Networking Now:

The following article was written by my friend and partner in the Referral Institute, Mike Macedonio. I wanted to share it with you here because it mentions some very important points regarding asking for referrals. After you read the article, I’d really like to hear what you have to say in response, so please feel free to post a comment.

Just Ask. Right? . . . No.
By Mike Macedonio

I was recently attending a BNI National Conference and there was a lot of effective networking going on. With the culture of “Givers Gain” there were participants offering to help one another and make connections. On several occasions I was also watching some businesspeople walk up to people who barely knew them and ask to be referred to their valued relationships. I felt a sense of awkwardness in the conversation.

I think what I was actually feeling was deja vu. I’ve been on the receiving end of the “referral ambush” before, when someone I may hardly be in the “Visibility” phase with is asking me to expose my reputation by referring them to one of my valued relationships. In some cases, I was even asked to promote them or their company to my entire database.

During the BNI Conference, there was one participant who approached the main speaker and introduced themself. Shortly into the conversation, they let the speaker know that they understood the speaker knew an internationally known personality and that they would like an introduction to that person in order to pitch their business to him. WOW . . . that was a big ask. So why did it feel inappropriate? Part of the reason is the stage of the referral process, or the VCP Process, that the attendee and speaker were engaged in.

VCP is the acronym Ivan Misner uses for Visibility, Credibility, and Profitability. In the Visibility stage, two people simply know of each other. If both people can state the other’s name and business, that would be considered a qualified Visibility relationship. Credibility is when the relationship between two people has developed and both parties hold a mutual trust for one another. Profitability is the ultimate referral relationship goal. In this stage, both parties are reciprocally referring each other business.

In the situation I observed at the national conference where the conference attendee asked for the referral to the internationally known personality, the attendee was merely in the pre-visibility stage with the speaker. It’s true that the attendee might have mistakenly felt that they were in the credibility phase with the speaker, maybe felt that they knew him, since they had been watching him connect with the audience repeatedly over the course of the three-day event. However, it’s important to always remember that credibility is something that is established over a substantial period of time–not just a few hours, days or weeks. It takes months and, in many cases, years to develop real credibility with someone.

In closing, let me clarify that yes, I do believe that in order to get referrals we need to ask. The key, however, is to know how to ask and when it is appropriate to make the request. When is the right time, you ask? The right time to ask for a referral is when BOTH parties are in the Credibility phase of the referral relationship. Networking should not be a system that ends up alienating your friends and family. Be conscious of the deposits you make into your relationships before you start “writing checks” or, in essence, ASKING for referrals from those you have relationships with.

The fact is, people like to be treated in the manner to which they are most accustomed. If we understand people better, we can understand not only how to connect with them when networking, but also how to sell to them as customers. We get more insight into why they buy, when they buy, who they buy from and what they like to buy.

The study of personality types has long been of interest to psychologists, and one model that has stood the test of time was initially described by William Moulton Marston, Ph.D., in 1928. His early work with personality/behavioral types led to the DISC behavior profiling system, which outlines how a specific behavioral style can predict reactions to different selling and social situations.

Dani Johnson, an internationally known speaker and sales trainer whose clients regularly achieve high incomes, modified the DISC system to one called GEMS. GEMS enables us to easily differentiate a valuable contribution made by four distinct personality profiles. Dani holds her “First Steps to Success” GEMS training program around the world, and the Referral Institute offers an eight-hour program that incorporates GEMS training with referral marketing.

Here’s a brief peek at each GEM in Dani Johnson’s system:

RUBIES are risk takers, go-getters, and they like challenges. They like to win, be right and are fast-paced. They need control and authority and thrive on commission. Their bottom-line approach helps them make quick buying decisions. Sellers, be prepared.

SAPPHIRES are stimulating, enthusiastic, on-the-go people. They like fun, being the center of attention and receiving tons of recognition. Enjoying people, influencing others’ decisions and being popular is their style. Skip the details with them; they just make the buying process easy, fun, spontaneous.

PEARLS are patient, relational and incredibly harmonious. The quality time they spend with others is seen as supportive. Their relationships are longstanding and oriented to helping the team. Don’t push them from their low-key approach, or your sales style will overwhelm and scare them away.

EMERALDS are effective, thorough and detail-oriented. Their behavior of following rules, collecting data and completing tasks pushes them toward excellence. These are the detail people who need to carefully conduct their research before making a buying decision.

Every networking event and sales appointment is like going into a jewelry store. There are lots of GEMS around, and you just have to identify what type he or she is and polish them just the right way . . . the way that brings forth the most luster.

