Have you ever heard of the 80-20 rule?
In 1906, Italian
economist Vilfredo Pareto created a mathematical formula to describe the
unequal distribution of wealth in his country, observing that twenty percent of
the people owned eighty percent of the wealth. Consequently the 80-20 Rule or Pareto Principle was born. The distribution
shows up in several different aspects relevant to business. For example in
business: 80% of sales
come from 20% of products or services - 80% of complaints come from 20% of
customers - 80% of your profits come from 20% of time spent (for us that means time actually selling) - 80% of all sales are made by 20% of sales staff
& - 80% of your
income comes from 20% of your customers.
Why is that
important to New Business? Let me tell you a story… A number of years ago I had a conversation with a sales
rep with a company outside of Metroland & media; He was a highly successful
consistent performer with an excellent history of year over year growth for the
preceding 8 – 10 years. He had built his book of business on solid sales
principals with clients who grew to large accounts over time. They trusted him
and because of his solid reputation of meeting and exceeding client
expectations his accounts recommended him to family and friends. One family who
owned the majority of businesses in that area eventually all became his
accounts. So much so that they represented 60% of his total income… yes that’s
right one group of affiliated businesses made up 60% of his six figure income…
then the unthinkable happened… He began dealing with one of the grandsons from
the family on a new business venture. Everything was fine until a
misunderstanding with a new business office employee threatened to send the
young entrepreneur to collection over a disputed bill… His response of fix this
problem or we will pull all our business went unheeded and unfortunately a
small in discrepancy led to ALL their businesses choosing not to deal
with the reps company over the disrespectful way one of their own had been
treated. Overnight his income plummeted by 60%...
We have all lost
accounts over the years due to closures, new ownership or to competitive
raiding. We also know how tough it is to replace lost revenue. Most of our
large accounts started out as smaller ones and they developed over time into
the major accounts that make up the biggest part of our book of business…The
20% that make up 80% of our income.
The best sales
consultants are constantly aware of new business opportunities. How they can
find new customers or ways to develop existing accounts through new product
lines and services. They have a plan for developing their New Business Pipeline
(Setting up a database of
prospects, Identifying their target customer, Know their Unique Selling Proposition
& what they are selling, How to create a communications plan & How to
automate the process) and understand
the importance of cold calling on new prospects and the length of time it takes
to develop successful business relationships. They truly understand their
businesses USP and can vocalize it instantaneously when meeting a prospect as a
succinct positioning statement about what they can do for them.
They are
constantly growing their account lists by asking themselves the tough
questions…
How solid
are their "A" accounts (the accounts you Always call first…these are the 20% of your accounts that represent 80% of your business)? If they stopped advertising tomorrow
would they be able to replace that revenue?
Do their
"B" accounts (the accounts that will Buy if you make the call… but
have the potential for more - if you develop them) have the
potential to become A accounts? How well do they know this group of
clients?
Are their
"C" accounts (the accounts you Can sell but are occasional,
seasonal or sporadic customers at best) maximising
their penetration in their market? Are they helping these accounts brand
in the off season so that they can increase market share during peak times. Are there other products or services
that their more sporadic
customers might be interested in?
Are their
"D" accounts (the accounts that Don’t advertise because they are
never called on) representing
untapped potential?
New
Business Development isn’t just about chasing new accounts… it’s a mindset
where we capitalize on all new business opportunities. It solidifies client relationships with our constant
assessment of how we can do more for existing clients at every level of
engagement and identifies the potential for new clients at every corner... and with all the opportunities digital and our new products affords us what a fantastic chance to start a NEW business conversation with both existing and potential clients
For more conversation on New Business
Development principals check out our New Business Development webinar on
http://www.mymetroland.com..
