In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that 20% of the people owned 80% of the wealth.This became known as the 80/20 Rule, and is now widely used in many organizations as a benchmark of good quality practice.
In the world of telephone sales, the 80/20 Rule means that only a few calls we make (20%) are vital and many (80%) are trivial, reminding us to focus our efforts on the 20% that matters. Those 20% produce 80% of your results.
In consequence, sales personnel have two choices when cold-calling in order to achieve success:
Quantity – If we make 100 calls, then, based on Pareto’s Principle, we should be successful in approximately 20 of them. If we make 500 calls, then 100 of them will be successful and so on. In other words, the more calls we make, the more chance we have of finding those 20% that will realise a level of success.
How many calls do you think you need to make to ensure you achieve our sales targets? Let’s do some calculations:
A. Weekly sales target (£’s):
B. Number of calls per week (current):
C. Average value of a successful call (£’s):
D. Number of successful calls according to 80/20 Rule (= B x 20%):
E. Current sales forecast (= D x C):
F. Variance of target to forecast (= A – E):
G. Number of additional successful calls required to achieve target (= F / C):
H. Number of additional calls required to achieve target (= (G/20) x 100):
I. Number of calls (new target) per week (= H + B):
Quality – To improve our sales effectiveness on the telephone, we should maintain greater focus on the quality of our calls, more so than the quantity. This will enable us to turn the 80/20 Rule on its head, with 80% of our calls producing the results we want, thus reducing the “wasted” time spent on unsuccessful calls
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