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The Power of the 80/20 Principle

From category ELITE


Have you ever tried to please a client that was ‘unpleasable?’ Every sales professional has run into this problem at some point. Some clients just tend to be high-maintenance and without regard for the value of your time.

—Matt Linklater, Executive Program Director
Sequoia Systems International

That’s why we want to tell you about the 80/20 Principle.

The 80/20 principle, also known as the Pareto Principle, is an incredibly powerful productivity tool for any business. It has gathered some attention recently, so you may have heard about it, but it is still surrounded by mystique. So let us peel back the layers and explore exactly how the principle works and how to put it into practice.

Essentially, the principle states that for many things, 80 percent of the effects come from 20 percent of the causes. Translated into business terms this means that, potentially, 80 percent of your revenue comes from only 20 percent of your clients.

What are the implications of this theory?

Upon verification that the principle works for your business, you can choose to focus your efforts on the 20 percent of clients that make the biggest difference to your bottom line. This frees up much of your time to go on a search for other high impact clients, ultimately getting you far above your original revenue.

The beauty of the 80/20 principle is that it applies to more than just sales. If you’re trying to cover territory, a strategic analysis will likely reveal that 80 percent of your business comes, or can come, from only 20 percent of that territory. If you’re trying to stay on top of customer service, you will find that most likely 80 percent of the inquiries you receive come from a particular 20 percent of your clients and are not as urgent as you might have thought.

Keep this principle in the back of your mind as you do business, and do some brainstorming on the many ways it could improve your productivity. Just remember to check the numbers before you take any definitive action — it is entirely possible that your case is actually 70/30.

The 80/20 rule is one of the key concepts taught in NEXT’s Essential Lessons in Investment Training Excellence (ELITE) Program.

If you would like to learn more about The ELITE Program or other proven practices from the Sequoia System for Advisors, contact and an ELITE Ambassador will provide you with any information you may need.

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