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Add You - How To Use A Pareto Analysis As A Sales Management Tool
Pricing is one of the most difficult and frustrating duties a manager must deal with. Pressure comes from all sides. Both the sales force and the customer base can be extremely vocal. Managers never hear that their prices are too low. They usually hear that the competition will provide equal service and quality for a lower price.This question plagues many managers: What should the manager's role be when it comes to pricing? Some managers exert almost total control, while others abdicate pricing decisions to the sales
Key Points:
Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
List the problems you face, or the options you have available
Group options where they are facets of the same larger problem
Apply an appropriate score to each group
Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
*This is only one application of this important 80/20 principle. It shows the lack of symmetry that almost always appears between work put in and results
It is a popular verse that all great technological advancements had been a child of necessity. During the 1980s, the world witnessed a revolution in telecommunication that changed the shape of the world. It was public access to the internet or more specifically the birth of E-mail. Since then the technology has never looked back. It has been enhanced with a speed of wild tiger running at the peak of his pace. Technology acquired the attention and changed the lifestyles of everyone from home users to large enterprises. How co
It uses the Pareto principle - the idea that by doing 20% of work you can generate 80% of the advantage of doing the entire job*. Pareto analysis is a formal technique for finding the changes that will give the biggest benefits. It is useful where many possible courses of action are competing for your attention.
How to use the tool:
To start using the tool, write out a list of the changes you could make. If you have a long list, group it into related changes.
Then score the items or groups. The scoring method you use depends on the sort of problem you are trying to solve. For example, if you are trying to improve profitability, you would score options on the basis of the profit each group might generate. If you are trying to improve customer satisfaction, you might score on the basis of the number of complaints eliminated by each change.
The first change to tackle is the one that has the highest score. This one will give you the biggest benefit if you solve it.
The options with the lowest scores will probably not even be worth bothering with - solving these problems may cost you more than the solutions are worth.
Example:
A manager has taken over a failing service center. He commissions research to find out why customers think that service is poor.
He gets the following comments back from the customers:
Phones are only answered after many rings.
Staff seem distracted and under pressure.
Engineers do not appear to be well organised. They need second visits to bring extra parts. This means that customers have to take another day off work to be there a second time.
They do not know what time they will arrive. This means that customers may have to be in all day for an engineer to visit.
Staff members do not always seem to know what they are doing. Sometimes when staff members arrive, the customer finds that the problem could have been solved over the phone.
The manager groups these problems together. He then scores each group by the number of complaints, and orders the list:
Lack of staff training: 6: 51 complaints
Too few staff: 4: 21 complaints
Poor organization and preparation: 2 complaints
By doing the Pareto analysis above, the manager can better see that the vast majority of problems (69%) can be solved by improving staff skills.
Once this is done, it may be worth looking at increasing the number of staff members.
Alternatively, as staff members become more able to solve problems over the phone, maybe the need for new staff members may decline.
It looks as if comments on poor organisation and preparation may be rare, and could be caused by problems beyond the manager's control.
By carrying out a Pareto Analysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a new computer system.
Key Points:
Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
List the problems you face, or the options you have available
Group options where they are facets of the same larger problem
Apply an appropriate score to each group
Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
*This is only one application of this important 80/20 principle. It shows the lack of symmetry that almost always appears between work put in and results
He stood, gripping the sides of the counter, his fingers white knuckled from the strain. I'd seen my boss, Mr. Burke, stand there countless times before, studying the inventory, looking for just the right item for the customer, but I'd never seen him like this; his face and neck a livid red, his neck muscles strained, beads of sweat on a brow that only moments before had been dry.I heard Allison, his assistant whisper, "Go get Mrs. Burke." Someone scampered away, relieved to escape the tense scene. I stood there fr
The first change to tackle is the one that has the highest score. This one will give you the biggest benefit if you solve it.
The options with the lowest scores will probably not even be worth bothering with - solving these problems may cost you more than the solutions are worth.
Example:
A manager has taken over a failing service center. He commissions research to find out why customers think that service is poor.
He gets the following comments back from the customers:
Phones are only answered after many rings.
Staff seem distracted and under pressure.
Engineers do not appear to be well organised. They need second visits to bring extra parts. This means that customers have to take another day off work to be there a second time.
They do not know what time they will arrive. This means that customers may have to be in all day for an engineer to visit.
Staff members do not always seem to know what they are doing. Sometimes when staff members arrive, the customer finds that the problem could have been solved over the phone.
