There is some truth to the 80/20 rule in the sense that there will always be a top 20% of salespeople and a top 20% of customers--no matter what--the reality of math dictates that to be the case.
However, the rule is meaningless in itself. When applied to an organization or client database, there has to be realistic analysis to determine whether this rule has any meaning. For example, I have a client company that employs 31 salespeople. I've worked with them to upgrade their sales force through both recruiting and coaching.
Their industry average salesperson makes 65,000 per year. Except in this company. They have 3 who are earning $175+ (that's right at 10% of their sales force); another 8 are earning in excess of $110k (that's another 26% of their sales team); 11 earn in excess of $65k (another 35%); and 9 who are earning less than the industry average (29% of the team). The top 3 do, in fact, bring in about 20% of the business, but that doesn't take away from that fact that they have 22 out of 31 that are earning--and selling--more than the average salesperson in their industry.
But, based on the advice of the 80/20 advocates, 80% of the resources should be going to the top 3 producers who earn about 2.7 times the industry average. What about the next 8 who are earning more than one and a half times the industry average? Or the next 11 who are still outperforming the industry average?
Trying to apply any general rule has great limitations. This company has worked hard to upgrade their sales force and they now have one of the best in their area. They didn't shrug their shoulders and simply write it off to the 'ol 80/20 rule. They pro-actively created a great sales team. They implemented a strong training and coaching program and implemented a manager based recruiting program to bring in the best salespeople in their industry that they can find, court, and bring over.
Obviously, they're not done. They still have 9 team members who are way under-preforming. They still have 11 others that they are trying to get to the 100k mark (10 really, as one of those between 65 and 110k is actually over 100k). So, they're still working. But they certainly have no plans to replace those 10 who are above the industry average but not up to where the company wants them to be--they're proud that these salespeople are performing at above industry average--they just want to help them achieve more.
Those below the industry average--well, we're working with them, but the company is committed to excellence and they will have to leave if they can't cut it. The company is committed to 100% performance from all salespeople.
So, don't look upon the 80/20 as carried down the mountain by Moses.
In many cases, the 80/20 has been used to excuse the poor performance of both salespeople and managers when what is called for is more insistence of performance and high standards.
Great Insight!
