Have you ever thought about the 80/20 Pareto principle and how it could be applied in the world of sales? Think about 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, who they establish long-lasting relationships with and why, what other products they can sell, and when is the best use of their time to do their main job.
Before discussing how the Pareto principle applies to sales, it may be helpful to look at how it has been interpreted throughout history. The Pareto principle started out as a simple statistical analysis looking at the vital few (20%) versus the greatest number (80%) and originally looking for population rather than work place. In terms of Juran’s quality, the principle was used to mean that 80% of the effects of the problem come from only 20% of the possible causes. While 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. instead of prioritizing.
Before explaining 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 shopping is easy, orders are more likely to be placed.
Now, the rule of thumb, when having a conversation with a potential customer, they should be the ones talking 80% of the time. The salesperson only needs to provide 20% of the words spoken during the meeting. And those words should be questions that make the customer talk even more. Every salesperson needs to practice good listening skills and use those skills as much as possible. After all, it is impossible to ask good questions and meet the true needs of the buyer without first hearing what the customer wants in a service or believes about a product line. When presenting a sales pitch, pause frequently to request feedback and read the potential customer’s body language to ensure they understand the concepts and have a chance to agree or disagree with the points that have been raised.
Business studies have shown that 20% of a company’s customer base typically represents 80% of its business. What that means to the salesperson is that these great customers are the ones they need to work the hardest with to maintain a relationship in order to keep them coming back. Check with them to see if all of your needs are met and ask for suggestions on ways to improve your current product or service. Never let a competitor choose a “best customer” because the other company was willing to spend more time meeting your needs.
Of course, that doesn’t mean that smaller customers can be ignored. For smaller customers, salespeople need to better understand the customer’s business so that when they meet, they can offer solutions to help them with their particular problems. The more customer solutions that can be provided, the larger or more frequent orders will be from them.
Look at the products of the company that are bought the most. Most likely, only 20% of the product line supports 80% of the business. Why could this be the case? Have marketing and advertising review materials for those other products. Do the materials need to be updated? Are trial discounts and upsell alternatives being explored?
Do marketers need to be better trained on the benefits that different products can offer their current 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 supplier. Be the preferred supplier, know all possible customer needs and offer the best solutions. Don’t be pushy even when introducing 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 fact sheet as part of the customer package.
Sellers should review their “To Do” list and prioritize using an 80/20 time management rule. 80% of time spent at work must meet top priorities. For salespeople, these are: prospecting, client meetings, presentation and sale. In the book “The Sales Messenger” this is referred to by the phrase “the day is sales time”, which means reaching out to current and potential customers during their business hours. Spend time selling wisely by scheduling client meetings, building those relationships, and exploring all of their needs.
Then, for the other 20% of the workweek, 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 prefer to see a monthly sales statistical report or expense report before 3:00 pm or find out that the company received a new order that day. Or better yet, find someone who is willing to prepare reports and perform 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, a better understanding can be gained of what may be most relevant to the time and effort invested. With key 80/20 professional efforts, sales staff can better focus on: leads, current customers, learning about other products, and how to prioritize their time.