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80/20 Vision

When I first took a sales job at a retail plant nursery, it came with a list of existing accounts.  Some accounts were great (easy to work with, profitable and great providers of referrals).  Other accounts were a real drag (difficult and unprofitable.)

My first reaction was to appreciate the good accounts, but spend most of my time “fixing” the bad ones.

That was a bad plan.

In any given company, 20% of the customers will likely account for 50% of the business.  It goes without saying that the remaining 80% account for the other half of the business.  My reaction was wrong for two reasons:

1.  It assumes the “Top 20” are already having all their needs met, and won’t generate more business.

2.  It assumes that there are no other customers available in the world.

Both assumptions are obviously silly.  But strangely, sales people (and small business owners who are by default sales people) make my mistake all the time!

A much better response to a list of 100 customers is:

1.  Who are the top 20? (Based on sales, but also factors like the quality of the relationship and referrals.)

2.  How do I rock their world with remarkable service and products that solve problems?

3. Where can I find 80 more like them?

Note that spending more time on the “Top 20” means taking attention from somewhere else.  Take that time away from the bottom 20%, the grumpy ones that don’t buy much anyway.  What would happen if your worst customers stopped buying?  Very little.  Please consider this permission to ignore them.

Side Note:  The idea of the 20% assumes that a small farm or business has multiple customers.  That’s on purpose!  Selling to a single customer, or selling at an auction where Mr. Market dictates the price, is scary business.  Finding multiple customers is the only way to run a stable business.

Christian

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