Learn what a RUBY, a SAPPHIRE, a PEARL and an EMERALD client expects from you, the seller, and you’ll enjoy buyers who feel compelled to buy from you and refer to you.

Since practically no college curriculum in networking exists (despite its importance in the world of entrepreneurial business), you’re pretty much left to your own devices to find training in the art and science of this set of skills. The fact is, if you want to be a successful networker, you need to commit to lifelong learning on the subject of networking.

This may sound like a huge task at first, but it’s actually not as daunting as it sounds. The truth is, networking is something you can train for on the job–in fact, that’s the best way. By putting it into practice, you not only learn how to apply and fine-tune your approach, but you also build your business at the same time. In many ways, it’s less work and more fun than some of the traditional approaches to building your business.

What’s more, becoming a master networker is a journey, not a destination. You might reach the 29 percent of people who are truly connected by becoming a master networker, but that’s not the end of your efforts because a master networker is one who is constantly improving his or her skills and learning new ones. Now the challenge is to stay in the 29 percent and learn to secure your footing.

So in your never-ending journey toward peak networking performance, I recommend you do three things:

1. Keep reading.

There are hundreds of articles and dozens of books out there on networking, word-of-mouth marketing and referral marketing. I strongly recommend reading Bob Burg’s Endless Referrals, Susan RoAne’s How to Work a Room and The Secrets of Savvy Networking, Robyn Henderson’s Networking for $uccess, Bill Cates’ Unlimited Referrals, and Jan Vermeiren’s Let’s Connect. Some of my own books that will help you develop your networking skills are Truth or Delusion, The World’s Best Known Marketing Secret, Masters of Networking and Business by Referral.

2. Practice! Practice! Practice!

Find networking groups that believe in education as part of their regular meetings. If they help by guiding you, you can practice the networking ideas you are continuing to learn as you participate.

3. Seek out reputable training programs on networking.

I highly recommend the networking content on iLearningGlobal.tv, Brian Buffini’s referral training for the real estate industry, and the Referral Institute. Look also to your local business development and entrepreneur centers for workshops, experiential learning and in-depth training in networking and word-of-mouth marketing.

Lifelong learning continually sharpens and hones your skills. Would you trust the growth of your enterprise to someone who’s not skilled in one of the most effective ways to grow your business? Probably not. So take the initiative to continue your learning on the subject of networking by enrolling in a course, attending a workshop or reading the next book. Think about how the knowledge and skills you derive from these resources can continue to build and enhance your business by effective networking.

If you have a favorite educational resource on networking, please share it by leaving a comment.

My  good friend and partner in the Referral Institute, Mike Macedonio (pictured here), is my guest blogger today.  He recently wrote a great article about referrals that takes an interesting look at the two investments involved in referral marketing–time and money.  If you want to learn how to avoid falling into the trap of being penny wise and time foolish, I recommend that you read this material–it’s great content.

Penny Wise and Time Foolish
By Mike Macedonio

Is it just me or is anyone else shaking their head at the assertion that “word-of-mouth marketing and referral marketing are FREE advertising.” Clearly, referral marketing (done properly) is a cost-effective way to get businness, but the only way I can possibly see making it FREE is to do nothing at all.

So what is the investment for referral marketing? There are two investments with building your business by referral: time and money. I’m surprised when I ask business owners how much they are investing in referral marketing and they don’t have any idea. Is it because it is so cost-effective that they don’t think it is worth budgeting or tracking? Maybe. However, I also see businesspeople turn down opportunities to get involved in networking organizations, acquire training, attend conferences or sponsor strategic alliance events for financial reasons.

What about the hidden cost? How much time are you spending networking and meeting with referral sources?  What is your time worth? Often when I ask that question, I get the billable rate.  Here is the simple formula I use. How much you earn, divided by how much you work. For example, if you’re making $120,000 a year working 40 hours per week, 50 weeks a year, your time is worth $60 per hour. You may be billing $150 per hour; however, after you factor in everything else you are doing, this is what your time is returning to you.

When you consider that the serious active networker will spend eight hours a week attending networking events, networking online, meeting with referral sources and giving time to activities with his network, that works out to 400 hours per year or $24,000 of time invested a year. Hmmm, that doesn’t sound like FREE to me.

Referral marketing is the most cost-effective way to grow your business. Getting the best return on your time and money requires a clear referral marketing plan. Will you be spending your time doing the right things, with the right people, in the right organizations? Investing in referral marketing knowledge will help you get the best return for your time investment.  Be careful not to fall into the common trap of being penny wise and time foolish with your referral marketing.  Create a budget and invest appropriately in your referral marketing.

