Italian economist Vilfredo Pareto discovered that 80% of Italy’s wealth was in the hands of 20% of the population. This may not have been a revelation to the poorer class of Italians in the late 1800’s, but it did become a concept that has been widely applied in all types of business.
The Pareto Principle basically says that 80% of the outcome is from 20% of the input. In a time management context, you can say that 80% of your time is used by 20% of your clients.
Chances are you could easily name (and recall the phone numbers) for the 10 -20 most demanding clients that you serve. Those might be your 20%. The other 80% of clients are far less demanding and create little time demands.
Of course, if 80% of your income is derived from the sales or service fees of that 20%, then you are less concerned about spending the extra time. Unfortunately, you may be overwhelmed by the demands of the 20% which do not generate the majority of your income.
Using your client contact time well is extremely important to increase your business. While you might think that continuing to provide a high level of service to existing clients is the way to go, you’ll quickly run out of time and fail to generate any new clients.
That’s where Pareto’s Principle works against you. As you bring in new clients to your business, you want to transition them to the 80% that require less service demands as soon as reasonable so that you have time to add new clients.
The first step is to analyze your client contact time for several days, preferably for one week. Just keep a notepad by your desk or an open file on your computer. Log your time with each client and a brief note about the conversation.
This will cause you to be more aware of time wasted in conversations with clients. Sure you want to be friendly and ask about their family, business, etc, but keep it short. As you get to know your clients better, it’s easier to spend too much time chatting about non-business matters.
You need to find a balance between being too curt and distant versus too much talk about trivial things. If you reduced each of these conversations by 10 minutes, you could reclaim another hour easily, maybe more.
The second step is to structure your day for client contact. Even if your job is to be on the phone all day, make the effort to group your calls. Plan to make new client calls in the morning when you are fresh and enthusiastic. Set aside the afternoon for current client follow-up calls.
If you have any problem client calls to make, group those in a one hour block and get it over with at one time period. Decide in advance how much time you want to spend on each type of call, and then time yourself. As you get accustomed to the flow of each type of call, you will begin to stay within the scheduled time naturally.
Finally, if 80% of your revenue or income consistently comes from 20% of your clients, consider hiring an assistant to work on some of the less important details in serving the other 80% of your clients.
That frees your time to spend with the 20% of clients who are supporting most of your lifestyle. If you can make more money by working with fewer but better-qualified clients, then your time spent with them, no matter what you chat about, is time well spent.