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How The 80:20 Rule Helps You Sell

The Sales Confidence Skills Series is a range of articles based on insights from our inaugural Sales Confidence live event, staged this September. One of our speakers was Chris Tottman, Partner at the VC firm, Notion Capital. You can read his insights into whether or not to take a pay cut to join a startup here.

Here’s a small point Chris made about choosing which startups to invest in.

‘If you look at VC statistics, in any given fund you’re seeing 2500 opportunities to invest in 25 companies. Over a 10 year period, you’re probably going to make 80% of your return from 3 of those companies.’

OK, so the maths is slightly out, but that line made me think about the 80:20 rule, or the Pareto Principle. Chris identified its importance in the VC industry, but it’s everywhere in the sales industry too. There are so many ways you can use the 80:20 rule to improve your sales process. Let’s explore them now.

1 – Lead generation

The most well-known instance of the 80:20 rule in sales is that 80% of your sales will come from 20% of your clients. All customers are not created equal. Once you’ve worked out who the 20% actually is, you can use that data to find more big-spending clients.

When thinking about who to target, or where to aim your sales messages, look for commonalities in the 20%. Do they operate in similar niches? Are they companies of a similar size? Are a majority of them based in the same city?

Find what connects the companies that use your service and love it, and you’ll get clues to who else will love your service too.

2 – Time management

One mistake that many salespeople make is they spend the same amount of time on all their clients. They also waste time trying to get clients to spend more budget, when there’s no indication that they will do it. Then, they’re surprised when one of their high-spending clients leaves them and spends their cash elsewhere.

When managing your time, make sure the top spending 20% of your clients, the ones that bring in 80% of your sales, get the bulk of your attention.

Build a lasting relationship with these clients. Make sure you give them as strong a level of service as you possibly can. Whatever they need, make sure you’re the one providing it. Don’t totally neglect the 80%, just recognise their place in the great scheme of things.

3 – Presenting

Here’s a different 80:20 rule you can apply when you’re presenting to a prospect. Make your presentation 80% about them, and 20% about you. You’d be surprised how many salespeople get this totally upside-down!
Spend 80% of your time on your prospect’s pain points, and how you are going to solve their problems. Offer insights into your prospect’s industry, and how your service can improve their place in it.

Sure, you can establish your authority, and the backstory of your company if you must, but don’t spend too long on it. If nothing else, this will lead to shorter, better-targeted presentations.

4 – The reverse 80:20 rule

For every yin, there is a yang. If you have a top 20% of spenders on your client list, you have a bottom 20% of spenders too. Should these people really be on your list?

Do you have clients that spend a meagre amount, but take up massive chunks of your time? High maintenance but low benefit? Clients that you dread receiving an email from, because you know it’s going to cause you problems?

Why not consider ending your relationship with them so you can spend your time on your bigger spending clients, or find more bigger spending clients? There are only so many hours in the day, you need to use them wisely.

We’ve seen how the 80:20 infiltrates almost everything we do in sales. Make sure you keep it in mind, and success will follow.

Now I want to know what you think. Are there any other examples of how you use the 80:20 rule to boost your sales? Let us know by leaving a comment.

Become a sales leader at www.https://salesconfidence.co//blog

About the Author

James Ski works for Linkedin and advises companies on recruitment, employer branding and how to achieve scalable, predictable sales growth.

If you would like to be first to read his published posts focused on sales confidence sign up to his blog here

You can also follow him on Linkedin or on Twitter @jamesas

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