20-80 Rule For Success - Are You Following It?
Twenty percent of your customers produce 80 percent of your revenue.
Which mean in turn that 80 percent of your customers produce only 20 percent of your revenue.
Which further says that 80 percent of your time is spent on the customers that only produce 20 percent of your revenue.
Yet, to many times we know about the 20/80 rule and we just accept it.
Yea, that is how it is.
Yes, that is what happens.
There is nothing we can do about it.
That opinion I will have to tell you is pure garbage.
What you have to do is answer these questions.
What is wrong with this picture? Why does it not work? What can you do about it? How do you correct it? Then you have to look even a bit deeper and say that if you can get more of the 20 percent of customers (ideal customer), that are producing the 80 percent of the revenue, your business will grow and will operate more effectively.
With that in mind let's look at the simple yet effective formula to make this happen.
First lets identify the 20 percent of customers that are producing the 80 percent of your revenue.
Who are they? How did you get them to be customers? How come they produce such a high volume of revenue? What else do we know about them? What makes them different form the other 80 percent of our customers? Once you have that data you can then move forward to building your customers.
What customers in our 80 percent are similar to these customer, yet not doing this amount of volume with us? Why are they similar, yet not doing more business with us? What can we do to get them into the 20 percent? The key point to remember is that many of your customers may be buying from you and from your competition.
That you might only have a small percentage of their business.
That if you worked them you could greatly increase your sales.
These are people who already know you and are doing business with you.
All you have to do is get them to buy more from you.
You will be amazed.
This is the first thing I have always done, both as a sales executive and as a consultant.
You will be simply amazed.
I have been able to increase sales in many organizations by 80 percent and more, just by increasing sales to existing customers.
Next, once you have the profile of these customers, which we will call your ideal customers.
You look into the market, industry, geographically and find like companies.
Companies that you are not doing business with but are similar to you best customers.
And you go after them with an effective marketing and sales process.
That is it.
Start today and work these two processes.
Stop spending so much time, effort and energy on customers who will never be in the 20 percent and start building the 20 percent.
Here is the math for you financial people.
Since 80 percent of your sales comes form 20 percent of your clients, then each percentage of client is worth 4 percent of sales.
Thus for each percentage of the 20 percent (ideal customers) you increase, you will increase your sales by 4 percent.
Thus is you increase you ideal customers by just 5 percentage points, you increase your revenue by 20 percent.
Amazing isn't it? Now, go do it.