If you don’t understand the 80/20 rule, it’s time you got acquainted. Because believe it or not, it’s at work in your life even if you don’t realize it. Once you do, it can mean unbelievably huge things for you.
The 80/20 rule, or the Pareto Principle, is defined by Wikipedia as: The law of the vital few, and the principle of factor sparsity) which states that, for many events, roughly 80% of the effects come from 20% of the causes.
Read that again: 80% of the effects come from only 20% of the causes. This is huge.
But what does it mean in real life? The man who originally made the observation was an Italian economist in the early 1900’s. He noticed that the 80/20 rule applied in many different areas. For instance:
In countries, 80% of the land is owned by 20% of the people.
In economics, 80% of the money is controlled by 20% of the people.
In team efforts, 80% of the work is done by 20% of the participants.
In investments, 80% of revenue comes from 20% of investments.
In agriculture, 80% of the crop comes from only 20% of the seeds.
And in Sales…
80% of your sales come from 20% of your clients.
80% of your revenue come from 20% of your sales force.
80% of your results come from the first 20% of your time and effort.
And so on.
It’s rather an epiphany right? And once you start looking at your own business, efforts, bookkeeping, and staff, you will find that it is many times exactly the case.
The key is learning to use it to your advantage.
So for instance, look at your 20% clients – the ones that are generating 80% of your revenue. Give them more of your time. You’re spinning your wheels and essentially wasting time with the other 80%, who are only giving you 20% of your revenue!
Take a good look at your sales force, and focus your efforts on the 20% that bring in the 80%.
Look at your calendar, and see what you are doing with the first 20% of your month. That determines what 80% of your month will look like. What are you doing for the first 20% of your day?
Now, deliberately choose what you’re going to do with that time, and do it. Focus your efforts very carefully, and watch your sales double and triple.
Furthermore, the 80/20 rule applies once again within that 20%. So what does that mean? When you start to focus in on that 20% that is giving you the majority of your revenue, you’ll find that 20% of THEM are supplying 80% of that revenue, and so on.
The principle is exponential.
Do you see how huge this is for you? Do you want to increase your sales? Do you want to double and triple them? Watch, and apply the 80/20 rule, and begin to shift in your favor. It can produce both productivity and increased revenue. Your sales won’t just double – they will increase exponentially.