For the beginner, the Pareto Principle states that 20% of your total work usually contributes towards meeting the 80% of your total output.
The Pareto principle for businesses is what Moore’s law is for the semiconductor industry.
From industry-dictating business moguls like Richard Branson to successful sales managers, the majority of Industry managers are known to religiously follow some iteration of the Pareto principle in their daily activities.
But the Pareto principle is not exclusively limited to people at the pinnacle of their craft. It’s namely a rule of thumb for success in the modern world. Here, let’s stress on the term, ‘the modern world’.
In the modern ecosystem, almost everyone has to work under multiple strains and pressures pulling from different directions. This means that you need to always multitask between no less than five different tasks that demand your valuable time and energy.
A competitive marketplace demands you to apply the rules of the Pareto principle in your decision making.
Application of Pareto Principle in Businesses
As described, the normal workings of an organization could be described in the given bell graph.
If you examine the graph, it seems to initially start slowly and then increase to the tip of the bell to further reach the original level. Even if your real life effectiveness doesn’t mirror this curve, it’s a rough representation of almost all businesses.
Based on this graph, you can see that the best way to manage your business would be to focus your time and effort in the middle part of your graph. In here, spending your effort all along the curve will generate only low to moderate results.
This simply means that you need to focus on the right parts to create maximum results.
A CRM system helps you find these critical factors that impact your business growth. This critical strategy lets you maximize your results.
Getting started with an 80:20 Approach to manage your business
If you take a long hard look at it, you can see that the Pareto principle stands for process optimization in businesses. The Pareto principle advocates to focus on the 20% of tasks or daily operations that create maximum result.
By spending your time on tasks that deliver maximum results, you can sideline all preoccupations or tasks that lead to lesser desirable results. This also helps you develop a healthy understanding of your business that enables you to make the right decisions.
As per Pareto principle, the way of your effectiveness getting distributed between various tasks could be described as given below.
First of all, you need to identify and mark your important processes. These could be different activities – monetary, productivity or developmental – where each has their own final impact.
This requires you to constantly analyze and improve your existing business processes. Meanwhile, you can also focus on discovering new opportunities that may provide a better way of doing your activities.
It also allows you to critically sideline your ongoing activities, thereby improving your total results. This also lets you focus on the right approach and the right industries.
In the following section, we will try to discover a better way of managing your daily activities than get stuck in a whirlpool of multiple conflicting processes. We will also try to evaluate multiple processes that help you maximize the final results.
Identify and Compartmentalize your Prioritizes
When it comes to new daily business process, there are always umpteen different activities that constantly demand your attention. You need to have the ability to segment your time and energy between these different processes. This helps you to amplify your end results.
For example, let’s consider the daily life of an entrepreneur or businessman. In turn, you could be constantly trying to juggle between important daily tasks.
1. You might be required to pitch to five new prospects.
2. You might be required to analyze the project development
3. You might be asked to manage internal operations
4. You might want to look into individual performances
This dilemma can see you torn between different tasks and responsibilities. The basic human impulse would be to invest oneself in the subject that consumes the most time and energy – which mostly happens to be sales processes.
But being exclusively focused on sales campaigns can also lead to giving less attention on other arenas. You need a system that will allow you to prioritize between the different avenues that require you to spend your attention.
Segmenting Time expenditure between different Processes
In hindsight, you need a process or system that determines which processes generate the best results. You also need to learn which activities could be outsourced or eliminated without any customer discomfort.
For a modern business, data means insight. You need to have access to the right data sources to make meaningful decisions.
The CRM platform lets you connect and manage different parts of your daily business process. It involves identifying and managing different tasks that generate maximum results.
For example, consider the daily time segmentation of a sales manager. If you are a sales manager, you need to divide your time and attention between multiple parallel processes.
Nominally, these could be prospecting, networking, meeting management, pre-sales customer service etc.
At the time of time crunch, the manager needs to know which processes need to be prioritized and which could be subordinated.
A sales CRM is intended to let you handle these responsibilities by taking right decisions at various introspections.
Drilling and identifying the best of your Leads
When you attract leads through different online or offline channels, your initial attempt should be to identify and prioritize your right leads.
You can see the influence of the Pareto principle in determining your lead quality. According to research, almost 79% of the acquired leads aren’t initially prepared to invest in the leads.
Your chances of closing deals are dependent on finding and focusing on the remaining 20% of your marketing leads.
The successful marketers obsessively focus on the lead quality, not the quantity.
But, how to determine which leads are good, better and waste?
For this, you should have an intelligent measure to process, qualify and handover leads to your sales team for final closure.
This creates a high level of distinction in skills that can’t be mistaken by the actual sales representatives.
You can qualitatively differentiate leads through a process called lead qualification.
In this situation, you are required to qualitatively differentiate your incoming leads. The sales CRM facilitates this process through a process called lead qualification.
Let me describe this process as given below.
Initially, you can start qualifying each lead, as per their indicated value of final closure.
This system lets you oversee and qualify each lead according to its proposed value to the business.
Further, each salesperson will be able to qualify each lead as cold, warm or hot.
This process overview lets you ensure that the right leads get transferred to the sales team.
This prevents your leads from becoming a mash-up of accumulated leads on a dashboard. It also allows you to productively segment your time expenditure for individual salespersons. This CRM-based lead processing ensures ample time spent on each potential prospect.
Automation Principle to Guide your marketing investments
As a preamble, let me take your attention to the popular saying that half of the marketing budget is wasted. Presently, it has come to be divided between different marketing channels and campaigns.
At present, marketing is usually claimed to be a highly complicated practice done by skilled professionals. It may be claimed to be the domain of experts. This could appear as a serious deterrent for small or medium scale enterprise that usually doesn’t have the budget to hire an expert.
But the truth may not be so glossy!
Although you may not be able to replicate the results of a professional marketer, you can still acquire significant sales leads through basic search and social advertising.
The bread and butter of various marketing consultants depend on identifying and monetizing different marketing channels that deliver the best results.
In turn, your role would be for investment between these independent channels and campaigns.
By integrating different campaigns on a single dashboard, you can analyze the results of different marketing campaigns.
CRM-based marketing automation lets you measure and manage your investment on the different marketing fronts.
This system allows you to make maximum out of your time and energy by investing on channels with the right ROI.
Getting the Right Employees to Spearhead your Efforts
All organizations are looking to find the sweet spot between employee talent and total work output. This requires you to start putting together the best teams to tackle each task.
As a business owner or manager, your primary challenge would be to identify and segregate the better performers at the earliest.
This helps you develop better retention strategies and understanding of key employee skills. The CRM platform lets you practically collect and evaluate performances over a given time period. With multiple graphs, you can ensure better visibility for your employees.
As businessmen and entrepreneurs, we are constantly looking to polish skills and invest on the right avenues.
The Pareto principle advocates that using the right tools and doing things the right way can amplify your result by many folds.
The CRM platform lets you manage and optimize your business processes to maximize your end-results.