14 Apr The Qualifirst 50-5 Rule

50-5-qualifirst-ruleAt Qualifirst, 50% of our sales come from 5% of our customers.

This is a concept that is similar in tone to the 80/20 rule, also called the Pareto principle, or the Law of the Vital Few which states that roughly 80% of the effects of something comes from 20% of the causes. One application of this in business applies as “80% of your sales comes from 20% of your clients.”

The Law was named after Italian economist Vilfredo Pareto, who, in 1896 wrote that twenty percent of the Italian people owned eighty percent of his country’s accumulated wealth.

For those of us in the food business, we like to believe the legend that Pareto was inspired to observe these proportions when he noticed that 20% of the peapods in his garden contained 80% of the peas. Regardless, the law is still true today.

Our “A” and “B” customers

The 20% of customers who contribute to 80% of our sales spend over $4,000 a year with us. We call these our A and B customers.

Those who spend between $2,000 and $4,000 a year are our C customers, and those who spend less than $2,000 a year are our D customers.

If I had to pick the one thing that I see as having the potential to move the Qualifirst Group towards achieving our goal of doubling our sales in 3 years, it is to put a proper focus on our A and B customers; the top 20% who contribute to 80% of our sales.

Our Pareto plan

Here’s how we plan to implement this:

  1. We will focus our outside and inside sales team exclusively on customers that buy or that have a potential to buy over $4,000.00 a year. This is a low figure and is achievable by any business that wants to partner with us: small, medium or large.
  2. We will provide an excellent customer service order desk to all customers when they phone in. This is a key strategic Qualifirst advantage, and will continue to remain so.
  3. We will send a value added customized email (or text) newsletter/update when it’s time for each customer to reorder.
  4. We will provide the premier specialty web interface in Canada for businesses, making it much easier for other businesses that are seeking top quality food supplies to find us. This will also make it easier for businesses of any size across the country to learn about our products and find answers to their questions at their own convenience.
  5. We will limit some services and advantages that we currently provide to all customers. Some privileges will have to be earned, by partnering with us and spending more than $4,000.00 a year with us.

We are taking these proactive steps to better focus on the customers that contribute to 80% of our sales, while simultaneously providing excellent service to all of our customers.

Qualifirst now has the resources to start implementing this strategy. Our people and our new software will quickly move this strategy forward, so that we can ensure top-level performance for our customers while remaining a profitable and growing company

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