How the 80/20 Rule Applies to Sales

Michele Warg
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Many professionals are familiar with the 80/20 rule — also known as the Pareto principle — that claims that 80 percent of productivity comes from just 20 percent of inputs. However, far too many business owners are willing to overlook this simple rule when it comes to sales, and they could be losing out as a result.

According to the 80/20 rule, the top 20 percent of a business's customers are responsible for 80 percent of sales. As a result, business owners who identify that top 20 percent of customers and focus on finding more customers like them can dramatically increase their sales and profits.

Forbes recently reported that sales and marketing expert Perry Marshall's book, "80/20 Sales and Marketing," describes how to take the 80/20 rule to its most extreme conclusion. As well as applying to the whole customer base, the 80/20 rule can also be applied to just the top 20 percent of customers. This means that the top 20 percent of the top 20 percent — 4 percent of the whole customer base — is responsible for 80 percent of 80 percent of sales, or 64 percent overall.

This scaling of the Pareto principle means that it is incredibly important to identify which customers drive the majority of sales. Rather than spreading one's time across the entire customer base, the smartest approach is to focus attention on the most profitable customers. The business can upsell services or products to these customers, thus raising more revenue without needing to dedicate large budgets to bringing in new customers.

Once the top 20 percent of customers has been identified, it is important to take the right approach to targeting them. Bombarding existing customers with information can actually drive them away. For some customers, indirect contact, such as contact through social media, can be more effective than traditional phone calls or emails.

When dealing with such a small group of customers, taking an individualized approach is the key to success. Customers who have a long-standing relationship with the company should be well-known to the sales team. Sales professionals need to take note of each top customer's communication preferences, as well as its individual needs. By carefully profiling each of the top 20 percent (or 4 percent, depending on the size of the customer base) of customers, the sales team can recommend just the products and services that are most likely to interest each customer.

The 80/20 rule is one of the most powerful principles in business. Applying this principle to sales allows businesses to target their marketing budgets where they will be most effective. Focusing attention on the most profitable customers, the top 20 percent, can dramatically improve sales figures and profits.


Photo courtesy of Vichaya Kiatying-Angsulee at



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