The manager groups these problems together. He then scores each group by the number of complaints, and orders the list:
Lack of staff training: 6: 51 complaints
Too few staff: 4: 21 complaints
Poor organization and preparation: 2 complaints
By doing the Pareto analysis above, the manager can better see that the vast majority of problems (69%) can be solved by improving staff skills.
Once this is done, it may be worth looking at increasing the number of staff members.
Alternatively, as staff members become more able to solve problems over the phone, maybe the need for new staff members may decline.
It looks as if comments on poor organisation and preparation may be rare, and could be caused by problems beyond the manager's control.
By carrying out a Pareto Analysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a new computer system.
Key Points:
Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
List the problems you face, or the options you have available
Group options where they are facets of the same larger problem
Apply an appropriate score to each group
Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
*This is only one application of this important 80/20 principle. It shows the lack of symmetry that almost always appears between work put in and results
College students and new graduates often feel they have nothing to include on a resume when conducting job search and for using with job applications. College students' work experience is often seemingly unrelated to their job targets, and aside from that, the only information left to include is education. However, while this may seem like the case, it simply isn't so!Transferable SkillsOne method of approaching a college student or new graduate resume is to focus on transferable skills. These skills are
Staff seem distracted and under pressure.
Engineers do not appear to be well organised. They need second visits to bring extra parts. This means that customers have to take another day off work to be there a second time.
They do not know what time they will arrive. This means that customers may have to be in all day for an engineer to visit.
Staff members do not always seem to know what they are doing. Sometimes when staff members arrive, the customer finds that the problem could have been solved over the phone.
The manager groups these problems together. He then scores each group by the number of complaints, and orders the list:
Lack of staff training: 6: 51 complaints
Too few staff: 4: 21 complaints
Poor organization and preparation: 2 complaints
By doing the Pareto analysis above, the manager can better see that the vast majority of problems (69%) can be solved by improving staff skills.
Once this is done, it may be worth looking at increasing the number of staff members.
Alternatively, as staff members become more able to solve problems over the phone, maybe the need for new staff members may decline.
It looks as if comments on poor organisation and preparation may be rare, and could be caused by problems beyond the manager's control.
By carrying out a Pareto Analysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a new computer system.
Key Points:
Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
List the problems you face, or the options you have available
Group options where they are facets of the same larger problem
Apply an appropriate score to each group
Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
*This is only one application of this important 80/20 principle. It shows the lack of symmetry that almost always appears between work put in and results
In the first quarter of 2006, the Chinese economy grew 10.2%. With the increase in growth in the Chinese market and the constant continued growth being forecast for the future, it's wise for western businesses to research what the Chinese market wants and needs before dipping their toe into the Chinese market. Here are the current trends in the Chinese marketplace:FoodWith such masses of people in China and a steadily growing population, it's no wonder that food and food service is one of the biggest markets in
Poor organization and preparation: 2 complaints
By doing the Pareto analysis above, the manager can better see that the vast majority of problems (69%) can be solved by improving staff skills.
Once this is done, it may be worth looking at increasing the number of staff members.
Alternatively, as staff members become more able to solve problems over the phone, maybe the need for new staff members may decline.
It looks as if comments on poor organisation and preparation may be rare, and could be caused by problems beyond the manager's control.
By carrying out a Pareto Analysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a new computer system.
Key Points:
Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
List the problems you face, or the options you have available
Group options where they are facets of the same larger problem
Apply an appropriate score to each group
Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
*This is only one application of this important 80/20 principle. It shows the lack of symmetry that almost always appears between work put in and results
Credit cards have been used for the last fifty years, but there are major credit card companies that have led the way. American Express, Diners Club, Visa, and MasterCard were the initial major credit cards, going nation-wide in the 1960s. The credit card itself has an individual credit card number which identifies which company or bank issued the card, and the cardholders individual credit card account number.The back of your major credit cards have a magnetic stripe that is called a magstripe. The magnetic part
Key Points:
Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
List the problems you face, or the options you have available
Group options where they are facets of the same larger problem
Apply an appropriate score to each group
Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
*This is only one application of this important 80/20 principle. It shows the lack of symmetry that almost always appears between work put in and results achieved. This can be seen in area after area of competitive activity. The figures 80 and 20 are illustrative - for example, 13% of work could generate 92% of returns. Vilfredo Pareto was an Italian economist who noted that approximately 80% of wealth was owned by only 20% of the population. This was true in almost all the societies he studied.
Copyright © 2007 Jonathan Farrington. All rights reserved
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