How to Increase Sales (by Doing Less)

February 7th, 2014

HammockIf I told you there was a way to increase sales by actually doing less – would you believe me? If you’re like the majority of entrepreneurs out there then you probably wouldn’t! Not that there’s anything wrong with working hard. As you’d likely agree, most business endeavors are in fact tough and time consuming.

What I’m about to share with you isn’t earth shattering and quite frankly you’ve probably already heard about it.  But, if you’re looking for an easy to understand tip (or reminder) for increasing output by working smarter then read on.

What we know about productivity is completely backwards

We’ve become accustomed to equating busy work with “real” work, and confusing multi-tasking with efficiency and productivity. We get tricked into thinking we’re being productive when in actuality we’re just doing busy work.

We all get distracted. It’s way too easy these days to get stuck in an endless stream of news, chatter, meetings, and other things that suck our productivity.

The result? We rarely get anything meaningful done. Our business suffers because we can’t focus on the activities that actually help it grow. And our personal life starts nosedives because we end-up with less time for friends and family.

Fortunately, there’s a simple approach for digging out of this rut.

Observations from one wise Italian

The 80/20 Rule is a concept initially observed in the 1800’s by Italian economist Vilfredo Pareto. Unsettled by the wide gap between the rich and poor in his country, Pareto decided to do some digging into the matter.

Pareto observed that 80% of his country’s land was owned by 20% of its people. He later validated his hypothesis through empirical research and other surveys. This observation was later dubbed the “Pareto Principle.” But others have since referred to it as the 80/20 Rule, so for simplicity sake will roll with that convention.

Simply put, the 80/20 Rule states that for many events, around 80% of the effects come from only 20% of the causes.

For example:

  • 80% of the wealth on our planet is owned by 20% of the population
  • 80% of NBA championships have been won by 20% of the teams (think Lakers, Bulls, Celtics)
  • 80% of insurance claims come from 20% of those insured
  • 80% of cars travel on only 20% of the roads

This list goes on and on….

The 80/20 Rule is fascinating because it can be applied to just about anything that has a cause and effect relationship. And because of that, it truly is a law of nature – not just of economics.

As a law of nature, it can be applied to your business

So this bears the question, how can you apply the 80/20 Rule to increase sales? Here it is in 4 simple steps:

1) Know what you want. Before you make radical shifts in your business, it’s important to first get crystal clear on what you want to improve. Is your ambition to find more customers? Or perhaps it’s to do more business with existing customers? Get clear on exactly what you’d like to improve.

2) Understand the 20%. This is where you identify the main drivers (the 20% that result in 80% of your sales) of your business. For instance, if you want to capture more sales from existing customers, you’ll need to identify your major customers (those who are responsible for 80% of your business). This may sound like a big task, but you’ll quickly find that it really isn’t. Most clients I work with can identify their major customers in under a minute.

Understanding who your big customers are will help you focus your efforts later on.

3) Set goals. Now, hang with me here. I know many business owners cringe at the thought of setting goals. I don’t know what it is about them, but at some point many of us developed a raw attitude at the thought of setting goals.

If you’re going to improve anything you’ll need to set a goal or target for it. This is one of the most important parts of the process. If you can’t measure your progress then what’s the point?

Using the example above, if you’d like to do more business with existing customers, set some targets for doing so. Setting targets will significantly improve your changes of success.

4) Action. This is the most important part in the process. You’ll need to focus relentlessly on action. Instead of letting yourself get pinned-down by all the little things impacting your business, you’ll need to focus. So what you’re doing here is narrowing your actions. This is where the 80/20 Rule comes into play…

None of us has the luxury of a surplus of time. We’ve all got stuff to do. Payroll, taxes, managing inventory… there’s a ton already on our plate.

The key here is focus. So when you do have time to take action toward your business targets, you’re dialed-in on exactly what you need to do. You’re not wasting your time on stuff that doesn’t matter. When you focus on those activities that generate 80% of the results, you don’t need to spend your entire day acting busy. Instead you can play it smart.

If you start doing this today you’ll start seeing results. Start small – you don’t need to boil the ocean. For instance, I know that 80% of my online referrals come from LinkedIn. So what do it do? I spend 80% of my social media efforts on LinkedIn, and 20% on the rest. That’s playing it smart.

Your friend,

Dennis Paresa

Got other 80/20 ideas? Drop a comment below and share it with other readers.

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