What is Pareto’s Law?

Originally designed as a model and equation to describe wealth distribution within a given society, Vilfredo Pareto’s power-law probability distribution can be observed across most things within our world (even outside it) today.

Historically, organizations looked to conversational coaching tools to help solve this problem, but are largely missing the mark.

Here are some examples of Pareto distribution:

• The 10 largest cities, representing .0005% of all total US cities, make up 11% of the total population.
• One planet, Jupiter, makes up 71% of the combined mass of planets in our solar system.
• Electric Utility Distribution Reliability (80% of the Customer Minutes Interrupted occur on approximately 20% of the days in a given year).
• In the 22 years Tom Brady has been in the NFL, he has won 31% of the Super Bowls against hundreds of other Quarterbacks.
• Other examples around the world are not hard to find:
  • Clusters of Bose-Einstein condensate near absolute zero
  • The value of oil reserves in oil fields
  • Sizes of sand particles (this one is surprising)
  • Goals scored in Hockey and Soccer by player

The 80/20 Rule 

In business, we often refer to this as the 80/20 rule. Whether it be the 20% of partners who drive 80% of the revenue in the channel, or the top 20% of Sales Development Representatives who drive 80% of the pipeline, the problem remains the same.

Organizations are spending 80% of their total salaries on individuals who account for only 20% of desired productivity.

The Problem

Another way of looking at this might be to reference Price’s Law, by Physicist Derek John de Solla Price. Price’s Law pertains to the correlation between the volume of books on a specific subject, and the number of authors in that specific area of study.

The law stated that fifty percent (half) of the work comes from the square root of the total number of contributors. For example, William Shakespeare is estimated to have sold 4 billion copies of his work. That is more combined copies of his work than the bottom 44,000 authors combined have sold as of 2020.

So the question becomes if a small minority of contributors make up a large majority of the production, how do organizations bring up the rest of the organization? How do we help contributors find success, which leads to more success?

Conversational intelligence tools, call recording tools, sales enablement tools, and many other technologies are being deployed by organizations with the goal of creating effective feedback loops. “Coach this strategy”, “deploy this strategy”, and “measure its effectiveness”.

As a new Sales Development Representative, entering an organization, have you ever looked around and wondered why the top reps always seem to win? And the reps at the bottom stay at the bottom? Here at Abstrakt, we believe sales is a skill and it can be learned. Putting aside personality characteristics or level of education, sales comes down to some core fundamental skills.

The best sales reps are currently looking to tools like conversational coaching to learn from their mistakes. The problem is, when a sales development representative reviews a call where they lost an opportunity, they are listening to their mistakes, not their success. This creates a negative feedback loop.

Success usually leads to more success

The opposite is true for success. Each good thing that happens, tends to lead to more good things that happen. Think about the last time a demo or call went really well. Usually, the turning point of a call can be attributed to a foundational element of success that is built upon. Conversational intelligence tools only help with that if they are in real-time.

• Pre-call research is done ahead of time
• The agenda is properly set
• Introductions were handled well
• Next steps agreed upon based upon the outcome of the call or demo
• Effective discovery questions asked
• Relevant demo parts shown

These may seem like macro elements of a successful demo. But taking a different perspective, one could begin to understand that each successful element of the call built upon itself, multiplying the chances of a positive outcome. Extrapolate that across an entire pipeline, and the good things at a macro level lead to quota attainment.

Conversational Intelligence Tools & The Problem

The problem is that conversational intelligence tools are doing nothing to help reps at the moment when the good things need to happen, and when the positive reinforcement into a positive feedback loop takes place. They only highlight the good things (or bad) after the call has already happened.

That is where real-time conversational coaching comes in. It allows us to focus on the 20% of effort that drives 80% of the results.

That 20% is simply ensuring the core fundamental skills (asking the right questions and objection handling) are second nature, and not to be stressed about.

Whether it is a cold call, a demo, or a support call, leveraging technology to drive the correct behavior and have reps ready on day one begins to lay the building blocks and foundation for a successful, ongoing, positive feedback loop where each core element of sales success is built upon each and every day.