Aug
20

Hard $$$ Data: Why You Should Spend Your Time Networking

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There are many reasons why people join networking groups.  The most obvious is that the strong relationships we create in these groups lead to more business through referrals.

Recently, I had a chance to review the data and findings by an independent organisation that conducted a comprehensive survey of several networking groups to determine the value of a member’s “seat” in his or her networking group.

And the results were impressive!

BNI-Style Networking: ROI Examined

The independently surveyed networking groups are of the BNI-type: members attend on a regular (weekly) basis, and there is only one member per business category allowed in each group. 83% of all members in the region participated in the project, and the average group size is 25+ members.

Quantify, Evaluate, Measure: The Networking Survey Objectives

The following were some of the objectives of this independent survey:

  • To quantify the financial value of referrals received by members, both in the last 12 months and since being a member;
  • To evaluate referrals received, including what percentage are internal referrals, and which percentage have been converted into closed business;
  • To update the extent of value-added indirect referrals through repeat business and referrals to other clients by the initially referred clients.

Value of Referral Networks – The Stunning Results

The results of the survey were far better than expected – especially considering the state of the economy.  Below is a summary of some of the findings from the survey (NOTE from BNI Australia: survey currency was USD, currently roughly at par with the AUD).

  • The average amount of business gained from business referrals in the last 12 months was or $37,055.
  • When asked about further orders they had received as the “spin-off” (new referral business that stemmed from the original referral) effect of referrals, the surveyed business networking members were able to identify, on average, an additional $17,668 per year of membership.
  • Combining closed business in the last 12 months with the average value of 2nd/ 3rd generation referrals in a year gives a true value of a membership in a networking group of this type of $54,723 per year. 
  • On average, members who were involved in their networking group for 7 years generated $383,038 since they joined it, thereby underpinning the lifetime value of the membership in a referral network.

Value to the total membership in the regions surveyed equalled $25 million per year—and we are still recovering from a recession!

The Longer You Remain (Actively Involved) In A Networking Group, The Larger Your ROI

The findings of the survey did also illustrate an important point: It took time within the first couple years to build relationships, with a return of $54,720.  However, when members moved into years 3-7 of their memberships, the figures jumped to a yearly return of $312,700!  Even more dramatically, the survey discovered that there were six new millionaires created out of the members surveyed—just from referrals from their fellow members!

Can You Benefit from Training on “How To” Network?

As someone who has studied business networking both academically and anecdotally since the early 80’s, I always knew that training helped members get more business. Still, I was pleased to see that this survey corroborated this fact.

Those members who attended any and all training sessions offered on the “art” of networking saw their businesses increase by 58%, compared to those who did not attend or who attended only one session.  This backs up the fact that taking advantage of any offered training support by a networking group is the cornerstone to members’ returns on their time and investment.

The ROI for members who stay actively involved with their
particular networking group for several years is many
times more than the annual cost of participation.  

In the survey results, it was very easy to see a linear correlation between the amount of time dedicated by the member to a networking group and the average and substantial return on investment that the member receives as he or she stays longer.

BNI Australia – So, How Do We Shape Up?

The financial year 2011/2012 saw another record closed business achievement for the approximately 5,000 Australian BNI Members, who closed $219 million worth of business between them and through outside referrals.  That is an exceptional $45,000 of membership ROI per member!

Well done, Australia, who out-networked those surveyed groups!

Clearly, the ROI based on this survey and BNI Australia’s latest data is incredible – what entrepreneur would take a pass on those numbers? This is why I’m surprised that there are still so many out there who have not yet begun to make business networking a vital element in their overall marketing and sales plans. What are they waiting for?

Called the “father of modern networking” by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the Founder and Chairman of BNI, the world’s largest business networking organization. His newest book can be viewed at www.BusinessNetworkingandSex.com. Dr. Misner is also the Sr. Partner for the Referral Institute, an international referral training company.

Categories : Networking

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