Building Your Business with The 5% Principle

by Dave Kahle

In the 1990’s I came across a book titled, “Everything I Needed to Know About Success I found in the Bible,” by Richard Gaylord Briley. In it, the author put forward an observation that was, at the time, radical for me.  It’s called the “Five Percent Principle.’

       We are all familiar with the Pareto principle, which, when applied to the world of sales, says that 80% of the business comes from 20% of the customers. As a general rule, that 80/20 rule is accurate in lots of different situations.  Whenever there is a large group producing something, 20% of the people produce 80% of the results.

       The “Five Percent Principle” states that five percent of the people produce 50% of the outcome. In the book, Briley notes that in countries, five percent of the population produces jobs, businesses, and the affluence for 50% of the population.  That is part of the reason why, for example, socialist economies always fail. They believe in taxing and discouraging the rise of the five percenters.  Instead, they ought to recognize this natural phenomenon, and encourage the development of the five percenters – they will lead the economy to higher levels.

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       I was struck by those numbers and began to test them in my world of sales forces and sales organizations.  I found the five percent principle to be about as accurate as the 80/20—a fairly accurate rule-of-thumb.  In other words, in sales organizations, five percent of the salespeople produce 50% of the volume.  The same is true of customers – five percent of the customers produce 50% of the revenue.  And industries: five percent of the companies in an industry produce 50% of the volume.

       The concept intrigued me as a marketing principle. One of my objectives was, and is, ‘to make an impact.”  If I could find the five percenters in an industry, and if I could work with them, they would multiply my effectiveness because they would influence fifty percent of the population.

       I began to study the five percenters in my market:  B2B salespeople, and sales organizations.  While my observations were anecdotal, and not quantifiably validated, I still found them substantial enough to become the bedrock for my marketing strategy.

       For example, I found that the “five percenters” among salespeople (whom I began referring to as sales ‘masters') invested in themselves, while the 95% did not.  I’ve often shared my observation that only one in twenty randomly selected salespeople has invested $25 of their own money on their own improvement.  The Sales Masters do, which is one of the reasons why they become five percenters. They have a passion for sales, they see themselves as professionals, and they think deeply about their profession, their competencies and strategies, and their customers.

       Among sales organizations, I made a similar incredible observation... READ THE ORIGINAL ARTICLE HERE.

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