Nothing can add more power to
your life than concentrating all of your
energies on a limited set of targets.
— NIDO QUBEIN
In 1895 in Italy, an economist named Vilfredo Pareto discovered a principle that has had an enormous impact on economics and business ever since. He found that you could divide members of society into the “vital few,” the 20 percent of the population who controlled 80 percent of the wealth, and the “trivial many,” those who possessed only 20 percent of the wealth.
This is now called the Pareto Principle, and it has proven to be universally valid in virtually every study of economic activity. We call it the 80/20 Rule, and you can apply it to every area of selling.
The 80/20 Rule says that 20 percent of your activities will account for 80 percent of your results. If you have a list of ten things to do, two of those activities will be as valuable, if not more valuable, than the other eight. One of your chief responsibilities is to continually analyze your tasks to be sure that you are working on the top 20 percent.
In selling, 20 percent of your prospects will account for 80 percent of your customers, 20 percent of your customers will account for 80 percent of your sales, 20 percent of your products and services will account for 80 percent of your sales volume, and so on.
In business, 20 percent of your activities will account for 80 percent of your profits. In addition, 20 percent of your activities will account for 80 percent of your expenses, and the activities that represent 80 percent of your expenses may not be closely related to your most profitable activities. In the worst of cases, businesses find themselves spending most of their time and money in areas that are not profitable at all.
Some years ago, a major insurance company analyzed the sales and incomes of its many thousands of salespeople throughout the country. The analysts found that the 80/20 Rule held up: 20 percent of the salespeople were making 80 percent of the sales and 80 percent of the commissions.
Then they compared the incomes of the people in the top 20 percent to the incomes of those in the bottom 80 percent. They found that the average income of those in the top 20 percent was sixteen times the average income of those in the lower 80 percent!
They then looked at the top 20 percent of the salespeople in the upper 20 percent—that is, the top 4 percent of the sales force—and found that their income amounted to 80 percent of the income of the top 20 percent. Some of the people in the top 4 percent were earning as much as fifty times the income of the people in the bottom 80 percent!
When I learned the results of this study, I resolved that I was going to do whatever it took to get into the top 20 percent and move up from there. I then discovered two principles that changed my life. First, I found that it took just as much time to be in the top 20 percent as to be in the bottom 80 percent. It took just as many days, weeks, and months of work to succeed greatly as to get average results.
The second thing I discovered was that there was very little difference in talent or ability between the high performers and the low performers, except for the way they used their time. It turned out that the high performers had developed the habit of working primarily on the top 20 percent of their activities, and the lower performers had not.
What this means, quite simply, is that for you to succeed greatly, you must always be focusing your time and energy on the few activities, the 20 percent of tasks, that can make a real difference in your life. Your ability to keep this focus will eventually move you to the top of your field.
On the other hand, the inability to focus on the top 20 percent of sales activities is the primary reason for failure, frustration, and underachievement in the sales profession. Even if you are working hard, it will do you no good if you are accomplishing more and more tasks of little value in comparison with what else you could be doing with the same time and energy.
Make a list every day, before you begin work. Organize your list on the basis of the 80/20 Rule. Select the one or two tasks that are potentially more valuable than any of the others. Start on the first task and stay with it until it is complete.
Use the ABC Method to sort out your prospects and customers before you begin work. Make a list of all your prospects. Place an “A” next to those who have the highest potential, the top 20 percent. Place a “B” next to those of middle potential and a “C” next to those of low potential.
Conduct the same exercise with your customers to determine how often you call back on them. Visit your “A” customers personally on a regular basis. Visit your “B” customers less often, and phone them between visits. Visit your “C” customers occasionally, using the telephone and mail to keep in touch.