Should the Employer pay for a Networking Group?

As a business owner, you need your marketing team to generate a positive return on the time and money you invest in them.  The higher the return on your investment, the more profitable you will be.  The more profitable you are, the more marketing people you can hire, and the cycle continues.

There are scores of options your marketing team can explore to generate business.  They can join a Chamber of Commerce, advertise on a bus bench, call potential clients on the phone, do some direct mail or try social media marketing. 

Any of these can work well if done correctly, but none will generate a higher return on the time and money invested as an EFFECTIVE referral group.  Note the emphasis on effective!  Most networking groups DO NOT work nearly as well as they could, and for good reason.  See our blog on “Choosing the Right Networking Group”. 

Referrals are a great way to generate business compared to other marketing methods for a number of reasons.  Consumers trust recommendations from people they know.  Referral closure rates are much higher, and it takes less time to convert prospects into clients.  The cost the cost to acquire the customer is lower, and customers who do business by referral are not as concerned by price.  Sometimes you are the only call they make.  All of this means better productivity and higher profit margins for your business.   

For the sake of argument, let’s assume a member of your marketing team joins an effective referral group like Tucson Business Club (TBC).   

As soon as they join the TBC, efficiencies and economies of scale are instantly created.  They get to meet with 30+ people at every meeting.  If your marker tried to schedule and attend 30 individual meetings, they would invest more than 80 hours a month to do what they can do in 3 hours at TBC.  

In addition, your company will be top of mind with 30+ strong referring partners who are committed to generating business for you.  You staff instantly leverages the collective connections of the entire chapter. Our members are very well connected in the community.  The potential of their collective connections is incredible.  Your staff instantly leverages those collective connections as soon as they join the TBC.  

As a group, we understand the power of the group lies in the collective connections of all the members, and our ability to leverage those connections to generate business and opportunities for each other.  We also understand that all of us have strategic partners who are in a position to send streams of business to us on a consistent basis. 

For example, an employee of a staffing agency would love to meet professionals who deal with business owners with lots of employees.  Their strategic partners would be in professions who deal with those large employers exclusively, and know the decision makers.  Some great connections might be a(n):

Ö       Business Attorney

Ö       Commercial Property Manager

Ö       Drug Testing Company

Ö       Uniform Company

Ö       Payroll Service Provider

Ö       IT Company

Ö       Employee Benefits Provider

Ö       Business Broker

Ö       Large CPA Firm

There are dozens more.  The point is, we as a group at TBC use our collective connections to connect you with your strategic partners, and to get you past the gatekeepers.  We have tremendous loyalty to each other, because we all get so much value from the group.

The results speak for themselves.  The average Tucson Business Club Chapter generates about $37,000 in gross revenue per member, per year.   That comes out to about $770 for every hour your employee spends in our meetings, and this counts commute time! Try getting that ROI from cold calling or knocking on doors! 

Do yourself a favor; make it mandatory everyone on your marketing staff join an effective referral group.  After all, the more successful businesses are in Tucson, the better off we all are!

 

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Choosing the Right Networking Group

How to Pick the Right Networking Group

Before you join a networking group, you need to know that all networking groups are not equal.  Some work much better than others, and some do not work at all. 

In my opinion, only the top 20% of groups are worth consideration.  As far as the others, the business community would be best served if they would just go away.   If you join the wrong group, it will not only waste your time, it will cost you incredible amounts of business.     

If 8 out of 10 networking groups are going to be a waste of your time and money, how do you know which group you should join?  Which group is going to produce the greatest return on your networking investment? 

We have all heard the saying “you get what you pay for”.  Maybe the cost to join the group can help us identify which one delivers the most value?  In most cases this is true, but not when it comes to networking groups.  We regularly see moderately and low priced referral groups outperform the most expensive groups in town. 

So if price is not a clear indicator of the right group, maybe the size of the group could be a good indicator?  Most people agree bigger is better when it comes to networking groups, and a large group of people represents more opportunity than a small one.  On the surface it is logical.  It would be hard to debate a small group of 20 people could consistently generate more business than a large group of 80, yet we see it every day.  Bigger is not better when it comes to networking groups, and you will understand why later in this chapter. 

If the cost and size of the group is no indicator of its value, maybe the professional level of the members might be?  A group filled with business owners and decision makers should produce more business than a group of mid level employees, right?  Wrong!  These Executive Referral Groups do exist.  Even large groups, filled with decision makers will not generate nearly as much business as a fine tuned, small group of mid level employees.    

