Focus On The 80/20 Rule To Win New Business bY Byron G. Sabol (This article was publisehid in Professional Marketing Magazine) When Alfredo Pareto discovered his now famous 80/20 rule in 1897, in all likelihood he didn’t have professional service firms in mind among those who could benefit most from his findings. Known as Pareto’s Law; Pareto’s Rule; the Principle of Least Resistance; and the Principe of Imbalance, Pareto discovered that approximately 80% of an organization’s revenue is generated by approximately 20% of that organizations clients and customers. While that message is well known, how many professional firms apply that logic to their business generation and client retention programming? The 80/20 Rule offers significant insight into improving a firm’s bottom line performance. Insight #1: Focus on providing the highest quality technical work product and service delivery to the top 20% of your clients, while identifying expansion opportunities among those clients. To do this, firms need strategic plans for the majority of the top 20% of their clients to ensure that they delight, keep forever (when feasible), and expand services to those clients. Criteria to be used when selecting clients among the top 20% include the following: a client that is using more than one service provider, which means the client has multiple service needs; client that is pleased with the service firm’s work product and service delivery; a client whose client partner will not block the service strategy effort; a client that, preferably, offers growth opportunities; a client within an industry for whom the service firm’s fee-earners want to work; a client capable of paying the firm’s fees. Creating a client service strategy means bringing fee-earners — primarily partners — together to share information for the purpose of producing a written plan of action identifying specific action steps the fee-earners are to take. Two primary goals of the effort are to enhance the relationship with this client and to identify achievable cross marketing objectives. Depending upon the complexity of the services provided the client, the size of the client organization, and the number of contacts within the client organization, the draft of a strategic service plan can be created between 4 and 6 hours. The clients selected for this effort would likely exclude those with one-off assignments that may have generated turnover within the top 20% of the firm’s client sort, but offer no future growth opportunities for the service firm. The means to determine if the clients are receiving the highest quality work product and service is to ask them. Most of the top 20% of the firm’s clients should be visited annually by senior management prepared to conduct effective client reviews. Those conducting the reviews should be individuals who are neutral to serving the clients. The service firm chairman or managing partner should be conducting reviews of the most important of the 20% of the firm’s top clients. Insight #2: Accountability is an important ingredient to growing relationships with existing clients. Many UK and European service firms lack that needed accountability. During a professional service firm marketing conference in Brussels last October, I asked 33 managing directors and marketing partners from eight European countries how many utilized performance reviews for their partners. The response generated was 3 of the 33. While speaking at a world congress in Vancouver, BC in June of this year to 500 intellectual property law firm lawyers from some 20 countries, a similar question that I posed produced a very similar 10% response. Firms with a systematic method for holding partners accountable for growing client relationships through the use of performance reviews of those partners are more successful in generating business than firms that do not have accountability built into the fabric of the firm. Insight #3: The 80/20 Rule calls to attention that 80% of what we achieve comes from about 20% of that effort. This means there is a significant imbalance between the actions fee-earners take to produce new business and the new business resulting from those actions. This also means that the effort that goes into the 80% of activities produces marginal results. All too often, fee-earners — particularly partners — revert to those 80% of activities that they want to do and feel comfortable doing, but all too often produce little new business. These activities often include speaking because the fee-earner enjoys speaking, writing because the fee-earner enjoys writing articles, rather than thoroughly examining those activities that actually produce new business and repeating those activities. If speaking and writing produce new business then do them. If they do not produce new business, do them because you enjoy the experience, but not at the expense of time that should be devoted to those activities that should be devoted to existing clients first and all other prospects later. The 80/20 Rule supports the highest and best use of fee-earners time and energy. By following the Rule, fee-earners can reduce their time devoted to misplaced activities, while increasing their efficiency to generate new business and expand relationships with all-important existing clients. Byron G. Sabol is an international speaker and business generation consultant based in Orlando, Florida. He can be reached at +(407) 909-1572 - E-mail: Byron@byronsabol.com - www.byronsabol.com