Google the words “sales funnel” and you’ll see that perfect triangle. Awareness at the top, purchase at the bottom. Clean, logical, ubiquitous…and completely misleading.

A client had a problem they didn’t know existed. Following a standard playbook their sales team was equally divided amongst all accounts.  It didn’t matter if an account bought 3 items or 300 — everyone got their “fair share.” Six months later, same team, same market, zero new hires, sales doubled.  Here’s how they did it.

The traditional funnel assumes all opportunities are equal. One lead = one lead. One customer = one customer. But if one customer buys 3 units while another buys 300, are those really equal opportunities?    Yet we keep feeding the funnel like they are.

The 50/20 Rule That Changes Everything

If every customer represented an equal amount of business, then 50% of the customers would represent 50% of all sales.   However it doesn’t work that way.   In every industry we’ve examined it works like this (graphic):

• Top 10% of customers by purchase volume = 30% of all purchases
• Next 10% of customers by purchase volume = 20% of all purchases
• Next 30% of customers by purchase volume = 30% of all purchases
• Last 50% of customers by purchase volume = 20% of all purchases

If you add up the top two tiers together you’ll discover that the top 20% highest purchasers buy 50% of all the product.   This is where the business is!

The lowest purchasers make up 50% of all the customers but only 20% of all the sales.   Avoid this segment unless you have good reasons to go there.

Now that you know where your customers are – now plot where your sales team allocates its time.  This is where it got uncomfortable for my client (see the purple line on the graph).   The sales team was spending an equal amount of time with all clients.   They were allocating their time by the number of clients not by the volume of business.  Indeed in an extreme case the customer didn’t purchase enough product to cover the cost of the sales visit.

What can we learn from the 50/20 rule:

• Sales volume and Customer volume are very different things: One customer can equal 3 sales or 300 sales.
• Allocate sales people by sales volume not customer volume:  Allocating sales people to the bottom 50% of the customers is a time sink, as only 20% of the business is there.

A little analysis can make a big difference.  In my client’s case, sales had been flat for the previous 3 years.  By shifting the sales force efforts to focus on the top 20% of the clients (and 50% of all the business) sales doubled.  Ironically sales in the bottom 50% of clients who now got zero visits didn’t change much.  What are you doing to ensure your  sales team is aligned with opportunities in the market?