In today’s article we are going to look at how to network for new business on limited time. So let’s get started!
A referral is a recommendation that your business gets from a trusted source — it’s a high-quality inbound lead.
Rick Burnes Hubspot.com
Networking is not about the number of business cards that you collect at an event or connections that you have on LinkedIn. It’s about expanding the circle of people with which you have quality communications and overlapping interests. The two keys to successful networking are:
Developing an ongoing relationship with your new connections
Having legitimate mutual business interests.
Mutual interests can be as vague as sharing information about a particular industry, or as concrete as buying advertising collectively. In this respect networking is like dating, trying to move too fast can ruin a new relationship.
Many people find networking hard because it involves introducing and selling yourself to a new person. There are certain events that will require that you introduce yourself to new people, over and over again. However, if you have a good networking strategy, you will not have to randomly introduce yourself to people or hard sell them on the value of your company.
The Keys To A Good Networking Strategy
1) Know who you want to meet.
Time is a limited resource. The more time that you spend networking, the less time that you will have to devote to other critical tasks. Instead of starting out with the premise that you want to meet the largest number of people possible, the idea should be to create a list of the type of people that you want to meet. Focus on quality instead of quantity.
Assuming that you’re business is not about serving a few large accounts and is spread out among hundreds of customers, when you network, you want to focus on people that can refer you many customers, rather than trying to directly network with clients.
A friend of mine owns a junk removal business, and referrals from networking are a major part of his business. He focuses on networking with real estate agents, as they will recommend to clients that they remove “junk” from their house before showing it to potential clients.
Make a list of the type of business people or companies that can send you clients.
Are there people who are regularly in touch with your potential clients?
For example, lets say I am a nutritionist. Doctors that serve patients with diet sensitive conditions (such as diabetes) might be a good source of referrals. Personal trainers that have affluent clients clients that care about their health might also be another group of people in regular contact with potential clients. School counselors that have regular contact with parents, might refer those with overweight children.
Are there people who provide a service that occurs prior to or simultaneously with the purchase of your product or service?
The sale or purchase of a home triggers many additional purchases. Real estate agents, loan officers, and mortgage brokers are in a wonderful position to recommend everything from junk removal services to insurance agents. Weddings also trigger an array of purchases from catering to honeymoon packages. As an engagement ring is usually the first major expenditure, a jeweler might be in an excellent position to refer clients.
Once you have a good idea about the type of people that you want to meet, you should start making a list of names of people that fit that description in your area. If the list is less than 10 people, its probably too small. If the list is more than 30, try to reduce the size of the list. If there are too many names on the list, try to take off names of multiple people working for the same company or out of the same office. The best person to start networking with is an owner or manager, as he or she can easily introduce you to other members of the organization.
You can search Manta and LinkedIn to find people by profession and geography, or the names of people associated with specific business ventures.
2) Deciding To Approach People Publicly Or Privately
If you have a close mutual connection with the person you wish to network with, meet directly.
Ask for an introduction and try to arrange a meeting or phone call. Ideally, the first time that you talk to a new connection should be in person. When you meet face-to-face, you are likely to have a person’s full attention, which makes establishing rapport easier.
If you do not have a close mutual connection, try to find events that the people on your list are likely to attend.
Are the people members of any local groups like the local Chamber of Commerce, BNI, The Rotary Club or the PTA? Are there any industry events which the person is likely to attend? If you know the person is likely to be at event, e-mail them ahead of time and ask them if you can have ten minutes of their time during the event. While its possible to approach someone cold and strike up a conversation, its more relaxed and less pressurized if the person has agreed to give you their ear for a few minutes ahead of time.
The goal of the initial conversation should be fairly limited:
Establish a connection. Do you and the person have things in common? (Friends, Interests, or Living/Working in The Same Neighborhood).
Let the person know what you do and that you’re open to a referral relationship down the road.
Ask a couple questions about their business. Many business people love talking about their business. The more you know about their business, the easier it will to make proposals which they will be open to accepting.
