Ask any small business what goal they have for this year and chances are the answer is growth. Despite this goal, many companies struggle to develop a growth strategy that works.
Thankfully though, there’s a simple rule that can be applied to many companies to not only quickly generate growth, but also ensure that such growth does not result in a substantial decrease in productivity.
The 80/20 Rule (also known as the “Pareto Principle” and the “Law of the Vital Few”) was first developed by economist Vilfredo Pareto and eventually applied in business by the consultant Joseph Juran. It states that for most events, 20 percent of the causes produce 80 percent of the results.
What if I told you that 80 percent of your total revenues were likely being produced by 20 percent of your clients? Would that surprise you? Statistically it’s true. And, within that 20 percent there’s a tailored strategy to your company’s increased growth next year:
First, look at your last year of revenue and break it out by customer. Identify which customers are the largest revenue contributors and make up 20 percent of your annual revenue.
Now identify what similarities these customers have among them. Are they in the same market or industry? Do they demand a similar type of service or product? Are they similar in size, needs, location, etcetera? Try to be as specific as possible.
Finally, present your findings to your sales team and tell them that they are to spend 80 percent of their time targeting companies that fit into the above mold.
Soon enough, you’ll see the results. Your sales team will get in front of customers easily because they have applicable references and successful case studies. Customer accounts will come on faster because your operations staff is already comfortable with these types of customers. Customer satisfaction should stay high because your team has an idea of what these customers want. Productivity may improve as a result of likeminded customers demanding similar service and products. At last, revenues will increase.
Follow the 80/20 Rule and growth will follow your actions.
Good luck and thank you for reading!