80% of your sales revenues come from 20% of your clients
In this week’s article I’m going to talk about the 80/20 principle when it comes to selling and doing the same tested methods over and over again.
The principle is: The 80/20 rule is one of the most helpful concepts for life and time management.
Also known as the Pareto Principle, this rule suggests that 20 percent of your activities will account for 80 percent of your results.*
If you’re in sales, then that might mean that 80 percent of your revenue comes from 20 percent of your clients.
I’ll give you three examples. One is an example of a sales manager and what they tend to do when it comes to managing unproductive people.
Secondly a story about a retail friend of mine who has also had challenges with a supplier.
Thirdly how McDonald’s apply the 80/20 rule to their business.
Sales Managers hang on too long to non-producers
So let’s start with the ol’ sales managers. Many sales managers frequently invest the majority of their energy trying to help the worst salespeople they’ve got, who in truth, don’t really want any help themselves.
Look after the top performers
Instead look after and figure out who are the peak performers, who are the top clients, and ensure you make those people better.
It’s a real trap and if you’re a sales director reading this, go away and do the numbers.
It’s always in the numbers. 80 percent of your revenue comes from 20 percent of your clients in most cases.
I know in my own experience with one client when I was asked to evaluate their team and client list, 80 percent of their revenue was coming from 9 clients.
I say this again, 9 clients!
That’s pretty scary.
I recall saying: “We better be looking after those 9 clients for a start”.
And the second one is retail. A mate of mine owns a pretty successful retail store and 80 percent of his revenue is generated through 1 vendor/ supplier.
In fact, when you look at his numbers, he’s number one or two in the market.
Well you wouldn’t know. The service that he gets from that supplier is almost non-existent.
They would rather go to someone down the road that buys three or four of their products.
As he says it’s most likely that the ‘new’ client down the road has either nagged them to death or they want more sales, often it never happens.
The reality is if they just went to my mate’s business and sat him down and said:
“Hey look, how can we grow the business with you because you’re actually generating 80 percent of our revenue? What can we do? How can we help?”
Cause guess what? If my mate went somewhere else, they’ll be all over him like a cheap suit.
Do the few things many times over
Finally, the third observation around the 80/20 rule as it applies to McDonald’s.
Looking through some of my research for this subject I came across some information regarding what they’re really good at.
What they do consistently.
They’ve got dozens and dozens of ideas and concepts, but stick to five strategies.
I got this from an old Dan Kennedy blog that I saved years and years ago.
Basically what Dan said was that they use five strategies.
McDonald’s very good at understanding what works for them. For example, their billion dollar statement annually.
‘Would you like fries with that?’ is a classic example.
Let’s look at these five strategies.
The first one is discounting for a limited time.
The second one is a two-for-one special for a limited time.
A special item for a limited time.
A movie or a TV theme with a company such as Disney, for a limited time.
And a contest or game promotion for a limited time.
So what they’re doing is they’re using those strategies over and over and over again because they know they work.
Think about how it works if you’re a sales manager, retailer, or service business.
In summary, the 80/20 rule:
If you’re a sales manager? Make sure that you do your numbers and look at your clients that are generating the most revenue and your salespeople that are generating the most revenue and look after them with a passion.
If the ones that aren’t as good aren’t prepared to help themselves, get rid of them.
You don’t need them.
That might include a few clients as well.
At the end of the day, go and support the people that are prepared to commit to your business.
Second thing, if you’re a retailer or business owner, or a supplier, have a look at your clients and think does this apply to me?
Finally, like McDonald’s, do you have five strategies that you use consistently, to generate most of your revenue?
I believe the 80/20 rule plays a big part in a lot of what we do in business, every day.
You have a great week.
Selling is easy.
*Source: Wikipedia
Whatever career you decide to take in sales, it’s always good to get some help.
