What exactly is the “80/20 Rule” and how does it apply to corporate America and to your sales efforts?
The 80/20 rule, also known as the Pareto Principle, is attributed to the Italian economist, Vilfredo Pareto. It can be applied to a wide variety of phenomena: law and order, healthcare, even to language.
Applying it to the business world, the 80/20 rule suggests that 80% of your company sales come from 20% of your customers. We could also apply the idea more narrowly to vendor sales motions: 20% of your sales organization may be directly responsible for 80% of company revenue. And on a micro level, one can say that if a salesperson is tasked with ten sales activities, two of them are most likely to contribute to sales goals. These are what are often considered high value activities.
One might ask: should vendors accept the Pareto Principle when it comes to their field sales organizations, or is there a way to improve the odds and increase both the effectiveness and productivity of the lower 80% and to create a distinct competitive advantage? We believe the Pareto Principle can and should be challenged through focused sales enablement with very specific content and training that mirrors the activity and cadence of the high value performers.
If we study the activities of the high-performing 20% and their highest value tasks, across TFP’s client base the findings tend to be uniform with a keen focus on “consultative selling.” In other words, helping your customer understand the value of your proposed solution and how it can improve and impact customer operations in both measurable and non-measurable terms. What if technology vendors examined these high-value activities of their top performers and focused their sales enablement efforts on education and training of the entire sales organization to mimic these specific activities and sales motions?
TFP has studied and participated in many of sales enablement efforts over a 25 year span, working with a variety of technology vendors. So, why are some vendors more effective than others in training their entire sales force on these high value activities? Very simply, it comes down to what is realistic when attempting to enable the 80% to produce the high value tasks of the 20%. For example, one high-value task is the ability to identify, quantify and articulate the key value propositions of a technology solution and the impact in terms that resonate with the customer at the c-Level? Most salespeople are weaker on precise measurables simply because they are not analysts: they’re salespeople. To expect salespeople to become analysts is simply not realistic as 80/20 rule might suggest.
So what do the more effective technology vendors do to challenge the 80/20 rule and enable the less effective 80% of their field sales teams? Those leaders instead give their sales teams access to an overlay team of financial subject matter experts fluent in quantifying financial value, deal structuring, speaking the language of the c-suite, etc.
So, back to our original question: is there a way to challenge the 80/20 rule as applied to value driven sales efforts? Technology vendors that understand what is realistic and what is not realistic from an enablement perspective tend to turn the 80/20 rule upside down. We find that the rule can be challenged by technology vendors who have a keen understanding of their sales teams’ high-value skills and provide access to financial subject matter experts for the non-core skills.