Originally published: 03.01.08 by Paul Dooney
Word-of-mouth advertising is a powerful marketing tool. Joining a networking organization will enable you to spread the word even farther.
My company, Bay Furnace, has been able to increase its sales force to over 30 salespeople for less than $1,000 per year. How? Via business-to-business networking.
With all the choices in marketing your business, one tactic that gets overlooked all too frequently is word-of mouth networking. By “networking” with other businesses in the area, the word gets out pretty quickly.
Bay Furnace, a family-owned business that has been serving the Cleveland area since 1944, is a member of Business Network International (BNI). BNI is a business and professional networking organization founded in 1985 by Ivan Misner, a New York Times bestselling author and author of Entrepreneur’s Networking Now blog. BNI has generated over 4.9 million referrals resulting in over $1.9 billion worth of business for its members.
According to Misner, when it comes to networking, “luck” is where persistence meets opportunity. There’s no coincidence about repeat referrals. They’re the outcome of the day-to-day activities of building relationships. Although referrals can’t be measured as easily as tracking cold-call ratios, the results are dramatic — and almost never coincidental. Repeat referrals happen because you’ve laid the groundwork through professional relationships.
BNI is just one of many networking groups that can help you grow your business by giving and receiving qualified referrals with men and women from other businesses.
I was skeptical the first time I attended a BNI meeting. I didn’t feel that taking an hour-and-a-half out of my sales time once a week would be worth anything. I soon realized that the time is well spent. It is completely about building relationships with other professionals and providing real business leads.
Please don’t confuse these with Chamber of Commerce socials or “coffee klatches.” I’m talking about getting involved in a networking group that you join on an annual basis. These groups typically will have 15 to 30 members. The annual cost of joining a networking group will vary, but you can expect to budget $600 to $1,000 annually for this invaluable marketing tool. As you maintain your membership in these groups, you start to build quality relationships and those relationships quickly develop into profitable referrals.
Indeed, “By understanding that you can be connected to anyone through the power and potential of networking, you can set yourself apart from the competition,” notes Misner.
Like all marketing avenues, there are several different networking groups out there.
What networking group is right for you?
Take the time to visit multiple groups and chapters to ensure that the members are the best fit with your interest. For instance, if a certain group has members that work more in the private sector, and you’re a commercial contractor — well, you get the idea. Typically a quality group will have some form of membership committee. But remember, they’re not just interviewing you as a prospective member, you’re interviewing them as well. Ask questions and request statistics regarding quality business referrals.
Another tip, be sure you are the only member in that group of your “category.” In the group I am affiliated with, you “lock in” your category (Bay Furnace is the only hvac business in the group.)
Additionally, BNI stresses that it is important to educate your networking group’s members about the type of referrals you want and, where applicable, even the names of the individuals with whom you want to meet and develop relationships. Remember, your networking partners aren’t your clients — they are your sales force. And for your sales force to sell you effectively, they have to know who to sell you to and how to sell you.
To ensure you are building a trusting business relationship, the member from a category should always be the same person. The secret to networking is relationships. Our group has a policy that I am the member from my company. Other employees may come as a substitute, but it’s me that the members are building a relationship with.
When my fellow BNI members have customers ask them, “Hey, do you know a good heating or cooling company?” they can actually hand them my card right there. And because we’ve built a relationship, they feel comfortable referring me.
How do you know the difference from one networking group to the next?
Typically, you can attend a few meetings with no obligation. Look for a group that follows a pretty thorough agenda. We have fun in our group during the meeting, but it is well timed and well organized. Most important, however, is to watch how referrals are passed. In our group we track referrals given and received, and also track profits and attendance. Each month all members are given a report of this information. I am able to track my referrals down to the last dollar — how’s that for annual budgeting? Last year, Bay Furnace tracked $37,450 in sales related directly to BNI referrals. Factor in “second tier” referrals from neighbors and associates and the sales rate increases exponentially.
While it would be nice to say that you pay your money then sit back and watch the referrals come in, networking takes effort. As I said earlier, it’s about relationships. I’ve taken the time to sit down with fellow members and learn more about them, their company and their needs. By doing so, I am better able to target their audience. It is amazing to see via the monthly reports how many members match their “given” and “received” referrals. The more you give, the more you get— or not.
Indeed, we had a member quit after one year and only eight referrals received. But upon further investigation, we noticed the referrals he gave totaled zero— the math is easy.
Marketing your business is critical but some businesses don’t know where to start — this is a good place. For companies that are brand dealers, there may be co-op dollars that can offset the already low network budget. When teamed with a well-marked (and clean) fleet of vehicles, radio and TV ads, mailers, and sponsorships, networking can help get to places that some facets of marketing can’t.
My payment to the men and women out there supporting me? Return the favor. After you’ve been networking long enough, it takes almost no effort at all. No marketing tool guarantees profit, but it’s nice to have another choice where you have more control over it than it has over you. By weaving networking into your marketing plan you can enjoy the benefits of community and spread the word about your business.
Articles by Paul Dooney
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Word-of-mouth advertising is a powerful marketing tool. Networking groups enable you to spread the word even farther.