Ever Get Sick Of The 80/20 Rule Being Invoked As Proof Of A Job Well Done?
Well, if your business model is reactive sales and hunting for the next customer product purchase, that could be the case. But if your model is demand creation and proactive customer management, then I doubt you&'ll see even a minor blip in the improving economy we are in today.
I&'ve talked about it before, but the ultimate goal for solution providers ought to be to make their organization invaluable by understanding their customers&' business. Only by having the type of relationship in which you are a trusted adviser whose influence can redirect customers&' thinking on IT deployment do you ultimately become invaluable to vendors as well.
Solution providers that consider their relationship with manufacturers more important than their relationship with customers are likely to look to the vendor to create demand in the markets they serve.
Solution providers that understand their customer&'s business can see ways to improve that business with creative technology solutions. If you can show them how to enter new markets, increase share with their current customer base or reduce costs by deploying your solutions, they will spend money.
It&'s the difference between demand creation and demand fulfillment. It means that instead of being reactive to a customer&'s product purchase request, you are proactive in helping the customer manage their IT investment by getting the most out of it and improving their own business position through the use of technology.
When I talk to vendors and they tell me that 20 percent of their channel is doing 80 percent of the business, I always question why. And I truly wonder how much of that top 20 percent is really creating demand vs. merely fulfilling demand. Is the top 20 percent that good and the bottom 80 percent just inept?
I would bet there are chunks of the 80 percent that are creating demand for other vendors, and they look at those suppliers they do only a small percentage of business with as fill-ins.
My point is that the 80/20 rule is a bunch of you-know-what. It&'s a lazy answer to a problem that can and should be addressed by both sides. It&'s a lot easier for management to simply position their business as fitting the norm by citing the 80/20 rule. By doing so, there is little need to address the issue and figure out a way for the 80 percent to drive more business.
This is as true for solution providers as it is for vendors.
If 80 percent of your business is coming from 20 percent of your customers, the question you need to ask is, “How do I not only grow the business with my top 20 percent, but the remaining 80 percent as well?”
I&'m not suggesting that the answers to all of this are easy. What I am suggesting is that over the long haul the truly great companies in this business—be they vendors or solution providers—don&'t allow themselves to believe they are successful because 80 percent of their business comes from 20 percent of their customers. Instead, they focus on a larger base and ask themselves how they can do better with as much of it as they can handle.
If you concentrate your efforts on the 20 percent of the customer base you are doing best with, then of course you can prove the 80/20 rule. If you cast your net wider, however, the likelihood for growth is greater and your revenue base will be more diversified. That&'s never a bad thing.
Make something happen. I can be reached at (781) 839-1202 or via e-mail at [email protected].