Tuesday, November 13, 2007

The 80/20 Rule, An Excuse for Poor Sales Performance

There I was sitting at a conference table with VPs, Senior VPs, and other corporate notables, listening to their excuses for poor sales performance this past quarter. You know the excuses by heart because discussing them is a ritual that occurs monthly, quarterly, and annually.

Even though I hear it every month, the worst excuse for poor sales performance makes me laugh every time. "It's just the 80/20 rule."

What is? The reason for poor performance?? Really???

I just don't buy it and neither should you.

Side note about the 80/20 Rule: The 80/20 Rule, also called the Pareto Principle, is widely misunderstood and misapplied, thus it is also a pathetic, all too commonly used excuse for poor sales performance. Common understanding of the 80/20 Rule can be found in a simple definition: 80% of your results stem from 20% of your efforts. (Please note: the fact the numbers 80 and 20 add up to 100 mean nothing as the 80/20 Rule measures distinct elements: results and efforts.)

Proponents of applying the 80/20 Rule believe if you can determine which 20% of your efforts gain you 80% of your results, you can eliminate much (or all!) of the other 80% of your efforts and focus on what gives you the biggest bang for your buck. Furthermore, application of the 80/20 Rule doesn't imply "one and done." That is, after applying the 80/20 Rule, one might realize that they could re-apply the rule and be ridiculously more successful with only a fraction of the effort. And why not go for a 3rd derivative?

Your sales performance is poor because your are not keenly focused on your objectives (if you have them) and you are unaware of the real disposition of your sales channel. Stop blaming anything but the leadership in place and start cranking on a solution!

For more on the 80/20 Rule, including why it needs to be BROKEN, visit: breakthe8020rule.blogspot.com or breakthe8020rule.net.


bambamj26 said...

I have never heard of the 80/20 rule before. I do think people should do what they need to do without making any excuses. Excuses annoy me more than anything and I dont let my children give me excuses. I tell them no matter what they have done and they tell me about it I wont be mad, but if I have to ask them about something and they give me excuses then they will be grounded. I never have to question my kids now!--Joni D

tiffanyapolzin said...

I never heard of such a thing, but I think it is absolutely rediculous! In my opinion, it takes 110% effort to get even 50% results! With today's sagging economy no business can exect to get even as little as 20% results for only 80% effort! You have to train your people to do their absolute best...and then some! A company should not expect anything more than 5% results with 80% effort. I think 20% is a far stretch!

oriellee1 said...

The 80/20 rule is basically ridiculous. It some cases it takes a little to make alot but in this case I dont think so. Companies are not looking at their objectives. Poor excuses are always wrong and it wont get sales where they need to be.