Although the 80/20 rule was first popularized in the business world by Richard Koch’s 1997 book, The 80/20 Principle, the concept itself was devised a hundred years earlier (1896) by Italian economist and sociologist Vilfredo Pareto at the University of Lausanne in his work, Cours d’economie politique (Course of Political Economy). Subsequently, the 80/20 rule – which says that in a given set of events, 80% of the results arise from 20% of the causes – came to be known as the Pareto Principle.
Businesses in the late 20th and early 21st century adhered to the Pareto Principle, including in the sales world, where the principle was also applied to sales teams. In consequence, the top 20% of sales reps were celebrated, and everyone else was comparatively ignored. Then some sales leaders started recognizing the division of sales forces is actually 20/60/20 – 20% top tier, 60% middle tier, and 20% bottom tier.
With that change comes a necessary shift in thinking about how sales managers approach motivating, training, and coaching their teams. While traditionally, and still in average or underperforming teams, the lion’s share of attention is given to the A reps (Top 20%), the reality is, focusing on the middle 60% will have far more dramatic results on your sales – to the point where a 5% increase in the B reps will translate into 70% greater revenues than a corresponding increase by the A reps.
The question is how to incite that movement. It’s a query that becomes even more pertinent considering just over half of sales reps are making quota – a downturn that’s also translating into VP of sales tenure declining 7 months over the last 7 years. The cause? A widening gulf between the A and B performers – or what’s referred to as the sales performance gap. Fortunately, there’s ways to address the issue.
- Find out what motivates that 60%.
In order to begin the desired movement, it’s important to figure out what precisely motivates the backbenchers and bulk of your team. It will often be different from what drives your A reps. Life-work balance and non-monetary incentives can take primacy over money for this group, and you may well find striking differences on an individual level. For example, Sally Smith might want more flexibility in hours, whereas Joe Java might want to move from a cubicle to an office. They might be things you can implement immediately (such as giving Sally more flexibility on a trial basis), whereas others can be tied to rewards (If Joe can meet a designated annual sales goal, he gets his desired move).
- Create a tiered rewards system.
Realistically, your long cycle sales contests and Presidents’ Club, etc. are almost always going to go to A sales reps. B and C level reps will at best feel indifferent or at worst frustrated, because they have little to no hope of winning. Instead, consider separating your awards into tiers. Obviously, the big prizes are still there to motivate your top reps, but mid-sized rewards – perhaps tickets to a sporting event or a weekend getaway for two to a nearby city – can galvanize your middle reps. Smaller rewards, such as a gift certificate to a popular local restaurant, can make good targets for your lowest performers.
- Provide training, coaching, and mentoring.
While these things apply to all levels of your sales team, the greatest ROI on training, coaching, and mentoring is going to come from your mid-level reps. This is perhaps where we see the biggest opportunity for sales managers to improve – they tend to focus on the top and bottom tiers while shorting the middle group to their revenue detriment. In reality, it should be the opposite – the star reps will perform regardless and the worst reps will likely wash out sooner or later. It’s the middle tier that is the backbone of your team and the group likely to have the longest tenure with your organization if treated right. And considering the high cost of sales rep turnover, that’s a way to significantly decrease costs while also increasing revenue – a compound win for the bottom line.
Shifting the paradigm of focus and attention on your sales team to the middle 60% is the right move to make. Discovering their motives, restructuring your rewards program, and directing the majority of your training, coaching, and mentoring efforts to that group will pay excellent dividends to your revenues while reducing turnover and creating greater employee loyalty.