To determine which group is best for you, we need to understand the ability to generate referrals and create opportunities does not come naturally to most people.  Not everyone is at the same level in their ability to generate referrals.  Some people would not recognize an opportunity if it landed in their lap, and others can spot an obscure, hidden opportunity a mile away. 

Here is the good news, networking and referral skills can be learned and anyone can become a great connector in their community.  No matter what level you are at, there is always room for improvement.   

So here is the secret.  The real value of a networking group comes from the ability of the members to leverage their connections outside the group, and use those connections to create opportunities for each other. 

This is why a room full of well connected, lower level employees with strong referral skills, will generate more closed business than a room full of business owners and CEO’s who are not as skilled at creating opportunities.  This also explains why a low priced group can outperform a very expensive group, and why a small group can easily run circles around a large group.    

I cannot stress enough how important it is to find the right networking group for you.  Joining the wrong group will leave such a bad taste in your mouth you may never want to join another group.  If you join the right group, you will generate streams of business and opportunities that cannot be matched with virtually any other form of marketing. 

Choosing the right networking group is as important as choosing the right target market for your business.  Put some thought into it before you make a commitment.

The underlying reason most networking groups are not very effective is because the goals of the group owner are not aligned with the goals of the group members. 

The decisions made by a networking group are usually made from the organizations perspective, not from the member’s.  If there is an opening and someone is willing to pay to join the group, welcome to the network!  From the organizations perspective, the more paying members there are the better.  To the organization, it’s all about the money, and their decisions are driven primarily by the “quantity” of members.   

Conversely, members join networking groups to benefit their business.   They want to build relationships with people who are good at what they do and who are good referring partners.  They do not want to refer business to people who drop the ball and make them look bad.  The members do not want to refer business to people who are there just to take all the business they can get.  From the members’ perspective, it is more about the quality of members, than it is about the quantity.  The more quality members, the better.   

 

Before You Join ANY referral group:

Look at the bylaws and read the fine print.  Many groups have rules and expectations that you may not be willing to conform to.  Know what you are getting into before you sign up.  Here are a few things to look out for:  

Frequent Meeting Requirements:  Some groups have frequent meeting requirements.  If the group meets weekly, it is probably too frequent for most people.  You can expect to see more turnover in these groups, and most of the top caliber referring partners will not be there.  The time commitment is simply too much.  On the other end of the spectrum, some groups meet quarterly or monthly.  This is probably not often enough to get to know each other and be top of mind with other members of the group, but in can work in some cases. 

Recruiting Requirements:  Keep an eye out for groups that require you to recruit other members.  One of the world’s largest referral groups requires their members to send 40 written invitations twice a year to potential members.  You should bring people into your group because you want to, not because you have to.  If you have seen incredible results from the group, you will likely be excited and want to talk to other people about it.  Any group who forces it’s members to recruit for them must have major turnover issues.  Be careful before joining one of these groups.   

Restrictive Groups:  Here is a big one! Does the group prohibit you from joining other networking groups?   If it does, run!  Here’s why:

There are over 800 uniquely different professions you could refer business to, and get business from.  Most networking groups have less than 5% of these professions represented, yet they prohibit you from joining another group to expand your network of referring partners?    

There are many professions in other groups that are NOT in your current networking group.  Belonging to multiple groups exposes you to additional connections, opportunities and more business.  The more you make, the more you spend.  We are all consumers and as our buying habits increase, so does our ability to refer business back into our networking groups, generating business for everyone.

In my opinion, networking groups that prohibit their members from joining a competing group are paranoid, and afraid of competition.  They are concerned their members will find the other group is more effective, and less expensive.  When that happens, the group runs a risk the member will leave, and take other members with them.  Then again, we see that happen all the time.  Do not join one of these groups.  Consider these two real life examples that happened recently in Tucson:

Case #1:  A restoration company in our network orders about $300,000 a year in carpet for replacement, and wanted to know if we had anyone in another chapter that sold carpet.  We did not, so I talked to the owner of a carpet store with a good reputation, and asked if he would join the group and take care of these referrals.  He said he was part of an exclusive referral group, and they would not allow him to join another.  That group cost him $300,000 a year.     

