A previous post explained why business networking is not a numbers game. This post explodes the myth that networking results are aligned with the number of events you attend, cards or contacts you collect, one-ones that you get in the diary or cups of coffee that you share. Your networking Return on Investment should be judged on the income you generate. If you take it a step further (some business owners I have helped do) you will want to judge it on the profit you generate.
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Why are events, cards, contacts, meetings and shared drinks unreliable measures?
Put simply, collecting contacts and undertaking these activities do not always lead to income. They are all costs if they don’t produce a reasonable return. Sure, they are all nice things yet most people are networking to generate business. If they don’t cost you money they cost you time. And time is money, right?
I grant you that some people network for support and others find suppliers.
When the focus turns to generating income you could have hundreds of contacts, schedule weekly one to ones or the other time consuming activities mentioned above and still not generate any real results. I remember when I was employed, I had sales managers who expected the sales force to get business every time they visited an event or networked. With the self employed or a partnership it takes time for the pressure to build yet pressure can be paralysing.
What can you measure to gauge a busines networking ROI?
Income and profit are the very good measures for a Return On Investment. Twitter is very topical yet has become apparent that having lots of followers does not relate directly to income. You can have hundreds of contacts without generating any income. I’m not saying that no-one generates income when networking. Of course they do. Yet some are more successful than others. Register here for your free advanced copy of our special report about why networking doesn’t usually work for most people.
Take a look at your income for the last 3 months, 6 months or 12 months and work out how much of it has emanated from networking. If you haven’t got a customer relationship management system that makes this clear take a look at your client list name by name or sector by sector and work out how they found you. Or how you found them. Write the total percentages on a piece of paper. What are your initial thoughts when looking at this total? Are you happy, sad or indifferent?
How should you measure the true ROI?
First work out how many networking “events” you go to in an average week, fortnight or month. Make sure you include your online activities. If they involve people and discussions – it’s a form of networking. Then work out the time invested in them. That’s the time spent preparing, time spent travelling to and from, time spent at the actual event and time spent following up. Also add the cost of the event and the cost of any food or drink consumed whilst there. Don’t forget the travel cost. Especially if you drive – petrol costs have soared.
If you go networking every week multiply these figures by 50. If you go fortnightly, multiply by 25. If you go once a month, multiply by 12. Then compare the amount of income you wrote on the piece of paper to the figures you just calculated. If you are a “fee earner” you may already know your hourly rate so you can compare that with your networking rate with a little mathematics. What are your initial thoughts when looking at this total? Has your mood changed?
What I think may be immaterial. What really matters is what you think of the return of your networking investment?
Wrap up: To calculate your Return on Investment or Return on Engagement you must check your income and/or profit. Work out what you have gained from networking. The result may surprise you. Is there something else you can do to generate more income for the same investments? Or should you invest more time leveraging results from the network you have already built?
Top Tip: A fantastic benefit of networking is meeting highly talented individuals who have left corporations. Some of them are new to the SME environment and like mixing with people in similar positions – you can find them on the networking circuit. Their advice is available for a fraction of the investment that their previous employers’ would have charged.
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Or register here for your free advanced copy of our special report about why networking doesn’t usually work for most people.