Rule 20 70 10: what is it and how to apply it in managing the sales team?

Managing a commercial team is definitely not a simple task. Being a sales leader presupposes facing a series of challenges on a daily basis. Maintaining productivity, stimulating employee growth and having an engaged team and top performance are some of them. It is in this context that rule 20 70 10 emerged: as a way to help managers in this mission.

The methodology was created by executive Jack Welch, who for many years ran General Electric. The prestigious CEO considered that a management focused on cultivating the high performance of professionals is essential for business success.

Since this involves defining who reward for their results, who encourage and who dispense to be less than expected, Welch created the Rule 20 70 10. This leadership style can be very promising and its principles are very useful to support decision decisions made by managers — even if they are not followed exactly.

What is the 20 70 10 rule and how does it work in the sales area?

Generally speaking, the 20 70 10 rule is a management resource aimed at improving the organization’s results. We can think of the principle as a foundation for building a healthy process to take care of the sales team and preserve the business’s vitality curve.

The system serves so that the manager can differentiate between his salespeople, dividing them into different groups — each with a specific form of treatment. Let’s understand better?

Reward the best 20%

The first number of the designation refers to the top performance category. The manager must place in this group the salespeople who represent the best 20% of their team. These employees are usually those who, in addition to having an excellent performance, also have a high level of engagement with the company.

As such, Welch believed that these 20% should not only be financially rewarded, but also well-recognized for their work. That is, they must really be “loved” within the organization. The goal is to ensure that they work even harder and that they set an example for the rest of the team.

See more: Adaptation for remote sales: 8 management tips to accelerate or permanently improve this process of change

Maintain and boost the 70% that are on average

The most numerous group would be that composed of commercial representatives considered “average”. Two subcategories fit here: those that do not perform very well but are very much in line with corporate values; those that have a reasonable performance, but need to create a greater affinity with the organization.

With this group, managers must work in order to keep them, but also to improve the points that need attention — as we will see later.

Remove the 10% that respond below expectations

Finally, the last group is probably the one that managers tend to have the most difficulties to deal with, after all, it is always difficult to carry out the dreaded layoffs. However, according to Welch, to keep the team healthy, it is necessary to identify salespeople who are performing below expectations and remove them from the team.

Usually, in most cases, what the leader will notice is that these 10%, in addition to not achieving good results, are also precisely those who do not share the company’s values. So it doesn’t really make sense to keep them in play.

Why is rule 70 20 10 a good tool for managing teams?

In fact, many times, when there is good leadership, this is already an almost natural process in companies. However, rule 70 20 10 can be very important because it makes it possible to systematize the method and allows for informed decision-making.

In addition, in addition to equipping sales managers, the tool also brings other benefits for management and, consequently, for sales. Here we list some of them:

  • Drives sellers to reach their maximum potential;
  • It defines very clearly who should be the inspiration for those who have not yet achieved their best performance;
  • Stimulates the evolution of the team’s performance standards;
  • Ensures the productivity and quality of the team as a whole;
  • It promotes the search for better results and, thus, helps in the constant growth of the business.

Rule 20 70 10 in sales teams: see 5 tips for putting it into practice effectively

Welch believed that the leader’s role is to ensure that their salespeople reach their peak and become top performers. Some managers find their leadership style a bit cruel. However, it is true that the executive’s results as CEO of GE demonstrated that he can actually be very effective.

Therefore, even if it is not applied in an integral way and exactly the same as Welch proposes, the 20 70 10 rule should at least serve as an inspiration for a healthy and efficient management of sales teams.

Here are some tips so that the tool can be used in a useful way to improve the team’s results. Check out!

1. Establish objective evaluation criteria

For the application of the 20 10 70 rule to work, it is crucial to establish clear criteria and objective and effective performance review mechanisms. Therefore, ideally, you should use reliable and rigorous productivity indicators to differentiate sellers.

You can follow through the CRM system information about each seller such as:

  • Conversion rate
  • Average sales ticket
  • Number of commercial activities (calls, proposals, visits, etc.)
  • Total number of sales
  • NPS of conquered customers
  • Among other data that are relevant to your business

2. Count on the support of the company’s board

It is also very important to be very well aligned with the company’s general guidelines regarding this leadership style. Therefore, the tip here is to meet to explain the method and list the objectives to be achieved with the application of the rule, in order to guarantee the unrestricted support of the organization’s board.

3. Focus on engaging part of the 70% that is less tuned

Remember the subgroup that is part of the 70% and that performs well, but is not so aligned with the company’s values? Believe me: they will perform even better if they are completely “in” the organization. Therefore, it can be very interesting to develop work in this direction together with HR .

Among the actions that can be applied are specific training, mentoring with more senior professionals in the company, sales coach, external courses and incentive campaigns.

See more:  What does a sales leader need to develop further in 2021?

4. Invest in training for salespeople who need to improve

On the other hand, do you know that part of the 70% that is well engaged, but has a performance that still leaves something to be desired? The secret here is to invest in sales training focused on the sales routine! These salespeople are already aligned, they just need a push to improve their performance and reveal their full potential.

In this case, focus on sales fundamentals and you will certainly get better results!

5. Work to expand the 20%

What if the 20% of top performers became 30%, 40%? The work with the “average” group must have exactly this purpose: to increasingly increase the performance of the team as a whole, ensuring that everyone is giving their best.

Therefore, it is also essential to try to find effective and attractive ways to reward the best. The manager’s role in this regard will be crucial to increasingly improve the quality and results of the sales team.

How well do you know your sales team’s motivations?

When we talk about alignment with the company’s culture, it is important to remember that an important motivating factor is that the salesperson feels that they grow along with the organization. And how does this happen? To the extent that he also manages to achieve his personal goals, just as he seeks to do with the company’s goals.

So it’s worth combining the Funnel of Dreams methodology to rule 20 70 10 , which is available for free online to help boost your results.