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Thinking about Networking

25 September 2012

Is networking an important source of new business for your firm? If so what is your networking strategy? If you have a good answer to this, you won’t need to read on…

The subject of networking is an interesting topic in the context of marketing a professional service firm. I’ve given the matter some thought recently, partly because I was trying to make it work for my own business, partly because I was advising my clients on the subject but mostly because I was asked to give to a talk on the subject to a networking group which always focuses the mind!

My conclusion is that networking is an important but poorly thought through source of new business for professional services firms.

A question I ask prospective clients is – do they want to increase their fee income? They naturally say yes. Then I ask them to describe their new business activity. Immediately they go into talking about all the usual broadcasting techniques like seminars, articles and speeches. Then I ask them where they currently get most of their new business from. Almost without exception the answer is “word of mouth referrals”. Then I ask – so tell me about your word of mouth referral strategy – but so far nobody has ever had one of those. Isn’t that interesting!  About 80% of all new business comes to professional services firms from referral sources and yet not a strategy in sight.

Networking groups are an interesting phenomenon. The object of the groups is to refer business to each other. A few years ago I was invited to attend one by a well meaning friend. However I ran away scared from what felt like “a very American idea”. However recently an experienced architect friend invited me to attend his networking group. The group is a mix of professionals and building industry people. What I have noticed after six months or so is that the building guys are all starting to refer work to each other – the architect to the builder carpenter, the carpenter to the painter and so on. My observation is this networking thing works.

I realised that the group was working for the building guys but not for me so I did some reading and some thinking and I boiled it down to the following thoughts which could form the basis of a networking strategy:

  • The key seems to be to build a network of colleagues who are fishing in the same pond as you but are not trying to eat your lunch!
  • The first requirement for a referral is trust. You would only ask for a referral from someone you trust. You would also only recommend someone you trust. So trust is central to getting and giving referrals.
  • The next requirement is need. Somebody needs a good accountant or a lawyer so they ask for a referral. So need and trust are at the heart of giving and getting referrals.
  • The purpose of networking therefore is to build honest, authentic relationships! So as in any strong relationship it’s about giving before receiving.
  • Who needs to be your network? Prospects, Influencers and referrers and clients.
  • Start close to home – clients, family, friends, bosses, school friends, college professors, service providers. These people know you, trust you and will refer you if you encourage them to do so.
  • How many people should be in your network? About 50 would be ideal. You need to be in regular contact with these people. You can’t keep in touch with 1000 people in any meaningful way.
  • The way to start is to build an initial group and refine it over time so that it becomes increasingly powerful.
  • Set specific networking targets for yourself – make I call per day, one meeting per week
  • Leverage social media – use Linkedin and Facebook to stay in touch with your close network (top 50) and with your wider network. Finally two things to remember if you are going to embrace social media – no selling and say something interesting!