Revenue is one view of customer value
A large account may generate substantial revenue and still require unusual discounts, rework or management attention. A smaller account may be profitable and easy to serve. Neither conclusion should be guessed from how demanding the customer feels.
Start with a defined period and consistent cost treatment. Distinguish direct or variable delivery costs from allocated overhead. Contribution is not net profit. Where information is missing, show a range or mark it unknown rather than inventing a precise account margin.
Build a ranked account view
Pareto analysis ranks categories and can show cumulative contribution. For sales, compare at least revenue, contribution after the defined costs, service hours and payment timing. Use the actual distribution rather than forcing twenty per cent of accounts to explain eighty per cent of value.
Be careful with averages. A customer that buys several service types may look attractive overall while one part of the work creates repeated losses. Segment by meaningful work type where the data supports it.
Worked example (illustrative): the biggest invoice is not the best return
Account A generates $100,000 revenue and $80,000 variable delivery cost, leaving $20,000 contribution before fixed costs. Account B generates $60,000 and $30,000 variable cost, leaving $30,000 contribution. A uses 400 service hours and B uses 200.
The contribution per recorded service hour is $50 for A and $150 for B. Those figures do not automatically justify dropping A. Check cost completeness, strategic commitments, capacity, payment reliability and whether the work can be redesigned. But they do challenge the assumption that the largest invoice deserves every concession.
Unlock the rest of this lesson
You're halfway through. Enter your email to read the full lesson, use the exercises and quizzes, and unlock the rest of The Business of Growth library.
Already signed up through The Business of Growth? Use the existing signup to return and unlock this browser. No payment required.
Choose the right account action
Possible actions include improving scope, reducing avoidable rework, agreeing clearer service boundaries, adjusting price where appropriate, developing an adjacent need or declining future work that does not fit. Each requires a customer and commercial rationale.
Do not use a spreadsheet to dehumanise customers. Explain changes clearly and respect existing commitments. A difficult interaction may reflect a problem your business created, not a customer who should be removed.
Check concentration risk
Calculate the share of revenue and contribution from the largest account and the top few accounts. Then ask what happens if one leaves, pays late or demands a major change. A concentrated base is not automatically wrong, but the dependency should be understood.
Diversifying can reduce dependency while adding acquisition and delivery complexity. Treat it as a trade-off, not an instruction to chase any new customer. The replacement work should fit the business rather than merely change a percentage.
Turn the analysis into a useful conversation
Pick one account where the evidence suggests a mismatch. Review the customer's needs, the scope and the operating friction. Propose one change that improves the exchange for both sides. Track whether contribution, effort and customer experience improve.
The 80/20 principle is valuable when it helps you understand where value and risk sit. It is not permission to neglect the remaining customers or assume historical winners will remain winners forever.
Look behind your largest accounts
Use one row per account: anonymous label, revenue, direct service cost in AUD. These are fictional starting figures.
This calculation runs in your browser. Nothing entered here is sent to Greg or the website. Use anonymous labels. Results illustrate the stated assumptions, not a forecast or personal advice.
Your next action
Create a ranked view of ten accounts using revenue, defined delivery cost, contribution, service effort and payment timing. Calculate the largest-account share. Choose one scope or process conversation and one dependency risk to investigate. Keep unknown costs visible.
Your notes stay on this page unless you choose device saving, download them or submit them to Greg below.
Keep names, private customer details and confidential information out of your notes. Device saving is optional. Only the separate Send my lesson work button below sends anything to Greg. There is no account or cross-device sync.
Two questions before you move on
These checks support learning. They do not assess business health, award a qualification or send a result to Greg.
Ask Greg
Ask a question about this lesson or a challenge in your own business. I read submissions and may reply or cover common questions in future lessons. I cannot promise an individual reply to every question.
Lesson: The 80/20 rule in sales: customer value, effort and fit. Please do not include confidential client, financial, health or staff information.
Questions this lesson answers
What is the 80/20 rule in sales?
Rank customers by actual revenue, contribution and effort. Investigate the distribution and dependency risk without assuming an exact 80/20 split.
Work out where your business is getting stuck
The free Growth Diagnostic asks ten questions across acquisition, conversion, relationships, delivery and commercial control. It gives you an area to investigate and three things you can do next.
One complete sample lesson in each stream is fully open. Read halfway into every other lesson, then enter your email to unlock the remaining content, exercises and quizzes across the library. Ongoing marketing emails are optional.