How to Use and Leverage the 80/20 (Pareto) Principle for Sales Success!

The analysis of sales performance data and your company’s position within external environments can be utilized in both decision making and strategic planning activities. It’s a well-known fact that it’s almost impossible to be successful in business without adequate future planning. Every company will have external factors that must be addressed properly in order to improve both current sales performance and future results.

Different Types of Analysis

There have been many techniques and methods developed by experts. Some of these methods deal with internal environments. Yet, others focus exclusively on external conditions. Many of these types of analysis methods are derived from statistics and mathematics. Pareto is one of them. This type of analytic endeavor has been used widely in decision making activities by many sales organizations. Its primary function is to show how a certain amount of tasks can influence overall performance. This rule states that twenty percent of anything can influence the remainder in obtaining benefits.

Pareto Analysis as a Business Model

Many companies and sales organizations closely follow this type of analytics theory as a guideline. Whether it is company revenue as it relates to sales staff, products and services, or even client retention, it has proven to be a widely accepted and accurate measure. However, there can be many outside influences that affect these statistics. When a sales team is constantly striving to improve closing ratios across their entire staff, and is successful, the Pareto numbers can change significantly.

Importance of Effective Management

As a small business owner or sales manager, using a Pareto analysis can be a valuable tool for your management efforts. Every business has areas that need improvement. This type of data can help improve processes within your organization. It can make it much easier to see where you may be lacking. Problem areas can include lower volume of sales, customer service errors, and increased overhead expenses.

Summarizing the Pareto Principle

This type of effective analysis can be applied to all aspects of your sales organization or small business operation. It makes it easy to identify and track problems that may be affecting your client relationships, or your opportunities for improving profitability while reducing costs. By utilizing this data effectively, improvements to certain processes can be achieved. Overall, this helps a business or sales team become much more efficient and profitable. This principle has become a highly effective sales management tool for many companies, leading to some great sales success stories.

About admin

Doug Dvorak is a certified sales trainer, management consultant and corporate humorist. Doug holds a Bachelor of Arts degree in Business Administration and a Master of Business Administration in Marketing Management. But Doug’s sense of humor is no less refined, as he is a graduate of the Player’s Workshop of the Second City, one of the oldest and most prestigious improvisational comedy schools in the world.
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