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Really understanding the Pareto Principle

Also known as the 80/20 rule

The Pareto Principle says that some small causes produce effects which are disproportionately large.

Vilfredo Pareto, an Italian engineer, sociologist, economist, political scientist, and philosopher came to discover that 80 percent of land in Italy was owned by just 20 per cent of the population. He then saw a similarly unequal distribution in many other circumstances.

A beneficial application of this idea is that if you concentrate your energies on those actions which bring about a lot of worthwhile results, you gain much more than if you distribute your efforts equally across all tasks.

The first step is to identify which actions are the productive ones and those which consume time and energy but accomplish little.

Once you have analysed how you fill your days and weeks, the message is clear; cut down on the unproductive, do more of the valuable.

Note that the numbers 80 and 20 are not absolute; the values could just as well be 64 to 36 or 92 to 8 or any other large to small ratio. The essential point is that some causes have effects which are much greater or much less than others.

In the world of sales, the most important activity is contacting and spending time with prospects, both new ones and old customers.

To have a good indicator of your sales effectiveness, Take a look at how much of your time is spent doing this. Perversely for most salespeople it will be a only small part of every day.

Distractions seduce us into spending our time on secondary activities. Feelings are deceptive, you may have the impression that you are working hard, but the question to ask is 'Are you working on the right things?' And in sales, finding prospects and presenting to them are the two vital actions, not internet browsing, emails, report writing, meetings or exchanging 'war stories' with colleagues.

A way to get a fix on the scale of the problem would be to have a time-and-motion study made of your working month. If this were done and your activities were categorised and the time spent on each one measured, it's likely you would see a dismally low amount of time applied to important actions, while the bulk of your hours and days were spent on activities which contribute little or nothing directly to achieving your goals.

To illustrate this point at my Selling for Engineers seminars I sometimes ask the participants, 'How many miles do you drive a year?' The answer if often 40,000. Then I inquire, 'What would you say your average speed is?' Typically they answer, '40 miles per hour', or less.

It then takes an elementary calculation to see that with these values, 1,000 hours a year, which is on average about 20 hours a week or about half of every working day is spent behind the steering wheel; a location where you are not directly creating sales. With 50% of the week gone, and a plethora of other interruptions and other non-essentials stealing more of your productive time it's easy to be ineffective.

All of us are afflicted to some extent with the challenge of avoiding distractions and getting on with what is important. But what you can't escape is that the successful people are the ones who pursue their objectives with focused energy.

If you want to be one of this minority, the achievers, look at what makes up your day and identify the 'thieves of time'. Reduce these low-value activities and put more energy into the productive actions.

AND - please never employ the excuse, "I haven't got time". Billionaire or pauper, no one has more or less than 24 hours every day. It's what you do with your time which determines your outcome. (Before you get angry with me - yes, luck does play a role, but there is a long list of people who have overcome awful events and gone on to achieve great things - Mandela for one.)

If you enjoyed this article, take a look at my book.

The Selling for Engineers manual

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