b'By Frank DallahanTHE PARETO PRINCIPLE REVISITED Readers of The Retail Jeweler may recall references in past issues and articles to the principle of the 80/20 rule, also known as the Pareto Principle. This principle holds, for example, that 80% of sales will flow from 20% of the product. If you are a retail jeweler, 80% of your business will be written by 20% of your sales team. The Pareto Principle was named after the esteemed Italian economist, Vilfredo Pareto, who originally observed,20%80% 80% of the land in Italy was owned by 20% of the population. In fact, in thisof product of salesissue an article by David Brown of The Edge, once again reiterates the principle behind the 80/20 rule. Over time, this principle has become an axion of contemporary business management theory and practice. However, unlike other principles, the Pareto Principle is merely80%20% anobservation.Mypurposeinthisarticleistoobserveof your business of sales teamthat retail jewelry may not be as a likely follower to the Principle as Mr. Pareto originally thought.InmyexperiencewithLenox,ArtCarvedandKrementz,allKnowledgeofandawarenessofyourcustomersislikely jewelrymanufacturingcompaniesandtheotherwholesalethemostimportantkeytosuccessfulrelationshipbuilding. product centric companies the 80/20 rule held true. 80% ofInsights into a clients taste level and style preferences offers sales did flow from 20% of the product line. However, of late,a jewelry retailer into the clients personality. Keeping detailed Ive seen the exception to this rule become more prevalentand careful records will provide the clues to the customers and widespread especially in the retail jewelry business. Whenproduct/designpreferences.Everyretailerjewelerdepends I would discuss this topic with jewelers, they would usuallyon clients returning for that next anniversary or birthday gift relate a story of the so called good customer who wouldopportunity.Observingsuccessfuljewelersnavigatethe express the concern that they would not like to see what theyselling process smoothly is truly a thing to behold. From the were about to purchase, which was a unique designer creation,welcome and greeting, to the casual conversation during the appear on another member of the of their social circles neck,sales process, up to and including the close of the sale, all wrist,orfinger.Suchanincidentwouldresultinaserioushave to be done naturally and easily.breach of trust for the jeweler. And more importantly, it would have the effect of losing that customer for a long time if notThiskindofsellingtakestimeandpatience.Itcannotbe forever. No jeweler would knowingly risk a good customersrushed or hurried. And, it takes a particular level of sales skill business knowing this.to do it effectively. The Pareto Principle may have application todifferentsegmentsofyourbusinessasillustratedabove Somehow, owning the consequences of this theory does notwith diamond tennis bracelets. diamond stud earrings, and seem to apply to diamond merchandise as much as it does tostandard gold jewelry. colored stone product or gold jewelry. I suppose it is the fact that there are so many standards in the diamond and goldYour mission is to find out where it is applicable and where it and fewer in colored stone categories. A standard is a productwill work to help build your business and where it will not.likeadiamondtennisbraceletordiamondstudearrings. Another factor, worthy of consideration, in this scenario is price point. Once a several thousand-dollar price-point is reached thisunderstandingbetweenretailerandtheconsumerFrank Dallahanbecomes more important. Although a valid argument couldco-publisher of The Retail Jeweler be made that a diamond tennis bracelet selling for $5,000 isEmail [email protected] so design unique as to create a problem. The same holds true for diamond stud earrings. 8 | The Jewelry Business Magazine'