Some of my work for clients involves putting together business development plans which means creating bespoke sales and marketing strategies. An important part of the planning process is breaking down the annual revenue goal into monthly chunks and coming up with the number of leads required in order to achieve the desired growth goal. Going through this process, I have noticed that there is a tendency among some SME owners to disregard the importance of such targets because, in their opinion, no one can actually predict these things and we can only do our best and hope it works. I strongly disagree but then I started reading 80/20 Sales and Marketing by Perry Marshall and I think I found the proof as to why this attitude will lead you to miss opportunities in your business!
Most people have come across the 80/20 principle which was originally developed by Vilfredo Pareto and states that for many events, roughly 80% of the effects come from 20% of the causes and that this principle can be applied to all sorts of things in life and business. Perry Marshall’s book is concerned with applying the 80/20 rule to your sales and marketing strategy and is pretty revolutionary in doing so: you really have to read it to get the full picture.
Coming back to my proof, do you remember the old saying by John Wanamaker: ‘Half the money I spend on advertising is wasted; the trouble is I don’t know which half’? Here is what Perry Marshall had to say about it: ‘Wanamaker was being optimistic. Most advertising is hugely wasteful. I know from experience, he wasn’t wasting half, he was wasting 80 percent, maybe more. He did not know how to take 80 percent of the money he was wasting and pour it into the right 20 percent. He didn’t know his ROI wouldn’t just improve by four times; it would improve by 16 times. He was missing 96 percent of his opportunities’.
I could not agree more and in my opinion Wanamaker must have missed a few more key components in his business to find himself in this situation. For example, his target markets, his current lead generation and conversion numbers, what are his competitors doing, the list goes on. But in short he needed a business development plan to help him understand what he was doing well and what not, thus establishing the best strategies that would help him focus on the 20 percent key strategies that will get him 80 percent of new revenue. Want some examples? Here are a few ways in which such a plan can be helpful in getting more leads for less effort:
- It will help you consider your growth goals and by doing so, identifying where your main income is currently coming from i.e. which of your customers make up the 20% that brings in 80% of your turnover.
- The plan will include putting together monthly lead generation and sales targets which will help you learn your current sales patterns i.e. which current strategies make up the 20% that brings in 80% of sales
- An important part of the plan will be identifying your target markets which will help you focus on the right activity to get through to more clients that already make up 20% of your top spenders
- The process will encourage you to look at best practice in your industry and what you competitors are doing better then you i.e. what other strategies might be used to make up the 20% most effective ones
Because you see, according to Perry Marshall, the leverage power of 80/20 is in the layers which must mean that you could keep leveraging it the more you look into the details of the sales and marketing in your business.
So, if this sounds logical and helpful why not read Perry Marshall’s book yourselves, if you have not already done so, and then contact me if you need help getting a plan together?