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The 80/20 Rule

The 80/20 Rule

When most people hear 80/20 they normally think about the coinsurance of their health insurance policy. However, there is an 80/20 rule that applies to business teams and any good business owner knows it very well. I have experienced it for almost 25 years now and it doesn’t matter the product or advances in technology, this rule simply never changes.

The 80/20 rule simply states that 20% of a team’s agents or representatives do 80% of the sales volume and 80% of the agents/salespeople do the other 20% of the company’s sales volume. It doesn’t matter whether there is a team of 10 agents or 1,000 agents the 80/20 rule applies. No matter the size of the team, the product or service, the “cream rises to the top” in every case. Let’s explore the principle behind the rule.

The 80/20 rule was actually started by an Italian economist named Vilfredo Pareto back in 1906. His observation was that 20% of Italy held 80% of the wealth and the remaining 20% of the wealth was held by the 80%. The principle was established that 20% were the vital few and the 80% were the trivial many. It is known today as the “Pareto Principle”. When a leader applies this principle to his team, productivity goes up. A good leader recognizes which team members are in the vital few and which are in the trivial many. Knowing this helps the leader to allocate time spent with each group accordingly. In other words spend 80% of your time and resources on the 20% vital few to help them continue to grow. Spend only 20% of your time and resources on the 80% trivial many.

The 80/20 rule can be broken down to each agent or salesperson by helping them understand the same about their clients. Roughly 20% of their clients account for 80% of their revenue and vice versa. Therefore, the agents time is better spent working with his vital few as well.

Take the time to evaluate your 80/20 rule and move this year into being more productive. Remember, speed of the team is speed of their leader.

“80 percent of output is produced by 20 percent of input.”George Zipf

www.yourfriend4life.com

Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 25 years of experience in sales and marketing in the insurance and beverage industries.

3 Responses to The 80/20 Rule

  • I have found the same thing true in my business as well. I have agents that will get out and work as long as I go with them. They write great biz and are great salespeople but lack the gumption to go out by themselves. I decided to just let them founder on their own. I am now just going to spend most of my time on personal production, a little on training and product knowledge, and let them either work or starve. I believe that the Bible says that a man that dose not work should not eat. Why should I take from my family to give to his when he wont produce?

    This country is trying to bring the upper level that works and pays to keep this wonderful place known as the USA down on an even playing field where it is fair and 50/50 and we all have the same. The re-distribution of wealth. That is wrong and it rewards mediocracy, and lazyness. I am glade not to choose to play in that arena, but rise to the top of my field in my area of influance.

  • Jason, you are always direct and to the point. Thank you for sharing.

  • This is preached in every business class I have been to

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