving you your business and spend your time appropriately on those clients. Perhaps you should look at giving the other clients away to another sales representative or even suggest that the client work with someone who can provide them better service.

Example 2 - 80% of your most productive efforts will come about because of 20% of your actions: This means that of all the things you do, that 20% will derive 80% of your overall results. For example, if you were to call on 100 prospects, only 20% will turn into clients (potentially). If you go after RFP's, then only 20% of the RFP's will turn into business, etc., you probably get the point. The idea is to figure out what parameters you need to use to determine what the 20% is.

How to figure out the 20%:

- Look at what you do every day - track the average week (although there is never an average week in sales)
- Break your week down by tasks or events, for example; prospecting, meetings (internal and external), administrative work/paper work, etc.
- See how much time you spend on task in a given week
- Determine which of these tasks or events will provide the desired results you want to achieve
- Focus your efforts on those tasks that have the biggest bang for your effort and see how you can minimize your non-productive tasks.
- Track your results and adjust as needed

This is an ongoing process, so do a follow up on these tasks every few months so that you can see if you are on track or not.

One of the benefits of doing an exercise like this is that you will see if there are other tasks that you can potentially unload on other individuals. For example, if you are doing a lot of paperwork and it isn't providing any value, there is probably someone else who can do this for you. By freeing up this time, you will be able to focus on the actions that get you to your goal.