I’d love to pass your feedback about this article along to Mike, so feel free to leave any comments below.

International Networking Week, Feb. 2-6, 2009, is quickly approaching and it’s a great way to start off the New Year.

Make 2009 the year you see opportunity when others see problems, seek growth when others expect collapse and see success when others see failure.  Watch the short 2009 International Networking Week video and find out about how to join me and many other successful business people in recognizing and participating in this year’s International Networking Week. Focus on what you do best, and don’t let other people sidetrack you from building your business.

 WATCH THE 2009 INTERNATIONAL NETWORKING WEEK VIDEO HERE!

At the BNI International Conference in Long Beach this past November, I had a great conversation with my business partner in the Referral Institute, Mike Macedonio (pictured to the right).  He was explaining why he feels there are only a few criteria that must be met to make people referrable by him.

The first criterion is that the individual is must be an expert at what he or she does.  He looks for people who have invested in learning their trade and continue to invest to master their trade.  Do they specialize in a certain area?  What achievements have they attained in their area of expertise?

Another one of Mike’s requirements is that the person is passionate about what he or she does.  This, especially, makes a lot of sense to me because if you’re not passionate about what you do, how could you expect other people to get excited about working on your behalf?

Mike’s last criterion stipulates that the person he is referring understands and honors the referral process.  More specifically, Mike wants to ensure that the person receiving the referral understands his or her number-one responsibility.  To quote Mike, “The number-one responsibility when you receive a referral is to make the person who gave you the referral look great.”  As long as the people Mike gives referrals to are doing this for him, Mike can remain confident that his reputation will be protected.  It also compels him to continue giving these people referrals.

Mike’s list of qualifications that make a person referrable is short, yet very powerful.  After discussing it, we both agreed that we should expect others to evaluate our referrability by these same criteria.  Are we invested experts, and do we continue to invest in our trade?  Are we passionate about what we do?  Are we practicing what we preach?  Do we make our referral sources look great?  I’m glad to say that I’m confident we both do all of these things.

So what makes people referrable by you?  I’m sure many of you have some great ideas in response to this. I’d love to hear them, so please feel free to leave a comment.

Many times, as I am speaking to entrepreneurs all over the world, I will “poll” the audience for answers to some questions. It is a simple tactic that gives me a ton of great information. Asking questions of my audience gives me stats that can be very useful. For example, I’ve found that almost 90 percent of the entrepreneurs I’ve talked to love their work, but only about 15 percent enjoy doing the marketing it takes to get that work.

This type of information can be very powerful when I use it in my presentations. In fact, I was speaking with Dawn Lyons (a director with BNI and a Referral Institute franchisee, seen in the photo below) recently, and she described a poll she did at a GEMS Behavior Styles training event in Wisconsin. A participant was telling her how his boss always receives referrals “on the spot” from brand new clients, and how that strategy has never worked for him. He was actually wondering whether something was wrong with him.

Lyons decided to poll the audience. She asked, “How many of you have been taught that you should meet with a client, close the deal and then on the spot ask them for additional referrals?” The answer was a resounding yes from the crowd. Then she broke it down to this: “How many of you have been incredibly successful with this approach?” Not one hand was raised in the audience. Her next question was, “How many of you have been moderately successful with this approach?” Again no hands were raised. “How many of you have had a decent amount of success?” No hands again! “OK, how many of you have had at least one person give you referrals on the spot?â€� Finally one gentleman, a sales consultant, raised his hand out of the entire group.

Dawn turned to the original gentleman who asked her the question and simply stated, “It’s not you. See, many times we are taught techniques that simply don’t work for the majority. Maybe your boss is fantastic at it because he has 25 years of experience. Maybe it is because he works from 100 percent referrals.”

So you see, polling your audience is a great way to collect information instantly and even be able to give a great lesson from it. Try using it in your next presentation.

Trey McAlister, a certified trainer/coach with the Referral Institute and a BNI director in Northern California, was commenting to me the other day on a huge BFO (Blinding Flash of the Obvious) he had about how and why professionals often become disillusioned with networking. Trey said he realized that many professionals go into networking events ignoring one of the principal “commandments” of networking, either by having the wrong goal in mind or not having one at all, and they therefore end up leaving disappointed. It is extremely important to set a goal before you go into a networking event to give yourself a sense of purpose and direction.