Mike Brunel started mikebrunel.com after being a successful entrepreneur and founder of NRS Media. He co-founded NRS Media in Wellington, New Zealand, expanded it into a global powerhouse in media sales and training, and was eventually responsible for opening offices in London, Atlanta, Toronto, Sydney, Capetown, and Bogota. He has hired hundreds of salespeople around the world.
He made a lot of mistakes when it came to hiring his superstars. Check out his How to Hire A Super Salesperson Each and Every time – It’s packed with tips and ideas on how to hire great salespeople. Don’t ever Hire Bad Salespeople Ever Again. Promise!
One of the key components to selling is selling yourself first.
These days, where online content is just a click away; where your clients often already know a lot about the features of your product thanks to the likes of Google, online reviews and such being so readily available – selling yourself still plays a big part in the sale.
Emotion plays a part
Any sale is made up of a client understanding your product and then taking an emotional attachment seeing it work in the future.
Future results – if you think about it – is what a client has to know first, so you are then able to engage them emotionally to buy your product or service.
This is not new by the way.
Including the future
Understanding what future your client wants, and delivering that solution, is one of the key aspects to discovery.
Mike Brunel started mikebrunel.com after being a successful entrepreneur and founder of NRS Media. He co-founded NRS Media in Wellington, New Zealand, expanded it into a global powerhouse in media sales and training, and was eventually responsible for opening offices in London, Atlanta, Toronto, Sydney, Capetown, and Bogota. He has hired hundreds of salespeople around the world.
He made a lot of mistakes when it came to hiring his superstars. Check out his How to Hire A Super Salesperson Each and Every time – It’s packed with tips and ideas on how to hire great salespeople. Don’t ever Hire Bad Salespeople Ever Again. Promise!
Here’s my tip for this week, and it’s a story which I think you’ll like…
Built on performance
But firstly here is some background.
I owned a media sales company for many years called NRS Media. (Link) to Mike Brunel.com?
We solely built that business on performance; in other words, we only ever got paid on what we sold.
I’m a big fan of performance.
We would go to a media company and they’d say to us, “Hey look, what’s the deal?”
We’d say, “We can generate a million dollars’ worth of revenue over a short period of time out of your inventory, that you’ve got for your radio, TV or newspaper company, and we charge only for the results”
That charge is in the 10-15%. Range.
We take all the risk
We would say it this way, “We take all the risk. Our rates vary from 10 to 15% depending on what sort of revenue you want to generate.”
Guess what? Time and time again, they’d haggle.
The reality was, we were taking all the risk, we were performance based only, and we only ever got paid on results.
So, we used to say to them, “Hey look, at the end of the day, you are going to keep 90%, and we’re going to keep 10%. I mean who’s winning now?”
Majority is yours
“We take all the risk, train your people to go out and sell the concept or the idea that we develop for your media company. No risk at all and they’re all new clients. So what have you got to lose?”
We’d be back and forth and haggle, haggle, haggle, and eventually get what we felt was fair.
This got me thinking, and I was reminded me of a story I heard recently from a guy called Dan Sullivan at Strategic Coach.
Are you pitching a higher price range?
Now, this story’s been bandied around and has different variations, but I think it’s a real lesson for anyone that’s in consultancy, performance, or trying to add value, or pitching a higher price range.
The story is about a guy driving a Rolls Royce, his pride and joy.
He’s driving this Rolls Royce along the road and, all of a sudden, it starts to splutter and he’s thinking ‘This has never happened before.’
And then, it stops, and he’s thinking, ‘My God, I’ve got to get somewhere, what am I going to do?’
Luckily, across the road was a garage and he spotted a mechanic inside the premises.
So he locked up the car and walked across to the mechanic and said, “Hey mate, I’ve got a few problems with my car. It’s never happened before but I can’t start it.”
The mechanic says, “Oh, I’ll come over and have a look mate.”
So he wanders over to the Rolls Royce, lifts the bonnet, and looks around.
He then says, “I’ll be back in a minute”
The mechanic races across the road and into his garage. He looks at the back of the workshop and he sees a hammer. ‘That’ll do the trick’, he thinks to himself.
