While selling animated video services in New York, I’ve attended many networking groups. They’re all different, but they’re all much alike: you schmooze, drink coffee , go around a table and introduce yourself, someone presents something, you schmooze some more, and you set up one-on-one meetings. After going through the networking motions for over a year with little to show for it, I started taking my peers aside and asking what impact the sales channel had on their revenue.
Some maintained that networking had extremely positive effects. They gave me specific figures or percentages on the growth they experienced. Most, however, either admitted or uncomfortably implied that networking produced little to no revenue boost. My peers and I did everything you’re supposed to do: we attended almost every meeting, we arranged one-on-ones with everyone we could, we were generous with introductions, and we knew how to effectively describe our offerings and request the right intro’s. Was it our fault that networking wasn’t paying off? Was there something wrong with our products or services? And what is networking’s ROI compared to other sales channels, especially for those who claim success with it?
Unfortunately, many salespeople plod along quietly and blame themselves entirely for underperforming in a networking environment. Though the undertaking requires skill, time, and energy, there are other factors that influence success.
Transactional vs. Non-Transactional Products
Networking is effective for those selling transactional products or services. People know who to refer to the residential real estate broker and when to do it. In my groups, the real estate lawyers, brokers, title insurance reps, and others in related verticals saw incredible gains from networking because they were part of a transactional business ecosystem. When a buyer needed one of them they needed all of them. As such, I saw these industry players drive each other’s revenue in the course of large transactions involving a group of providers. These networkers acted as a cohesive basketball team, making well timed assists and increasing each other’s goal percentages.
This wasn’t the cases for complex project-based products and services, like my own, or the the guy selling custom intranet systems to CIO’s in mid-size biotech firms . I rarely had the opportunity to bring in a website designer, marketing agency, or other related verticals when selling animated video services. Trying to incorporate similar offerings was like a waiter trying to sell a nutritional plan to a guest who just ordered a meal. That’s not to say we could never work together, but there were a lot of moving parts involved.
Eventually, my network did drive a modest level of business. But if I had spent my time sending targeted emails to prospects, would it have produced better returns? What if the networking investment was translated into dollars put toward SEO or PPC? My gut tells me I would have found better ROI with other channels.
That being said, and regardless of your product or service, networking is unmatched as a source of advice, education, inspiration, and resources. Here are some Pro’s and Con’s:
Pros of Networking:
- High referral quality: the trust factor of personal referrals increases the likelihood that the prospects who come your way will buy from you. Once you’re vetted with a prospect, you can expect to close business much more easily.
- Recurring business: as discussed above, offering a transactional product that’s part of an industry ecosystem can produce consistent recurring revenue.
- Keeps you social: networking keeps your social muscles strong. I really enjoyed this ancillary benefit. If you have a job that keeps you in the office, networking can be a great way to get out there, meet other professionals, and get inspired.
- Hiring: if you ever need to fill a position at your company, your network will be useful for finding and vetting people, and delivering high quality applicants.
- Advice: no matter what business issue you’re facing, chances are that someone in your network has dealt with it. Networking groups can double as “master mind” organizations for providing helpful insight into a variety of situations.
- Fun: escaping the office and having face-to-face meetings sure beats sending emails all day.
Cons of Networking:
- Time-consuming: networking is a huge time obligation. To do it right, you have to attend group meetings, schedule one-on-ones, and follow up with introductions. Then you have to set up more meetings with those you’re introduced to.
- Difficult to scale: replacing yourself in a relationship-building scenario is damn near impossible. Furthermore, there are but so many people you can truly keep in your network before they become vaguely-remembered acquaintances. Go for quality over quantity.
- Locational: networking opportunities are meager if you don’t reside in a major city.
Is Networking Right for You?
Networking’s fans will tell you it’s the most lucrative channel you can adopt. It’s detractors relegate it to a dustbin of antiquated methods like door-to-door sales. I think its success depends on several factors: the nature of your product or service, your availability, and how much you enjoy the networking process.
Is Your Product or Service Right for Networking?
Answer True or False:
A) Your offering is generally recognized and understood .
B) You have to provide an in-depth explanation of your offering before people understand what you’re selling.
A) Most people know who you’re targeting from the get-go.
B) You have to give an in-depth description of your buyer.
A) You can throw a rock and hit your buyer.
B) You’re targeting a buyer with a very specific title in a very specific vertical.
A) You sell a product or service.
B) You sell the experience of a project and the deliverable that stems from it.
If you answered “True” to most or all of the “A” points, you probably sell a transactional product. It’s likely something most people know and understand. Your network will be poised to deliver you relevant prospects on a silver platter. You can expect great returns from networking if you put in the time and energy.
If you’re in group B, you’re likely selling a complex, non-transactional product. You’ll need to educate your network about your offering, and then get your contacts to direct you to hard-to-find buyers. Building a network may be a worthy undertaking, but it will be a longterm process to construct a group that will lead you to your unicorn. If you do decide to network, I recommend considering other sales and marketing channels as well.
Do you have the time?
Are you a full-time salesperson, or are you tasked with managing projects as well? If you’re the former, you will probably have the bandwidth for networking. If you have other obligations, networking may require more time than you can take devote. To make the channel work, you have to put in the time. This typically means at least three hours of meeting time per week.
Do you enjoy networking?
As with anything, those who excel at networking usually enjoy it. On the other hand, many find the “getting-to-know-you” game boring and headache-inducing. Don’t feel obligated to network if you don’t enjoy it. There are plenty of other sales channels. That being said, if you avoid networking because you’re nervous about public speaking and interacting with strangers, then it’s time to get out there and give it a try.
The art of the schmooze is a specialized craft: it’s great for some, but misses the mark for others. If you’re on the fence about it, find a relevant group in your area and give it a whirl! In a later post, I’ll cover tips for getting the most out of networking, as well as a breakdown of networking groups and how to choose the ones that are right for you.
