Not All Leads Are Created Equal

by | May 22, 2012

Pursuing every lead equally rarely leads to the results that a company wants. The reason is not all leads are equal. Identifying those few leads that produce the best results will allow your company to focus its efforts on the prospects that are most likely to become sales. Focusing on the quality of leads rather than quantity is the key to a successful business.

What is the Pareto Principle?

Understanding the Pareto Principle can help your company to maximize its lead conversion efforts. This principle states that eighty percent of results come from twenty percent of effort. In essence, every task has a few crucial components which produce most of the results, as well as a lot of less important tasks that have very little impact on the outcome.
This principle can be seen in almost every area of a business. From employee productivity to costs to what products are marketed, the seemingly small number of 20% will drive most of what actually happens. When you start paying attention to this pattern, you will notice it pops up all the time. For example, if a manager starts paying attention to who’s interrupting him, eighty percent will inevitably come from the same twenty percent of people.

How Can this Principle Help Your Business?

For a company, 20% of its customer base produces 80% of its business. Pursuing leads that will become part of the 20% group is what will help your company become more profitable. The first step in evaluating future leads is looking at past leads. Analyzing the customers who were once leads and became sales can provide invaluable information about what to look for in future leads.
Analyzing customers’ demographic information, their buying patterns and their locations can all create a picture of the market your company appeals to most. You also want to talk to those customers. Speaking to them about what drew them to your business will not only provide useful information, but will also increase the rapport between the two of you. After you know what worked in the past, you can apply that knowledge to the future.

Applying the Pareto Principle also means sorting through the leads that come in by:

•Removing any leads that are “just looking”

•Rating the remainder based on potential for conversion

Those with the highest potential are the ones that your company should put the bulk of its effort into. They may resemble previous sales or just be farther along in the sales process. This group is the most likely to be the 20% that will produce the best and most results.
Leads are like fish nibbling on your hook. Not every nibble is a big catch. Some have to be thrown back. Applying the Pareto Principle to your business helps your company always have the right bait on its hook. This works to maximize the big catches, making your company more efficient and profitable!

Have you noticed the impact of the Pareto Principle in any areas of your business?