Copyright © 2005 Alan Rigg
80/20 Sales Performance
http://www.8020salesperformance.com
If you want to maximize your sales performance,
take a STRATEGIC approach to selling. After all, wouldn't you
agree that "the 80/20 rule" applies to customers, where
approximately 20 percent of customers produce approximately 80
percent of sales?
The starting point for strategic selling is figuring
out a) which customers produce the bulk of your sales, and b)
what they are buying. Armed with this information, you can strategically
plan how to increase sales.
Critical Data Elements
If you want to sell strategically, you need to
have access to specific data elements. Plus, you need to be willing
to perform data analysis.
Which data elements do you need? This list provides
a reasonable starting point:
- Customer Name
- Revenue by Month by Customer
- Gross Margin or Gross Profit by Month by Customer (this is
only necessary if it impacts your performance measurements)
- Product or Service Name (for each product or service purchased
by each customer)
- Product or Service Quantity (for each product or service purchased
by each customer)
- Product or Service Unit Price (for each product or service
purchased by each customer)
- Product or Service Extended Price (quantity x unit price)
This data can be used to analyze the buying habits
of your customers. Sort it in various ways to answer the following
questions:
- Which customers buy the MOST from you?
- What is the TREND for each customer's purchases? Are they
buying more or less when you compare the current month to preceding
months? How about when you compare the current month to the
same month in the previous year?
- Which products or services are they buying?
- Are the amounts purchased in line with your expectations
and the commitments that have been made by your customers?
- Which products or services are they NOT buying?
- WHY aren't they buying these other products or services?
Once you have completed the first stage of analysis,
consider this next set of questions:
- How much time should you allocate to each customer in your
territory? (Tip: You should spend 80 percent of your time with
the customers that buy the most and/or offer the greatest potential
for sales growth.)
- What is your plan for increasing sales to each of your customers?
(This includes selling more of what they have already been buying,
and selling other products or services that they haven't purchased
from you previously.)
- Which new prospects should you pursue? (Tip: Which prospects
can your existing customers REFER you to? Which prospects have
the greatest potential to produce significant sales?)
It may not be easy for companies to extract the
data that is required to support strategic selling. However, arming
salespeople with this data is the best investment a company can
possibly make. Strategic selling enables salespeople to maximize
their sales, which in turn maximizes the company's overall sales
and profitability.
How frequently should the data be made available
to salespeople? If sales cycles are relatively short, it would
be ideal for the data to be available on demand, with the minimum
frequency being weekly. For longer sales cycles, providing the
data on a monthly basis may be adequate.
Strategic selling begins with data availability.
If you are going to maximize sales, you need to be able to analyze
your customers' buying patterns to determine how to prioritize
your efforts. Which customers should you spend the bulk of your
time with? How much time should you allocate to each customer?
How will you increase sales to specific customers? Which new prospects
should you pursue?
Plan your work, work your plan, and compare your
results frequently against your quota and personal goals. Sell
strategically to maximize your sales, minimize unpleasant surprises,
and maximize your earnings!
