For years, it's been bandied about that 80 percent of real estate sales are accomplished by 20 percent of the top salespeople. Have you ever wondered if it's true, and if it is, how do you get there?

Contrary to popular belief, the 80:20 rule, as it is commonly known, is not a real estate statistic, nor is it even a salesperson's statistic. It wasn't compiled by National Association of Realtors' research, nor is it a purloined pearl of wisdom from a motivational speaker.

The 80:20 rule is actually a variation of the Pareto Principle, a conclusion based on studies by 19th century Italian economist and sociologist Vilfredo Pareto. After studying the economies of several nations, Pareto noted in 1897 that about 80% of the wealth was consistently controlled by about 20% of the population. Pareto called this phenomenon "predictable imbalance."

Twentieth century quality management expert Joseph Juran expanded upon Pareto's conclusion by creating a general rule which became known as Pareto's Principle - that small cause(s) produces larger effects. From the 1950s to the present day, the 80/20 rule has become part of general management principle as people employ it for problems:solutions, risk:reward, effort:results, and other productivity ratios. When applied to sales, it is easy to see how the principle was applied to salespeople - that 20 percent of top producers garner 80 percent of sales.

But how do they do it? There has to be an underlying principle involved that makes the 20 percent more productive, effective, successful, and wealthier than other salespeople.

If you use the 80:20 rule for a few suppositions, you could conceivably run your whole business based on Pareto's Principles. Let's try a few and see how they work.

80% of your closings come from 20% of your farm - Work smarter, not harder. Identify which areas of your farm (church, children's schools, neighborhood associations, etc.) are producing the most leads for you and concentrate more of your time there. But don't desert your other prospects; keep them informed and nurtured with an online newsletter filled with homebuying, home owning and selling tips.

80% of your problems come from 20% of your customers/clients - Are you spending too much time driving unmotivated buyers around? Get those buyers pre-qualified and under contract or tell them to find an agent who can afford to work for free. Are you tired of placating unrealistic sellers? Don't take overpriced listings - you'll save money in the long run. Let another agent spend his/her money trying to beat the market. If clients don't take your advice, make them sign a waiver. And document, document, document every phone call, e-mail, and notation on every transaction.

80% of new leads come from 20% of your marketing efforts - Some ads just won't pay off for a variety of reasons. Direct mail reaches a lot of people but much ends up in the trash. Agents rely on ads and mailers because they can blanket a large farm of strangers. But the cost per lead is high. The reason newspapers are so effective for bringing in business is that brokers have systems in place to capture the leads. Now buyers are using the Internet, but brokers and agents aren't as adept at capturing leads online. If you systemize your Internet leads, you'll be just as successful as if you were blanketing your city with ads, and at a fraction of the cost. Do you give reasons to buyers and sellers to contact you? Do you have an e-mail alert system, complete with responder? do you know how to send listings and other information over the Internet? New products such as cellular phone/PDA's are coming out everyday that are ideal for the mobile professional so that there is no excuse to ever miss a lead from the Internet again.

80% of a problem can be solved with effort toward 20% of the solution - Don't have enough business? Go back to the basics using a few of Juran's results principles:

1. Establish specific goals to be reached.
2. Establish plans for reaching the goals.
3. Assign clear responsibility for meeting the goals.
4. Base the rewards on results achieved.

Juran also had another revolutionary thought which was the basis of his quality management principles - Find out what the customer's needs are and develop products to meet those needs. When you concentrate on the quality of your processes, sales will take care of themselves.

Published: June 7, 2001

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.