Business Management – The Pareto Principle & Apple Pie
It’s a well-known fact in corporate America that 80% of all the revenue generated by a company comes from just 20% of the sales force. This means that there are only a few sales professionals sharing the majority
of revenue, while the majority of sales reps are competing for a tiny slice of the income paid by a company to its sales force. This concept is called “The Pareto Principle”, or “The 80/20 Rule”. If you want to be one of the few agents getting the biggest piece of the income pie, you must focus on Pareto Activities, or activities that are most beneficial to your career. For example, if your goal is to make as much money as you can while providing the highest level of service to your clients in the least amount of time, it makes the most sense for you to identify which activities will get you the best results. Consider the two groups below:
Pareto Activities (20%’ers or Money-Makers) Profitable Results
Finalize info needed to close Yes All of these activities
Work on putting a contract together Yes are worth hundreds of
Listing appointment Yes dollars per hour.
Direct mail sent to farm Yes
Non-Pareto Activities (80%’ers or Non Money-Makers) Profitable Results
Order a survey No All of these activities
Reading emails No support your business
Picking up dry cleaning No but don’t make you
Attending a board function No money.
The point is not that 80% activities don’t have to be done. It’s that they should be done after you get the higher priority “money-making” or “20%’ers” done first. That way, if you run out of time, at least it’s only with the things that aren’t as important.