Now, another thing that Trey and I both know is that the two main reasons people might not enjoy networking events are that they 1) feel like everyone is trying to sell them (which many times may be true) and 2) they go to the event hoping to find either hot prospects or a bona fide client. The problem is that when you combine numbers one and two, it creates a recipe for discomfort and dissatisfaction. Trey pointed out that if people actually take to heart the definition of networking I suggested awhile back, “Networking is helping others as a way of growing your business,” they would go into and come out of networking events with better focus and have a much better and more productive time.

When Trey mentions this BFO in presentations, he reminds members of his audience that if they are truly “business” networking, then goals are a must. “Whether it is the number of people you want to meet or the types of people you want to include in your ‘contact sphere,’ ” he says, “you will be more productive and satisfied with your efforts if you set a goal.” Also, if you make sure to focus on others and not on yourself when you participate in networking events, you will be paving the way to start building relationships, you won’t appear to be selling, and you will be more enjoyable to talk to.

One of the last things Trey mentioned was something he said he remembered from being mentored by Tom Fleming (master trainer for the Referral Institute). Tom taught him to always go into mixers with the business networking attitude as opposed to the social networking attitude. If you go into a mixer ready to socialize or chat, you might as well leave the business networking for another time. By deciding to go into a mixer with a business networking attitude, you’ll undoubtedly improve your chances not only of feeling more satisfied when you leave, but also of having a happy networking experience.

I recently had two organizations attempt to create a strategic alliance with BNI and the Referral Institute and I got two substantially different results.   

The first company (which shall remain nameless on the grounds that they like to attack folks they are not happy with via the media) contacted me and wanted to speak.  With them, it was a case of “Glad to meet you—let’s get married!�  I really got the sense that they wanted to GIVE me the privilege of sharing my entire database of contacts with them based on who they were and how amazing it would be for me to even say I had stood in their shadow!  Get the picture? 

When I explained our corporate philosophy and my own personal belief system that deepening a business alliance and building a relationship with a partner business took time and effort before getting to the “let’s get married� stage, they abruptly ended the call and (I’m sure) moved on down their computer-generated list of businesses to call.

By contrast, here is how the second organization (Brian Tracy University) approached the same issue:  Brian Tracy himself contacted me and started the conversation by asking me what our company goals were.  I shared with him that we recently set the goal of  “92 in ‘12� (9200 chapters by the year 2012).  The next statement from him was, “We want to help you achieve that!�

From there it went from “Glad to meet you� to “Let’s get to know each other better!�  Brian shared with me that he had ideas that could help us achieve our corporate goal and help our members do better business at the same time.  When I explained, as I had with company X, that our philosophy as a networking organization was one of mutual cooperation and that our belief was that anything that would really be of value to either of us would take time, he completely got it, respected it, and supported it!

If you want to create strategic alliance relationships with other companies, be sure you work with organizations that are willing to work with and respect your corporate culture and make sure to understand that the process takes time.  If you do, you will have great success with a business alliance. 

Our relationship has developed organically and we are now offering a very special program through the Brian Tracy University (www.briantracyu.com) to BNI members and Directors. I’m not sure how company X is faring; I don’t hear so much about their program anymore!  I wonder why? Hmmmm . . .

Looking back over two decades of building an international company, I can clearly see that no one person or company brought something to the table that launched my company to the next level.  Instead, it was the cumulative effect of many people, many strategic alliances, and many well-nurtured relationships with companies that were willing to get to know us and gradually, over time, build each other’s businesses through combined efforts.  Each contact, each opportunity to reach out to each other and each mutually beneficial activity served as just one more spoke in the wheel as we rolled up the hill toward success.

Last week, I met with my business partner in the Referral Institute, Mike Macedonio (seen below with me), and as we were discussing what it really takes to drive your business by referral, one of the first things Mike mentioned was that the first core competency of referral success is the need for correct knowledge.  It didn’t surprise me that Mike would start with this; after all, we co-authored Truth or Delusion–Busting Networking’s Biggest Myths which directly adresses what works and what doesn’t work in referral marketing.  In the book, Mike paraphrases Mark Twain’s statement about having correct knowledge, which appropriately says something to the effect of, It’s not what you know that will stand in the way of your success as much as what you know which isn’t so.

 The second core competency in successful referral marketing is to stay engaged with your referral marketing plan.  This is harder than it sounds.  Many referral marketing concepts are counter intuitive.  It’s like telling a driver to turn into a skid.  This is not the natural reaction.  Even when the driver understands it’s in his best interest to turn into the skid, it’s only when he does it that he learns how it actually works.

