* Relationships arising from networking lead to getting more business through referrals.
* The longer you are involved, the greater the ROI.
* Training in the art of networking can increase business by 58%.
There are many reasons why people join networking groups. The most obvious – and what makes them remain in these same groups year after year – is that the relationships they make in these groups lead to their getting more business through referrals.
Recently it was interesting reviewing the data and findings by an independent organization that conducted a comprehensive survey of several networking groups in to determine the value of a member’s “seat” in his or her networking group. Note – the networking groups as defined in the survey were of the type where members attended on a regular (weekly) basis, and where there was only one member per business category allowed in each group. In the survey, 83% of all members in the region participated in the project, and the average group size was over 25 members.
The survey found that members in the study generated $156 million in referral business for their fellow members.
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 and what 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 better than expected, especially considering the state of the economy. Below is a summary of some of the findings from the survey.
* 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 equaled $25 million per year—and we are still recovering from a recession!
The Longer You Remain Actively Involved in a networking group, The Larger the 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? Survey says…
Training always helped members get more business, and the 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.
Clearly, the ROI based on this survey is incredible – what entrepreneur would take a pass on those numbers? It is surprising 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.
The ROI for on hold messaging can be quantified by mentioning a slow moving product in your message on hold. Tracking sales of the product can give you a clue of how effective your on hold marketing really is.