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Understanding 80/20 or Pareto’s Principle in a Business Context
- “Pareto Principle” - Italian economist Vilfredo Paredo noticed that 20% of the people owned 80% of the wealth.
- 80/20 says 80% of your results come from 20% of your efforts, and 20% of your results come from the other 80%.
- 80% of your sales come from 20% of your customers.
- Sometimes 20% of core customers actually account for 100% of profits, and the rest on average are loss makers you would be better without.
- “Your best new customers are your existing customers”.
- Sales and marketing begins with product development for your best and enthusiastic customers.
- 80% of the sales are made by 20% of the salespeople.
- 80% of the customer service headaches come from 20% of the “problem children”.
- 80% of your productivity comes from 20% of the tasks on your to-do list/calendar
- The winner-take-all phenomenon is the disproportionate advantage that any top dog has over all the others - that the top 3 players have over all the rest combined..
- Average equals mediocrity.
Rack The Shotgun
- This means sending one calculated signal that most ignore, but a few respond to
- Triggering your audience and seeing who responds.
- Before you bet your time or money on any sales or business project, you need to rack the shotgun.
- Selling to the right person is more important than all the sales methods, copywriting techniques, and negotiation tactics in the world.
- The wrong person doesn’t have the money, doesn’t care, or won’t be persuaded by anything.
- People are self-identifying as being the right targets or the wrong targets for you all the time.
- The vast majority of businesses waste huge sums on ineffective advertising.
80/20 Traffic
- When you do publicity like writing books or magazine articles or blogging, the publicity itself will almost never close the deal for you.
- You still need a mechanism for turning the publicity into a sales funnel, like an offer or white paper or diagnostic tool or problem-solving cheat sheet.
7 Cardinal Rules of the 80/20 Sales Pro
- Don’t cold call. Only sell to warm leads.
- Before you start selling, know how much you’re willing to pay to get a new customer.
- A prospect who “finds” you first is more likely to buy from you than if you find him.
- Building relationships with the press is not how most salespeople should prioritize their time.
- Instead offer to write them magazine articles.
- Enhance your credibility as a salesperson, by authoring, speaking, and publishing quality information
- Good publicity strategy for any salesperson who doesn’t mind sitting down and writing.
- Generate leads with information about solving problems, not information about the product itself.
- You can attain the best negotiating position with customers only when your marketing generates “deal flow” that exceeds your capacity.
- The most valuable asset you can own is a well-maintained customer database, because existing customers are easier to sell to than strangers.
- The 1st step to getting anyone to listen to you is getting ears and eyeballs.
The Yin and Yang of Media and Traffic Expertise
- Yin: Impossible to become proficient in every form of advertising.
- Focus on 1-3 forms of marketing and advertising, so that you are much more skilled in those media than most people.
- Yang: if your entire business is dependent upon one source of traffic, one advertising medium, your business is a train wreck waiting to happen.
Business Tips
- Many successful entrepreneurs become extremely proficient at the use of ONE sales channel and use it to develop a firm foothold in a desperately competitive marketplace.
- As a salesperson, if your company won’t generate sales leads for you, generate them yourself.
- As a marketer aspire to create endlessly irresistible offers so people spend a lot of money with you
- To build a sales funnel you begin with the end in mind.
3 Steps To Selling Anything (Power Triangle)
- Traffic ⇒ Getting traffic
- Conversion ⇒ Convince the person that what you have is going to solve their problem
- Economics ⇒ You have to give customers something that’s valuable and get their money
This was a whole section in the book (Power Triangle) so here’s an example of how Traffic, Conversion, and Economics would apply to an ad campaign
- Traffic ⇒ people who see the ad
- Conversion ⇒ ad copy
- Economics ⇒ click and cost per click
4 Questions You Need To Ask Yourself Before Selling
- Who would buy this?
- What can we say to persuade them to buy?
- Can you reach them affordably?
- Can they give you money?
- Before you try to convince anybody of anything.
- You must DISQUALIFY people who don’t fit.
- Sales, is first a disqualification process, not a “convincing people” process
- 5 Power Disqualifiers That Are Always Present When A Sale Is Made
- Do they have the money? - Some markets consist of people who have no money.
- Do they have a bleeding neck? A bleeding neck is a dire sense of urgency, an immediate problem that demands to be solved.
- If you want to make good money your product has to deal with something that involves either big pain or big pleasure
- Pain and great inconvenience, loss of money, threat of loss
- Craving for pleasure that borders on the irrational.
- Do they buy into your unique selling proposition?
- USP
- What does your product do that nobody else’s product does?
- Why should I buy from you instead of anybody else?
- What guarantee can you make that nobody else can make?
- Do they have the ability to say YES?
- Does what you sell fit in with their overall plans?
- Test Fast, Fail Fast, Move On, Next, Next, Next
- If you’re talking to your prospect on the phone, you need to start with a unique selling proposition that really gets his attention.
- Remember that all good sales copy is about your customer, not you. Good copy speaks to the bleeding neck first.
- The surest way to emotionally connect with a customer is to empathize with them, show them that a page of your diary looks an awful lot like their diary.
- Headlines, italics, highlights, and bolds emphasize the most important 20% for people who are skimming.
- Headline Test: If your headline were a classified ad, would it make the phone ring? Don’t focus on your product. Focus on the urgent problem, the bleeding neck.
Your USP (Unique Selling Point)
- Why should I buy from you right now, instead of buying anything else from anybody else next week? What can you uniquely guarantee?
- Symptoms of a bad USP:
- You’re constantly fighting downward price pressure
- 4 Questions Your USP Can And Should Answer?
- Why Should I Listen to you?
- Why Should I do business with you instead of anybody and everybody else?
- What can your product do for me that no other product can do?
- What can you guarantee me that nobody else can guarantee?
- How do you make yourself unique?
- Quality of Service
- The market you serve is unique
- Your product is unique
- Your whole “experience” is unique
- Your price is unique.
Random Sales Advice
- Master the area or aspect of marketing or sales that you naturally love and excel at - harnessing the natural forces of who you are
- Whenever you have something in your sales funnel that’s not working, you just need to break it into pieces and make the 1st piece work.
- If you can’t sell a product, see if you can give it away. Or give part of it away. If they won’t take the free item, find out why.
Check out the book here: https://www.amazon.com/80-20-Sales-Marketing-Definitive/dp/1599185059