|SalesLinks Bulletin Archives
Observations and tips for business to business salespeople
"Paretoing" Your Way Around the Dance Floor
Guess what? I learned a new word last month. And it might just be the most powerful
word that anyone in business can learn and apply. The word is "Paretoing" and it
comes from Wilfredo Pareto, the 19th Century Italian engineer. Pareto discovered an
analytical technique that separates the major causes of a problem or an opportunity (the
"vital few") from the minor ones (the "trivial many").
You probably know about Pareto's principle from its well-known application of the 80/20
rule in sales. The one that says that 80% of your sales will come from 20% of your
customers. Or, 80% of the sales will be written by 20% of the sales force.
Sales Tip and Practice
|Pareto your accounts into five separate
and distinct categories based on sales volume from the past. If you are a salesperson,
concentrate the majority of your time on the top two categories where you are getting most
of your business. If you are a sales manager or company management, plan a different sales
and marketing strategy that maximizes resources for each different customer segment.
Generally, high volume accounts are handled direct, middle and lower volume accounts
Major account selling in high-tech companies: an
Hunters and farmers, killers and cookers
Essentially, Paretoing means maximizing your efforts by focusing your activities in
areas where you will get the greatest results and the most leveragethe important
versus the immediate or the urgent.
Here are three very important ways that you can Pareto yourself or your sales
- Work the major accounts that have the potential to produce the majority of your sales
revenues. All customers are not created equal and should not be given equal time. Give
time according to the business you are getting, or the potential.
- Target markets and accounts within markets that have a strong potential for a
significant payoff. "He or she who tries to be all things to all people usually winds
up being nothing to anybody."
- If you're managing a sales organization, make sure that your group is
"Paretoed." Don't have high level people who are capable of working on and
closing major deals with major customers, doing low-level, low-leveraged jobs like cold
calling. I love cold calling and advocate it as an essential of target selling, but don't
put your thoroughbreds behind the plow. Hire inside sales qualification specialists or
outsource lead qualification services. In the long run it's a lot less expensive.
- posted by Ken Gould, 07-May-1999, firstname.lastname@example.org
Jack you are 100% right. The single most important ratio I have learned is the 80/20
rule after reading your article I do think you forgot one minor/major aspect of it.
20% of your sales staff will make 80% of the money. After my former sales manager
told me that I realized that I HAD to be the 20% and thats why today at 20 years old I am
now a sales manager on my way to a very successful career. So one should definitely
believe every word of you article because I think it is one of the 5 major steps to being
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