The 80/20 Rule Applied to the Revenue Manager Role

Rest in peace Joseph Juran.  Inventor of the 80/20 rule.
Your 80/20 rule saved many careers.

How can that be?

If you managed for any period of time and were an effective manager, you’ve used the 80/20 rule.

Simply stated, the 80/20 rule says that 80% of your results will come from 20% of your efforts.

If you have Ten people on your team, 80% of your results or production will come from your top 2 reps (20%).

If you own a restaurant, 80% of your revenue will most likely come from 20% of the time you’re open.

If you have 10 accounts 80% of your revenue will come from the leading 2 (20%) of your accounts.

The beauty of the 80/20 rule is that it applies in a myriad of industries, settings and applications.  When you first hear it, you may be a bit skeptical, but is really true.

How can I get 80% of my sales from 20% of my accounts?  As many times as you challenge and question the rule, you’ll discover it still holds true.  Sure there may be a few exceptions, but it most cases it rings true.

Ok great, I understand the rule, how does it apply to line management?
I already mentioned the rep application.  You have 10 people in your region and 80% of your revenue will come from two reps.  Wouldn’t that mean that it would be wise to spend your voyage time with your major performers, the 20% producing the 80%?  The obvious answer is yep.  You may have heard this rule stated another way “Feed the eagles and starve the turkeys”.  The eagles represent the top 20% of your team and the turkeys the balance. 

What about looking at the 80/20 rule from a time perspective?
You spend 80% of your time on 20% of your tasks.  To make the math simple, let’s think of a week (5 working days).
The rule says that you will accomplish 80% of what needs to be done that week in one day.  Does that mean you get to take the other four off? Not really.

Look at it this way.
The most important task you have as a manager is to achieve the corporate goals.  These goals are normally a mix of performance/financial goals and MBO’s (Management by Objective) set by your boss.  If goal attainment is your top priority, then most of what you do should be directed towards achieving that goal.  I am a strong believer in every single week check in/funnel update calls to keep a pulse on the reps mindset, expand my relationship with that rep and update the sales funnel and forecast.  Every week, that time with the reps was a priority.
Back to the example with your region and ten reps.  Doing check in calls (budgeted at about an hour each) will take all of one day and some of the next morning.  So doesn’t that work out to you spending 20% of your time (one day) to accomplish 80% of your goals/objectives?  Yep it does.

I know you could split hairs (as you can with most rules or theories) about the exact numbers, i.e. , is it really 20% or it is closer to 25% and if I did that would that really reflect 80% of my productivity or closer to 60%?  The answer is all of the above.  Kinda.
As a manager meeting production goals and hiring and developing future leaders for the organization are your only goals.  All of the other things you do in pursuit of those goals are a “means to an end”.  Certainly, the things you do on the other four days of the week are important and contribute to your success, but if you did all of these other things without spending 20% of your week on check in calls, would those other things you did they other four days of the week put you 80% of the way on the path to success?

The answer is no.
By spending 20% of your time you will put yourself 80% of the way “there”.

Article courtesy of  Peggy McKee - Owner / Senior Recruiter at the nationally
recognized clinical and laboratory revenue recruiting team of PHC Consulting.
© Copyright 2008 PHC Consulting | All rights reserved

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The 80/20 Rule Applied to the Sales Manager Role