Art of Networking

Measuring Your Networking Success: Is It Worth It?
By Mike Zinni, ZINCASTLE Software Systems

Several years ago, when I chose to operate my business by referral, I participated in various programs that aided referral-based businesses. I quickly realized that I could not answer the most basic questions about whether my networking activities were successful.

I had a "gut feeling" based on the referrals I was giving and receiving, but as several of my employees also began to participate in networking activities, I became concerned about the return on my investment.

My behavior style demanded that I be able to measure my success, and with a software development company at my disposal, I proceeded to create the tool that has now evolved into Relate2Profit.com.

The goal was to answer the broad question, "Am I investing my money and my time wisely with specific networking groups and specific relationships?"

To evaluate if a networking group is valuable, participate in the group for a significant amount of time at a relatively high level—then measure the results. It's essential to know which groups are producing income and why in order to determine whether to continue a commitment to the group. This evaluation needs to be performed on a regular basis as group dynamics change. This same logic also applies to the individual relationships one develops.

Stats for Success
We monitor several key statistics that allow us to make intelligent decisions about networking groups and relationships.

Our closing ratio is based on our ability to close business opportunities that are presented to us. Looking deeper, the closing ratio indicates whether we are receiving quality referrals. If we spend time educating and motivating our referral sources, our closing ratio should reflect that investment. If our closing ratio is not acceptable, decide whether more time is required or if time should be invested elsewhere.

The average value of a referral (referred income divided by the total number of referrals received) is an important metric when evaluating referral sources and networking groups. Referral sources that consistently deliver referrals and result in above-average income are used as models for developing additional referral sources. Therefore, we need to understand how we developed that referral source.

Referral sources and networking groups that provide referrals below the average will be evaluated to determine how referrals can be improved. Also, consider whether they have access to desired clients.

We use the Networking Scorecard developed by Referral Institute to measure our activities with new and existing referral sources. The scorecard allows us to set weekly targets that we review to ensure that we are spending our time building the relationships that are profitable. Over time, the referral scorecard provides the roadmap to how we developed our premier referral sources.

To obtain this vital information, activities as well as income produced by these activities need to be recorded regularly. A company-wide commitment to a measurement application is required; we use Relate2Profit.com as our measurement system. We include the cost of this system and the significant time investment to maintain the information as an essential component of our marketing strategy and budget.

Asking the Right Questions
We use the information that we collect to answer these key questions to help determine if our efforts are successful:

1. Which networking groups and referral sources are performing well and why? Networking groups and referral sources that are performing well deserve a strong commitment from us. Understanding why referral sources are performing well allows us to duplicate the behavior that created that referral source.

2. What can we do to improve our results? Recognizing which relationships produce results early in the process allows us to focus on deepening those relationships. Over time, we expect our closing ratio to improve and our average referral value to increase as we concentrate our efforts on the referral sources that are producing results and as we develop similar referral sources.

Finally, our mature measurement system provides two substantial long-term benefits for our business. Our measurement system provides a framework for training our new employees in our philosophy and in our methods. A consistent training process reduces our costs and will produce a consistent message for our clients. Additionally, our measurement system documents how we produce referrals in a repeatable and measurable way; this increases the value of my business for potential investors or buyers.

Your referral marketing success can be measured and, therefore, improved. Make a commitment to the measurement process that works best for you—it will be well worth your time and money.

ZINCASTLE Software Systems was founded in 2001 by Mike Zinni. The first 20 years of Mike's career were spent working for large corporations, creating manufacturing automation software for some of the most challenging manufacturing processes in the world.

ZINCASTLE has a unique combination of desktop programming and web programming experience that allows them to design the right solution to solve the problem. They have also built an impressive network of referral partners to solve problems that are outside of ZINCASTLE's core expertise.

For more information, visit http://www.Relate2Profit.com