Following Up On The Initial Approach
Meeting a person is the starting point for establishing a relationship. After meeting you once, it’s unlikely that a business person will start referring clients to you. They will not want to put their reputation on the line by referring their clients to a person that they don’t know very well.
After meeting a person for the first time, its very important to send a brief follow-up within a day or two. Essentially, you want to the person to remember who you are. The follow-up could be a two or three sentence e-mail or sending a LinkedIn invitation.
One or two weeks later, you should reach out with a real attempt to start communications. You can follow-up by sending them a link to an article relevant to their business or ask their advice in area where they are likely to have expertise.
How To Get Referral Business
There are many ways in which you can get referrals or leads:
Many business allow other businesses to put up flyers or leave brochures in their offices / stores. Some businesses are very willing to allow you to promote your business, and others are much more selective. Leaving a flyer for your dog grooming business might have limited impact if left in a coffee shop but, might be very effective in a pet shop. If you have a relationship with the pet shop owner or manager, they may be willing to allow you leave brochures at the checkout.
An active referral is where a fellow business person is actively telling clients to use your product or service. Active referrals generally take place in two contexts:
The business cannot fully provide a solution to meet their customer’s needs.
Customers actively solicit advice because of the perceived knowledge of the business person.
Doctors frequently refer patients to specialists. However, doctors are not the only people that make referrals frequently. For example, my wife who makes jewelry professionally recently rented a studio space. To rent the space, she was required to get business insurance. She asked the landlord representative to refer insurance agents.
There are two keys to active referrals:
Connecting with the person actually talking with the client. If the business owner / manager is not directly facing and speaking with clients, it is important to establish a relationship with the person(s) in the client-facing role.
Giving the person making a referral a tangible reason to make the referral. Depending on the person, that reason can range from keeping the person in the loop about the client’s activity to giving their clients a special discount or offer. Further in this article, we will discuss providing incentives for referrals.
Lead Sharing and Co-Marketing
The types of referrals mentioned above can all be done without a formal business arrangement in place. They also don’t necessarily involve the transfer of client information from one business to another, so the relationships don’t raise any client privacy issues. However, the methods above may be slow in generating new business and you might want to take a more aggressive approach.
Here are a couple co-marketing and lead sharing ideas for pet grooming business and a real estate agent:
A pet grooming store might want to partner with a pet store, a veterinarian, and even a pet friendly restaurant to send out a calendar with cute animal pictures. (Ideally, the calendar would show pictures of animals at various businesses.) Each company would contribute both leads of clients / potential clients and chip in the cost.
A real estate agent might want to partner with a local bank or a mortgage broker, a real estate lawyer and perhaps even a moving company to send out a monthly e-mail newsletter on the local real-estate market. Each firm might contribute an article per month and enable sign-up from their website.
In the examples above, you are offering an opportunity to have your “partners” marketing dollars and promotional efforts go farther by joining a collective marketing effort. While those involved in these efforts are not explicitly endorsing your business, they are both sharing leads and associating their name with yours.
Should you pay for referrals?
I would say it depends on the following factors:
Do referrals happen regularly, or are they an infrequent event?
What is the value of a new client to you?
If referrals happen frequently and the value of a referred client is fairly high, then you might want to set-up a formal system for compensating potential referrers. Cash is usually a good motivator, however, the person referring you business must believe that they have a good opportunity to get a reasonable amount of additional revenue. Also, keep in mind that some businesses or professionals are restricted by laws or professional standards from accepting formal compensation.
While providing formal compensation works well in a small set of circumstances, moderately priced gifts (like a bottle of wine) with a thank you note to show your appreciation for referrals are always a good idea.
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Additional Resources On Referrals:
Referral Selling In Small Business By Joanne Black
Creating A Referral Engine By John Jantsch
How To Make It Rain Referrals by Charlie Cook
Business Networking & Referral Relationships by Hello Referrals