Case #2:  Here’s another true example.  Several of our members could refer streams of business to a good auto broker.  They were in different professions like a Credit Union, two business bankers, two fleet vehicle mechanics, two towing companies, two collision centers and several insurance agents.  They asked me to find a good auto broker to join our chapter.  When I called the best guy I knew, he explained his referral group prohibited him from joining ours.  He had joined the wrong group and it cost him untold referrals, from several strategic partners.  Now that business is going to his competition.  

At TBC we encourage our members to join others groups, as long as we know those groups work.  We openly promote organizations like the Marana Chamber of Commerce because so many of our members tell us they get a great return on the investment.  We want our members to generate as much business as possible.  The more successful they are, the more successful we are.    

 

Look for Quality:  Remember your reputation is on the line every time you make a recommendation.  You want to join a group full of people you can trust.  Pay close attention to the quality of the group.  Ask how they screen new members for quality, and if they remove existing members if they provide bad service.  You need a group as concerned about quality members as you are.  Be selective, most groups do not do this.

Avoid “Growing Groups”:  Be careful joining a “group that is growing”.  Usually this is an indicator the membership is shrinking because the group is too expensive, meets too often and/or does not work.  The organizers should not launch a chapter unless it is ready to go.  If they want you to join a “growing group”, you should pay less for that.  You will have to recruit more, and you will get less business until the group is large. 

If everything looks good, this may be the right group for you.  It should provide a steady stream of referral business for you, but don’t stop there.  Effective networking is one the most powerful ways to grow any business.  Join more than one group if you can.  The more people who know you and promote your business, the better!  

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Why refer business into your networking group?

Spending money in the local economy is a good thing.  The money circulates over and over, comes back through some of our businesses, and generates the tax revenues we need for schools, roads, fire, police and other things.   

Conversely, money spent outside the local economy benefits residents of the other economy.  Likely the recirculation benefits are gone forever.   

An economy can be big, like America, or small, like the city you live in.  An economy can even be a micro economy, like the networking group you belong to, the Tucson Business Club. 

We have all heard the phrases “Buy American Made Products” or “Buy Local”. The fact of the matter is, the smaller the economy, the bigger the difference you will notice.  There is no smaller economy than your TBC chapter.  It is a micro economy in the truest form. 

Let’s look at how supporting members of the TBC can have a HUGE effect on your bottom line. 

Imagine you are 1 of 30 members in a Chapter, and all of you have $2,000 to spend.  You can either spend it with members in the group or with people outside your network. 

If all of you exchange the money with members of the group one time, collectively you generate $60,000 in business.  Do it again, and there is another $60,000.  One more time, and a total of $180,000 in business has been exchanged between the members.  Do it 10 times, and each member has generated $60,000 in business on average.  And, if you do the math, every member still has the original $2,000 in their pocket!

Worst case scenario, every member spends the $2,000 with someone outside the network.  All of the money would be gone instantly.    None of the members would generate ANY additional sales, and none of the members would have the $2,000 cash they started with.  The economy would be dead. 

When you are part of a micro economy like the TBC, it is CRITICALLY important you support members of that economy, even if you pay more for the service.  If you spend the money outside the economy, it costs you much more in the long run.        

 
Buying from TBC members is a win-win for all of us. Keep your money in our micro economy.  Next time you find yourself buying from someone outside the network, stop! Email me, and I will connect you with a great service provider in our network.   

 

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Why does Tucson Business Club Exist

Why Do We Exist?

Before we talk about what TBC is, and what it does, let’s look at WHY it exists.  After all, there are dozens, if not scores, of networking options available in Tucson. Only a few are truly viable and offer incredible value to their members. Everyday there are more options to choose from.  Tucson certainly did not need another networking group, the market is saturated. 

All of us are consumers and we want to do business with those who provide Quality, Service and Value.  Most businesses do not deliver all three, only the “best of the best” do.   Yet, even the best of the best of businesses go out of business almost every day.  They do not survive for a variety of reasons.  Maybe they did not have unlimited marketing budgets.  Maybe they did not not adapt to a changing economy or to competitive threats quickly enough.  No matter what the reason, it doesn’t have to be this way. 

Imagine if the "best of the best" got together periodically and shared best business practices, referred family friends and clients to each other.  What if they did everything they could to give each other a competitive advantage so they survived, and thrived, in any market condition?  Consumers would be left with more good choices, and everyone would win! 

That’s what TBC is.   We bring quality businesses together and teach them how to help each other.  That’s what TBC does.  There is no other professional referral group like it.  That is WHY TBC exists. 

Now, let’s talk about how TBC can help you generate business.  Call us at 505-3062

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