He walks back across the road towards the man with the Rolls Royce, and as he’s approaching, the Rolls Royce guy says, “Hey mate, what’s with the hammer? I mean, this is my pride and joy, are you gonna be careful?”
The mechanic says, “Look mate, do you want me to help you or not?”
The Rolls guy says, “Yeah, yeah, yeah, yeah.”
So, the mechanic says, “Well, OK, let’s lift the bonnet back up. Now here’s the thing, I want you to hop in the driver’s seat and when I say one, two, three, I want you to turn the ignition on.”
The mechanic goes around the front of the car, lifts the bonnet back up, and says, “One, two, three…” There’s a bang and the guy turns on the Rolls Royce and she’s cranked up. She ready to go, brilliant.
The mechanic puts the bonnet down, walks around the front, and says, “OK, what I want you to do is turn it off, and start it back up again.”
So, the Rolls Royce owner turns on the ignition…perfect…turns it back off…perfect…turns it on again…perfect. He repeats this a few more times, and the mechanic says, “That’s enough, that’ll do the trick.”
The Rolls Royce owner thinks to himself ‘Fantastic, I’ll be on my way.’
He hops out of the car and opens up his wallet. He’s got about five bucks in there and he says, “Well, what’s the charge for getting the car going?”
The mechanic says, “It’s $500 mate.”
The guy in the Rolls is thinking ‘$500 bucks for just walking across the road with a hammer.’
“Really? $500 for that?” To which the mechanic replies, “Yep, $500 mate. $5 for the hammer and $495 for knowing which part to hit under your bonnet.”
What’s the lesson?
For me, that’s a great lesson about the fact that sometimes you pay more for expertise, sometimes you pay more for performance, and sometimes, you know, that’s just what it is, that’s the price.
So, when you’re coming up against price objections or you’re coming up against concerns around performance, level of expertise, or the way to add value…think like the mechanic, because that’s what he thought he was worth.
Whatever career you decide to take in sales, it’s always good to get some help.
Mike Brunel started mikebrunel.com after being a successful entrepreneur and founder of NRS Media. He co-founded NRS Media in Wellington, New Zealand, expanded it into a global powerhouse in media sales and training, and was eventually responsible for opening offices in London, Atlanta, Toronto, Sydney, Capetown, and Bogota. He has hired hundreds of salespeople around the world.
He made a lot of mistakes when it came to hiring his superstars. Check out his How to Hire A Super Salesperson Each and Every time – It’s packed with tips and ideas on how to hire great salespeople. Don’t ever Hire Bad Salespeople Ever Again. Promise!
This is a comment I hear from sales managers all the time.
“My salespeople drive me crazy” Guess what? My wife drives me crazy too; my kids at times drive me to drink. We are all driven crazy by someone.
But I believe that salespeople are like your family and you as the sale manager are responsible for their success.
Think about this for a moment.
Hire Time.
When you hired that ‘salesperson’ did you have all the best intentions that he or she would succeed?
Do you remember the actual time in your mind when you made the decision to hire that person? You probably thought “Yes, they are going to do well and be successful.
You were confident that you could put this person in front of your client and they would do well.
The Secret To Success For A Sales Manager.
Your success as a sales manager actually depends on the success of the individual. If you send your salespeople out with a brochure, some material about your company, and no training it reflects on you. Not the salesperson.
Train, Train, Train.
In real estate it’s ‘Location, location, location’ which is the catch phrase. In sales, it’s ‘Train, train, train.’
In my experience of over 25 years of training salespeople, the best companies are the ones that make an ongoing commitment to training continually.
And they have the best results.
What you are trying to do with your training is to give the salesperson the confidence and tools so when they see a problem or issue that a client may have, they can go away and come back and create value for the client.
How Do You Create Value?
I think it is unprofessional for a sales manager to let a salesperson on their team go out unprepared.
