The document discusses applying the Pareto principle to sales data to better understand customer outcomes. It presents a hypothetical example where 33% of customer contacts result in sales, while the outcomes of the other 67% are unknown. The example tracks a sales database over 3 months, showing that focusing follow-up efforts on existing customers in the database, rather than only new leads, can increase overall sales. Applying this approach resulted in a 40% closing ratio over the quarter rather than just the initial 33%.

1. The Paradigm of Pareto
Sales & The Art of War

2. If as we are encouraged to believe,
the Retail Motor industry along with many other
sales environments, benchmark themselves at a
minimum of 33% closing to total contact ratio....
what happens to the other 67% ?

3.  The question is of course is not new and has
invariably been answered vaguely, suggesting
that....
‘...such and such percentage are ‘time wasters’, another
percentage bought an alternate brand, another are
postponing their purchase, some are fleet buyers and
sadly although only very few, buy from a
competitor.’

4. Strangely we use statistics and probability on the
one hand to set the standard and then make
excuses and ‘guesstimates’ to justify them...
In reality we really don’t know the answer........
Largely because all we focus on is the 33% &
partly because, we just don’t care and yet scratch
our heads for novel ideas of how to deliver
exceptional customer service.

5. The chart in Fig 1 is representative of a total
capture of 300 customers for pure
mathematical ease.
We have assumed an industry average of 33%
closing ratio and have assumed 20% ‘wastage’
or 60 contacts, based on Pareto Principals;
leaving almost half or 141 potential customers
out in the wilderness and a large black hole in
the balance sheet.

6. Month 1
Wastage
20%(60)
Data base
47% (141)
Sales
33%(100)

7.  Invariably what we do, on the first day of month 2
is concentrate again on capture, striving to resister
300 customers and achieve our 100 sales of the
previous month.
 As opposed to systematically applying the
principles of economic convention and focussing
most on the wealth already in your possession- the
unspent database from month 1.
 Statistics suggest a dilution of the closing ratio by
50% to 16.5%, nevertheless this would still yield 23
sales from the enquiries taken in month 1; if all
other factors remain at a constant the gross sales
for month 2 would be 123

8. Sales from last months
Month 2 Database
5% (23 sales)
Database from current
month
32%(141)
Wastage from current
month
13% (58)
Sales from current
month
23%(101)
Ramaining database
from last month
27%(118)

9.  Month 3 in the 3 month cycle is by far and away
the most difficult and requires far more
concentration;
 There is still an unspent database of 118 remaining
from month 1, although sales closing ratio is
further diluted to 10% or 12 sales. With sales from
month 2 following the precedent set in the
previous months amounting to 23, the total yield
for the last month will be 135.
 Statistics for the quarter indicate a close to 40%
closing ratio, or 358 sales from a footfall or total
contacts of 900.

10. Sales from month 1 Sales from month 2
database Month 3 database
2%(12) 4%(23)
Wastage from current
month
11%(60)
Reminaing database
from currnet month
25%(141)
Sales from current month
18%(100)
Remaining database
from month 2 Remaining database
from month 1
21%(118)
19%(106)