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On an average, for most of the happenings, 80% of the effects are the results of 20% causes. This 80-20 rule is known as Pareto principle. This is a common rule in economics and business and is generally used in social sciences, engineering and game theory. The easiest way to understand this rule is to take examples of the sales statistics of any professional service organization or any industry. It is a fact that 80% of the sales come from 20% of the customers. Or another way to apply this is that 20% of the professionals in sales are capable of selling 80% of the products.
Now the question arises how this rule helps the industry in managing the process of sales? There are three areas of sales that are regulated by the Pareto principle. Firstly, the industry must be extremely prompt in selecting the people in sales department. Secondly, the industry must provide them the training as per what output they require from these team members. And thirdly, also keep them coaching to reach the higher levels of performance. This is essential as in the present time there are almost 80% professionals in the field of sales related services who are giving only 20 % of the sales.
This principle basically runs on the fact that 80% of the time and resources invested in any project are consumed by 20% of the work. This means that this 20% is the one where you need to put all your concentration.