Breaking this law is the surest way to increase your sales performance in 2016!
I am referring to the 80/20 rule also known as the Law of Pareto.
I am not attempting to debate the merits of the science that underlies statistical patterns, but I do want to challenge The Law of Pareto to the degree that is has become a self-fulfilling prophecy in many sales organizations. An accepted reality that 80% (or some other majority %) of sales will be generated by 20% (or some other minority %) of the people.
The core challenge I have with accepting 80/20 distribution in sales, is that it labels 80% of the team as marginal. Those 80% can be divided into 4 basic groups: Steady performers, newbies, wounded warriors and, yes, those not fit for the fight. Some in the 80% are hopeful of a rise to the top and others have lost hope altogether. Some are just one ingredient away from a major performance breakthrough.
I realize that no matter what an organization does, it is not likely to achieve a perfect balance of sales distribution, but it can achieve a better mix than 80/20. Companies invest heavily in building sales organizations. Why continue a process that relegates 80% of your team somewhere between dismal and marginal, without inspection?
What is the cause of this lopsided distribution?
The key lies in one of the three areas of focus that I mentioned last week:
If the product is new or non-competitive, then the few sales generated are likely still distributed along 80/20 lines – just smaller revenue. If there is an established product, conventional wisdom might suggest sales would distribute more evenly. Yet, even when name recognition and price superiority exists, there is a likelihood that the Law of Pareto prevails – just higher revenue.
If the product is not the key, then it points to the process used to hire, train and develop the people. Many sales organizations engage a “fire fast and bring in new blood” approach, if the new hires don’t work out. They performance manage struggling members of the team, when sales don’t meet expectations and, once again, bring in new people. These, and other strategies, undermine the performance, morale and culture of the sales team. It also perpetuates some of the behaviors that have given sales it’s reputation.
What then, is the quickest and most effective way to break the Law of Pareto?
The development and raising the performance of some portion of your 80% contingent. Notice, I said quick and effective…but not easy. Quick because these people are already on the team. Effective because they have a foundation of knowledge and experience with the product. The difficult part is development.
What is the difference between training and development?
Training is institutional. Training is 50 people in a classroom with structured modules, videos and workbooks. Done well, it is good stuff – I have done it for years. However, this type of training is static – a one way conversation designed for large groups. Training prescribes the same treatment to all without diagnosis.
Training delivers information but does not effectively transfer skill. It focuses on the “science of selling” – instructing the team on the things everyone must know and do. For example, we all must prospect. Sure, Q&A and a few role plays add an individual component but does not sufficiently transfer and embed skills needed to improve performance.
Development is dynamic, interactive and individualistic. It is a two-way conversation where you learn what they know, what they don’t know, what scares them, and most importantly, what will help them get better. It focuses on the artful, idiosyncratic side of sales. We all must prospect (science), but we will all do it differently and gravitate to particular methods consistent with our personalities/gifts/skills (art).
Development diagnoses then prescribes. In development, you conduct ride-alongs, watch them in action and let them watch you. In development, you partner them with a compatible team member. Through development, you can prescribe a specialized approach to help them through their challenges.
Training is necessary and good, but development is mandatory if your organization is to tip the scales of Pareto and increase sales, organically. This level of organizational analysis has to be done one by one…and one on one.
The good news is the 80% want to be successful. Reach out to them. Help them. Coach, mentor and guide them. Look throughout your team. All of them were chosen by the organization based on some tangible and intangible criteria. An initial investment of time, energy and money has been spent. Double down on that investment and find ways to develop them to greater performance.
First things first, applaud your 20% – they are the backbone of your organization’s current performance. Then create the strategies and tactics needed to develop the 80% – they are the key to greater performance.
Break the law, and expect your sales to soar!
Until next week, wishing you success.