Most people have heard of the 80:20 rule. The most common application of this rule is to sales forces: 20% of the sales people in an office bring 80% of the office’s sales revenue. But the 80:20 rule has deeper, universal meaning most don’t understand. We can understand the rule more by learning what it fundamentally means. Then we’ll see it can have a huge impact on our productivity as real estate professionals. Here’s how.
In 1906 an economist named Vilfredo Pareto noticed 80% of Italy’s farmland was owned by 20% of the country’s population. When he saw 20% of his garden’s peapods yielded 80% of his harvest, he realized he may have found a universal principle. His intensive research later proved his hypothesis correct. The basic principle he discovered is this: 80% of our results come from 20% of our actions. Conventional wisdom believes only time and effort deliver results, but according to the Pareto principle, only a fraction of our actions (20%) yields the great majority (80%) of our results.
The flip side of the Pareto principle is 80% of our actions yields 20% of our results. I challenge you to prove this to yourself by keeping a detailed diary for a single day of everything you do. Don’t do anything different just because you’re keeping a diary. Just do what you’d normally do. I guarantee you’d fire yourself if you were your own boss once you see how unproductively you typically spend your day.
The most valuable ways a real estate professional can spend their time is by developing prospects, getting listings, and leveraging other people’s time and talent. Take a look at your typical day and ask yourself how much time you’re spending on any of these three activities. Out of the three most real estate professionals spend the least time leveraging other people. In other words, they fail to use other people to handle the minor but necessary tasks of running a real estate business.
The most common objection to leveraging other people is “I can’t afford it” or “I don’t have the sales to justify hiring an assistant”. Here’s a simple way of looking at the 80:20 principle for your daily activities. Suppose you have time each day to do 20 tasks. You don’t have an assistant, so you have to do all the tasks yourself. However, only 1 out of every 5 tasks you did contributed to your sales volume. 4 out of 5 tasks were administrative or otherwise not contributing directly to new sales. That means you’d accomplish 4 sales tasks per day. In a 6 day work week that’s 24 tasks per week. Now let’s say you hired someone part time to take care of just 1 of your 4 daily administrative tasks. Now you could complete 2 sales tasks out of every 5 tasks you did. That means your time devoted to sales activities would double. You’d accomplish 8 sales tasks per day or 48 sales tasks per week. Wouldn’t the extra sales revenue quickly pay for the cost of hiring that assistant and make you a lot more money?
Learn more about how to maximize your selling skills in my course Excelling In The Real Estate Profession. This course has been approved by the Registrar, REBBA 2002 to qualify for 9 credits.
