High-performance salespeople don’t waste their time chasing after low-probability deals that are unprofitable, unqualified, are not in the buying window, don’t have a budget, or can’t buy. High-performance salespeople know they will close more deals and make more money when they know how to identify and pursue the Ideal Qualified Prospect.

The sweet-spot, the wheel-house, or the strike zone, regardless of what you call it, sales professionals understand the law of probability and focus their attention on those sales prospects that represent their best opportunity to generate profitable new business.

The 80/20 Rule

The Pareto Principle is named after Italian economist Vilfredo Pareto who noted the 80/20 connection while at the University of Lausanne in 1896, where he showed that approximately 80% of the land in Italy was owned by 20% of the population. The Pareto Principle, more commonly known as the 80/20 rule, has become an axiom of business management that “80% of sales come from 20% of clients.”

The 80/20 Rule plays out frequently in a Radio station. Eighty percent of the advertising revenue generally comes from 20% to 30% of the client base. To understand the value of developing an Ideal Qualified Prospect profile, you must look at the inverse of the Pareto Principle. Only 20% to 30% of the Radio station’s revenue is coming from 70% to 80% of the client base. In other words, the Radio station’s sales staff is spending the majority of their time selling only a small portion of the total advertising revenue.

Developing the Ideal Qualified Prospect profile will help the Radio station management and sales team recognize this misallocation of effort and begin to make the appropriate changes to put the focus of their efforts on more profitable opportunities with a higher probability of success.

A Sample Radio Station Analysis

After reviewing hundreds of Radio stations, a familiar pattern emerges. The following description represents a typical Radio station profile in a market size 150 and above.

• The market cluster has four to five different Radio stations.
• During the past year, there have been approximately 500 to 800 different advertisers, total.
• The highest billing advertiser spends over $100,000 a year.
• The smallest billing advertiser spends less than $100 a year.
• The average client spends less than $10,000 a year.
• The advertisers come from 80 to 90 different product categories.

Looking Through the Lens of the 80/20 Rule

For the review to be as candid as possible, you must include every single customer that had a schedule on the air in your traffic system. Regardless of the dollar size of the transaction, each deal consumes some of your time to process and execute. Now is not the time to cherry-pick which transactions count and which ones don’t.

• Eighty percent of the total annual revenue comes from 25% to 35% of the customers.
• There are approximately 100 to 130 customers in the top percentages.
• The average client in the top percentages spends $25,000 to $30,000 a year.
• The highest billing advertiser spends over $100,000 a year.
• The smallest billing advertiser spends approximately $9,000 (not less than $100).
• Eighty percent of the revenue comes from less than 20 different product categories.

Using the data, the beginning of your Ideal Qualified Prospect profile is a business that can spend $25,000 from one of the top 20 product categories. You must do further qualitative analysis to determine if additional criteria for the profile is warranted.

You will surely find excellent prospects worthy of a full sales effort that don’t neatly fit your Ideal Qualified Prospect profile. But if you define your strike-zone and focus your efforts, you will see an increase in your closing ratio and more profitable sales.

The Bottom Eighty Percent

The biggest gain in productivity will come when the Radio station stops pursuing the bottom 70% to 80% of the customers who only contribute 20% to 30% of the station’s total revenue. You must develop a profile of the type of prospect to avoid.

• Twenty percent of the bottom 80% spend less than $1,000 a year on advertising.
• The bottom 20% to 30% of the client list contributes less than 2% to 5% of the total revenue of the cluster.

One-Time Packages

As you look at the results of your analysis, you will see that the low end of your report has many one-time advertisers who bought a special advertising package like the Don’t Drink and Drive campaign over the Memorial Day Weekend. There is nothing inherently wrong with a package advertising plan. There are good packages, and there are bad packages. Start by selling the Don’t Drink and Drive campaign as an annual plan that includes New Years, Memorial Day, the Fourth of July, Labor Day, Thanksgiving, and Christmas.

Get Started

Run the report from your traffic system. Besides just the numbers, look for patterns and commonalities among your best customers. Try to develop an understanding of the triggering events in the selling process that resulted in the sale.

Once you have gathered sufficient information, develop a profile of the prospect that is most likely to do business with you and, over the long term, be a profitable, happy customer.

If you would like some help, please let me know.

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