Art of Networking
Referral Multiplier in Business Networking
By Richard Poi, Assistant Director, BNI Sydney Inner West, Australia

How does a Referral Multiplier work in a referral-based business networking group?

You may remember the multiplier and its effect from your study of economics at college. It simply refers to the idea that an initial spending increase can lead to an even greater increase in overall income. The extent of the multiplier effect is, in its simplest form, the amount of times money spent is circulated through a country's economy.

Within the context of a networking group, the Referral Multiplier's effect will depend on the number of businesses that benefit from a single referral; the more business transactions created from an initial piece of business, the greater the effect. The effect can even go beyond one's networking group.

If you are growing your business in a referral business group like BNI, the Referral Multiplier will take effect when you practice the following:

1. Adopt the "Givers Gain" approach

According to BNI Founder Dr. Ivan Misner, the law of reciprocity sets in motion in-kind responses of individuals based on the actions of others. He uses the old adage "Give and you shall receive." It means taking the focus off what you stand to gain from the networking relationship. Doing so creates bonds based on trust and friendship. By maintaining strong relationships, you retain customers and increase your business.

2. Activate the VCP Process™

VCP stands for visibility, credibility, and profitability. What you need to do in order to be visible, credible and profitable takes a certain skill set.

Make yourself "visible" by participating in networking events hosted by your local chamber of commerce, writing a regular column in your local newspaper, or involving yourself in local community work. As you become increasingly visible in your business community, you will develop credibility. People will recognize that you are here for the long haul, and you will begin to receive quality referrals.

3. Build a personal network of trust

"Credibility" means providing a high level of service in your professional field and keeping a strong line of accountability with your referrers and clients. Observe the Code of Ethics of your networking group as well as those in your own professional field. Doing so helps you build a good personal network of trust, which makes you highly referable. Any breaches in professional ethics will cost you your credibility. This will affect referral flow and slows down the multiplier; opportunities will slip away to your competitors outside your networking group.

4. Create a 'Power Team' that multiplies business opportunities

When like-minded professionals get together, more business opportunities are likely to arise and bear fruit. To see these opportunities multiply three, four, or more times will depend on whom you team up with.

Power-teaming your group is a great catalyst for the Referral Multiplier. A good example is a group comprised of an event planner, photographer, travel agent, paper products supplier, caterer, beautician, florist, and printer. When a referral to a soon-to wed couple is received by one in the group, the couple is mostly likely to be referred to others in the group.

In conclusion, the Referral Multiplier can only work efficiently and effectively if everyone in the group makes it a personal goal to harness the power of relationship marketing. It is highly dependent on the level of commitment and the strength of your networking group.