Home : Blogs : Steven Shewell, The Mortgage Maverick : Steven's Blog

Improve Your Profits With the 20/50/30 Rule!

You've heard of the Pareto Principle right? If not, it's the 80/20 rule that economist Vilfredo Pareto developed through his research.
I bet you haven't heard of the 20/50/30 Rule, though... right? It works hand-in-hand with the 80/20 rule for leads and is more centered on lead qualification.

The basic premise is this:

20% of the prospects that you contact will do business with you easily. There are several reasons why, but the rules on handling them are the same regardless.

1. Get out of their way, and make it as easy as possible for them to do business with you.

2. They believe what you say is true and have an overall good feeling about you.

3. They believe you are skilled at what you do and trust that you can deliver what they need.

4. These types of leads are like Gold - get out of your own way and get to the point.

What should you do? Close the deal!!!

The next 50% of prospects are on the fence. They could go either way, and you have to work with them to make sure they fall on your side of the fence. Here are some ways to help your cause:

1. Make a compelling presentation with confidence.

2. Make sure you tailor your presentation to fit their individual behavioral style.

3. Help break the ice with them, so they actually begin to like you.

4. Make sure that you communicate effectively the benefits that you bring to them.

What should you do? Close the deal so that you can then move them to the 20% that will do business with you easily.

The last 30% of prospects are problems waiting to happen. Their characteristics are:

1. They are highly demanding.

2. Usually have limited respect for you.

3. You will expend tremendous energy with them.

4. You will expend huge quantities of time with them.

What should you do? Throw these leads away - the conversion rate is too low, and the energy wasted is very high.

You need to take a VERY hard look at the prospects with which you are working. Decide who is stealing your time and who you should working with to close more deals. Measure their actions against the above listed guidelines and act accordingly.

You will end up with more money in your pocket and more free time to enjoy your life.

Just thought you should know.

Have a profitable day.

Steven

Posted by Steven Shewell, The Mortgage Maverick on 07/10/2007 06:26 AM

Comments (13)

13 Comments on Improve Your Profits With the 20/50/30 Rule!

JUL

2007

Great refresher tips. Determine what type of prospect you are dealing with and deal with it!

Yes, we go through a process to determine if we are talking to one of those 30% people. If we determine, yes they are just going to be problems, we throw them away and let someone else deal with them. I believe in this so much that my mother is one of those in the 30% category. When she is ready to sell her home, I will not be the broker to list it, someone else can!!

If this concept is true, wouldn't it make the most sense to spend all of your prospecting time trying to locate clients that fall into the 20% of clients that will do business with you now? Spending limited time and resources trying to convert the majority of prospects into clients when there are already people out there who don't need any convincing to do business with you seems counter-intuitive.

Amen! to the last 30%-alot of buyers don't value your time! I'm a 4 year agent and it's taken me up until now to figure out what to do with the 30%.

Hey Steven,

Good points. I would like to add that it seams like the biggest problems come from the smallest deals.

I can agree with that. There are some people who just need to be thrown away. I worked with one couple for 8 months, some weeks it was 4 or 5 hours of my time, other weeks 1 hour, but the point is they were high end and actually did write a offer on a house which was possible, only 10K off on a 800K house. Problem was the house got 2 other bids that day that were over ask and so my people did not even get a shot. Anyway the wife had breast cancer and ended up going in for treatment, it was her 2nd time and her husband asked to me to lay low for a month or two while she recovered. I complied. After about 6 weeks I sent them a e-mail and then another after 7 and then at the 8th week I gave them a call, VM sent them a e-mail again as well as a card. I kept this up for a few more weeks, ocationally calling them.

I was with a friend one day and I decided to call them from my friends phone, they answered, I talked with them for a bit, Oh, we purchased a new construction home from Toll over in such and such new project. I said to them, I thought that we were working together on this, I most certainly could have helped you with this builder as well, and it would not have cost you anything extra. Their response, we have worked with this builder in the past so we don't need you!! I said, I put in a couple of hundred hours of unpaid time trying to do exactly what you wanted, even marketed to a neighborhood that you said was the only neighborhood you would live in becouse you commited to working with me and were commited to purchasing a home in our area. They said, Well that is just life isn't it. By the way he is a executive VP at Citi Group. If that is the type of people they have running the show, they get no business from me.

Steven, great post! I am a big preacher of the 80/20 rule, but hadn't heard of the 20/50/30 rule.

Steven -- I gave your post a 5. I believe I knew this intuitively but you put it to words so very well. Thanks for sharing. Aloha

JUL

2007

What I have been trying to say to myself for a while now :) Thanks for clearing it up!

Lexa

JUL

2007

Steven- I hope it gets easier to sort through which is which. I've wasted lots of time with some folks who would never be ready to buy. I think it is a lesson everyone goes through, but it is still hard for me to decide whether they are a 50 or a 30.

JAN

2008

Thanks for the lesson on the 20-50-30 rule... appreciate you sharing this info.

Thanks for sharing the info.I will sort out my prospects and see where they belong.

Steven - a post worth bookmarking.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?