This is a Marketing-Sales Question. Please try to answer the whole thing if you

Question

This is a Marketing-Sales Question. Please try to answer the whole thing if you can!

According to John Romero, “In marketing, I’ve seen only one strategy that can’t miss--- and that is to market to your best customers first, your best prospects second, and the rest of the world last.” Discuss what is meant by key accounts and the 80/20 rule and how the organizations should adapt its sales structure to serve the large and strategic accounts that require high levels of service and deeper buyer-seller relationships. Please provide real life examples in your discussion.

Explanation / Answer

The 80-20 rule is a rule of thumb that states that 80% of outcomes can be attributed to 20% of the causes for a given event. In business, the 80-20 rule is used to help managers identify problems and determine which operating factors are most important and should receive the most attention based on an efficient use of resources. Resources should be allocated to addressing the input factors have the most effect on a company's final results.

The good thing about the 80/20 rule is that you don’t have to understand statistics to be a believer. Yes it has foundations in economics and yes, it was “proven” using statistical analysis by a man named Pareto, but it is not meant to be understood only by economics professors.

There are many economic conditions, for example the distribution of wealth and resources on planet earth, where a small percentage of the population controls the biggest chunk, which clearly demonstrate the 80/20 Rule. There are business examples such as 20 percent of employees are responsible for 80 percent of a company’s output or 20 percent of customers are responsible for 80 percent of the revenues (or usually even more disparate ratios). These are not hard rules, not every company will be like this and the ratio won’t be exactly 80/20, but chances are if you look at many key metrics in a business there is definitely a minority creating a majority.

At a micro level just by looking at your daily habits you can find plenty of examples where the 80/20 Rule applies. You probably make most of your phone calls to a very small amount of the people you have numbers for. You likely spend a large chunk of your money on few things (perhaps rent, mortgage payments or food). There is a good chance that you spend most of your time with only a few people from the entire pool of people you know.

When you start to analyze and breakdown your life into elements it’s very easy to see 80/20 ratios all over the place. The trick, once your key happiness determinants have been identified, is to make everything work in harmony and avoid wasting time on those 80 percent activities that produce little satisfaction for you.

The message is simple enough – focus on activities that produce the best outcomes for you. This applies to both your business/working life and your “other” life (I think they are all part of your “life” but people often prefer to distinguish them). The problem for most people is how to make a living from what you really enjoy, so lets focus on that…

I’m sure you have heard the phrase “struggling artist”. The stereotype where a creative person, musicians, actors, writers and artists, struggle to get discovered and work long hours on horrible day jobs, often in retail and hospitality, until hopefully they finally break out, get discovered and become famous. It shouldn’t surprise you that the ratio of struggling artists who actually become famous enough to live off their craft also follows an 80/20 Rule – only a small few of the overall total manage to get that far.

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