You need to have a plan, and you need to teach your salespeople how to do that. If your salesperson is unprepared they do not know to look for opportunities.
One of the biggest challenges for you right now is time.
We all know “I need time to set budgets, time for the General Manager, time for the strategy, time, time, time. You never have enough of it. True?
It’s Not About You?
Guess what, many of you may have it the wrong way around. Another secret, our clients and prospects expect a well-trained, well prepared, confident, value creating salesperson. Simple as that.
Whatever you can do as a sales manager to facilitate that has to come from you.
Good selling.
Whatever career you decide to take in sales, it’s always good to get some help.
Mike Brunel started mikebrunel.com after being a successful entrepreneur and founder of NRS Media. He co-founded NRS Media in Wellington, New Zealand, expanded it into a global powerhouse in media sales and training, and was eventually responsible for opening offices in London, Atlanta, Toronto, Sydney, Capetown, and Bogota. He has hired hundreds of salespeople around the world.
He made a lot of mistakes when it came to hiring his superstars. Check out his How to Hire A Super Salesperson Each and Every time – It’s packed with tips and ideas on how to hire great salespeople. Don’t ever Hire Bad Salespeople Ever Again. Promise!
Mike Brunel started mikebrunel.com after being a successful entrepreneur and founder of NRS Media. He co-founded NRS Media in Wellington, New Zealand, expanded it into a global powerhouse in media sales and training, and was eventually responsible for opening offices in London, Atlanta, Toronto, Sydney, Capetown, and Bogota. He has hired hundreds of salespeople around the world.
He made a lot of mistakes when it came to hiring his superstars. Check out his How to Hire A Super Salesperson Each and Every time – It’s packed with tips and ideas on how to hire great salespeople. Don’t ever Hire Bad Salespeople Ever Again. Promise!
80%……….Of all sales are made after the fifth call
48%……….Of all salespeople call once and quit
25%……….Call twice and quit
10%……….Keep on calling
These statistics are pretty close to the mark in all forms of selling and ring especially true in media sales.
I think that we all know SALES DON’T JUST HAPPEN.
Why do many of the great media salespeople thrive when others do not?
Here are some ongoing practices I observe every day.
1. Always add to your pipeline.
Always add to your pipeline. This is often a mistake that media salespeople make once they have established a strong ongoing funnel. If you continue to add to your pipeline then if that long-established client decides that this month they will not buy, it does not matter because you have potential opportunities in your pipeline.
If you are always taking the position of helping and assisting your client, then your pipeline will increase. If you are only filling up your pipeline when you are desperate then many clients will sense that, and you will come across as desperate.
2. Never assume they need you.
I have noticed that many salespeople leave a message with a client or a voicemail and they think it ends there. They think that they have done what they had to do and then move on.
Depending on the relationship you have with that client, they may or may not call you back.
If you do want to do business with them, you have to plan that call and decide the ongoing strategy to get the person to respond.
Create a proactive message for them to call you back.
3. Sales potty training.
For those that may have had young children there was a time when you had to train them to go to the toilet. In my experience (a while ago) I always used to say, “Pee or get off the pot” In other words, make a decision.
Therefore, there will be times when you have to make a decision to get off the pot, some clients need to be let go, you need to figure out if a prospect is serious about working with you or not. A good pipeline is full of qualified prospects and not “tyre kickers”
Whatever career you decide to take in sales, it’s always good to get some help.
Mike Brunel started mikebrunel.com after being a successful entrepreneur and founder of NRS Media. He co-founded NRS Media in Wellington, New Zealand, expanded it into a global powerhouse in media sales and training, and was eventually responsible for opening offices in London, Atlanta, Toronto, Sydney, Capetown, and Bogota. He has hired hundreds of salespeople around the world.
He made a lot of mistakes when it came to hiring his superstars. Check out his How to Hire A Super Salesperson Each and Every time – It’s packed with tips and ideas on how to hire great salespeople. Don’t ever Hire Bad Salespeople Ever Again. Promise!
