One of the misconceptions commonly seen to people new to business networking and referral marketing situations is the cost!
New businesses have many challenges that they face – recognise any of them?
Not surprisingly “No Money” is one of them which leads them to make sub-optiminal decisions on whether to join a more formal networking group. They think they can’t afford to do this and their belief as to the virtues of networking – better leads & more sales opportunities, mentoring and support, personal development and confidence, and great suppliers etc are not strong. Especially true we have observed if they come from the world of “work” and never had to build relationships in their safe employment haven!
Even for more experienced businesses who might “get networking” as a way of building relationships and thus sales don’t have a good handle on how much return they need to squeeze from any networking group they join to make a positive return on their investment.
What Are The Costs Of Membership per annum? The investment one has to consider each year (this example is for a more structure referral marketing group) is as follows:
- Cost of membership – typically £600 per annum incl VAT
- Cost of meeting fees – Between £10 to £15 incl VAT per meeting which can vary between 25 or 50 per annum, say £300 for the purpose of the exercise.
- Cost of transport to & from the meeting – Say 45p per mile which we can approximate to £300 per annum for this exercise.
- Cost of “coffees” for 121s & transport to and from these meetings – say 30 meetings per annum at £15 per 121 approximates to circa £450 per annum for this very important activity.
Total cash cost of the above is £1,650 – is this the investment you are making in your referral marketing group? The answer to many people is YES. This is an error that many make! The true investment you have to make is much higher – it is your time! This is made up of the time spent at the meetings, 121s (vast majority of the time including travel), looking for referrals for fellow members, inviting guests, social media promotion, training etc.
On average this might be 4-5 hours a week at minimum or over 250 hours over a year. How you value this time depends on your business but if we were to use £25 an hour as your opportunity cost, then you have added an easy £6,000 to your “networking” investment. Does this seem a lot of time to spend on a marketing system? Well most businesses should be spending at least 20% of their time marketing and selling to keep their pipeline constant, and if you’re a new business it should be 100%!
So depending on the circumstances of your referral marketing group, your investment is at least the best part of £8,000 per annum. This is the level your benefits need to exceed in order to have a positive return on investment, with the greatest cost being associated with the time you spend operating the referral marketing system in its entirety.
Some counter arguments to this cost estimate, might be that “if I do a breakfast group I would be asleep anyway, so this is free time!” – true enough but the majority of the time will be in 121s which will be in normal working hours, and if your referral marketing group meets at other times, every hour count! Other arguments are that 121s are not important to getting a return – again you might strike lucky in a group where little effort is required to get a great return, but in our experience every minute spent doing 121s is time very well spent and key to referral marketing success in any system.
£8000+ seems a great deal of money to invest in a referral marketing group membership but:
- Fact – Networking brings firms a rich stream of new contacts that can make networkers more successful & profitable
- Fact – Networking help businesses to understand their customers and the marketplace better whilst testing their message and its effectiveness.
- Fact – Business networking is a great way to meet your ideal business to business target market.
- Fact – These groups can literally become an unpaid sales force for the small to mid size business businesses in their community.
- Fact – Networking is the easiest route to market for good businesses to show they are different from the rest.
All it takes for referral marketing and business networking to succeed for your business is:
- And an plan of action & targets to aim for
The Elements for success for any networking or referral marketing group are which you must do equally:
- Presence – You need to be at each meeting or trust does not develop
- 121s – You have to invest in getting to know other businesses better and vice-versa
- Giving referrals – you are at the heart of the community, giving referrals to fellow group members from your client base or to other professionals should be easy.
- Guests – whether you are new or old businesses have clients that they need to keep up with. Save money on wasted marketing literature, pay for the meeting fee and solve your client’s problem or solve another member’s problem by bringing them along to meet your fellow group members & get a free testimonial to boot!
- Focus – Have a clear plan of what referrals you want so you can let people know in elevator pitches, presentations and 121s what you want as leads, introductions and referrals
- Energy & enthusiasm – It’s not hard for any business to take a leading role in any group and help it succeed (especially through social media).
All the above are easy steps for the well organised, disciplined and energetic business to manage! You will get your return if you are honest about the cost and value your time (which will focus you to do it properly), and of course honest in valuing all the benefits of membership both implicit and explicit from sales and opportunities, lower purchase costs, free advice, to all the coaching and development from fellow members.
With great FOCUS and a a bottle of mental perspiration thinking about your ideal customer (the number one cause of success for any referral marketeer) at your fingertips – you can only succeed and get a great ROI!
Joining any referral marketing group is in our experience a matter go how it feels. If it does not feel right people won’t join (CLICK HERE WHY) but as long as it is run properly (CLICK HERE WHY NOT) you will get your justified return over time.
If you want to discuss your referral marketing, social media, business networking needs & how to get the most out of them, then please do get in touch with us via LinkedIn. Feel free to connect with us LinkedIn, subscribe to our newsletter or our Superstars of Networking tips series via this website.