Referral marketing is the same way.  When we’re going out looking for more business, it’s natural to look for qualified prospects and approach them.  However, referral marketing shows us that we will be even more effective if someone who has a credible relationship with the prospect sent them to us.  We understand this is in our best interest, however it may not be our natural reaction. 

So, how do you get the business owner to network in a way that may not come naturally? Some of the solutions Mike and I discussed are to:

*  Stay connected to blogs and podcasts on networking
*  Participate in networking groups
*  Get involved in ongoing referral trainings

The first two core competencies, obtaining correct knowledge and staying engaged with your referral marketing plan, apply to any personal or professional development programs and it is important to keep in mind that though they may be “simple,” they’re not “easy.”

The third core competency, implementing a system to train your network on how to refer you business, is the missing piece that most business people do not have in place to create referral success.  No matter how brilliant you are in referral marketing, or how skillful you are in “leaning into the punch,” if your referral partners are inadequate your results will be insufficient.

Mike gave a great football analogy for this.  He said, “What if Tom Brady, the most successful quarterback at this time, were to get on the field with a team that was lacking skills and knowledge of the game?  Tom Brady would be throwing perfect spirals to players who can’t catch and don’t know their assignments.  It wouldn’t take long for Tom to recognize that he’s better off just keeping the ball and running.  This could be equated in business to direct prospecting.  It is hard work for short yardage.

So, what can we learn from this?  That if you make the three core competencies a priority, you will not only be on the right track for referral success, you will also be gaining much more “yardage” from your efforts!

What has your experience been and/or how do you think you can apply these ideas to your business?

Continuing with my discussion on “Business Networking Trends,” here are my observations about networking and social capital education:

Don’t hold your breath for the colleges and universities of the world to begin teaching networking and social capital. At this point, only two colleges in the world offer regular, core-curriculum college courses on networking and social capital. One is a course at Davis College in Ohio taught by Debby Peters, and the other is a class at the University of Michigan taught by Wayne Baker. That’s it–two colleges!

The college and university systems are behemoths of bureaucracy that are so far behind the curve of small business development that I’m beginning to despair that they will ever catch on. Most professors have never had a real job in the business world and are completely out of touch with what is happening in real life, especially in small business.

I predict that the current trend in networking and social capital education will emerge in the form of private professional training organizations, in much the same way that private industry has controlled the educational market on “sales techniques” (another area in which colleges fail miserably). Companies such as the Referral Institute, which are offering training series specific to the techniques and systems of networking, social capital and referral marketing, are starting to pop up with a very refined and polished slate of seminars and training for business owners who want to learn how to harness the power of word-of-mouth marketing.

Next on “Business Networking Trends:” Large Companies vs. Small.

Several emerging issues and trends surrounding the process of networking are being created out of the need to find an effective way to develop business for entrepreneurs and salespeople in this new century. Over the next few blogs, I will address three of the most prominent trends that I believe will become more important in the coming years. Here is the first one:

Online and face-to-face networking will both continue to flourish.

I’m a proponent of online networks such as Ecademy.com and others. I think they will continue to grow successfully and help many of their members. However, they are not the final answer to business marketing or to networking. They are another great tool for people to connect with others (especially outside their local geographic area).

On my Referrals For Life blog, someone recently said: “I don’t know that it is true anymore that referrals are about relationships.â€? He went on to say, essentially, that technology is changing the rules and that just participating in a website will be good enough. Well, in one word, I’d have to say, “wrong.”

Referrals are and will be, for the foreseeable future, all about relationships. Whether they are relationships built online or face to face, they will still involve relationships. People refer people they know and trust. They will not regularly refer someone just because he or she is listed on a website. That’s called advertising, not networking.

Online networking works, but relationships must still be part of the process. Using the internet to exchange ideas, share knowledge and increase your visibility will be imperative in the coming years. Virtual networking is catching on in many circles. Some people involved in face-to-face networking feel threatened, as if online networking were going to replace their tried-and-true system.

Those who foretell the demise of face-to-face networking fail to note one important thing: the facts. Face-to-face networking groups continue to expand. The growth rate of my own referral networking organization, BNI, bears this out. Since the internet first became popular in the mid 1990s, BNI has experienced more than a 1,000 percent growth rate. That is not a typo.

Technology flattens the communication hierarchy and provides opportunities to improve your networking efforts–not replace them. I believe people who understand this will begin to use technology effectively–without replacing relationships–to take their marketing to new levels in the years to come.