Power networking involves the development of a team of powerful, proactive referral partners capable of producing a steady flow of referrals for your business.
In this post you will read about:
- Definition of networking /power networking
- 7 Myths and truths about networking
What is Networking?
Webster’s Dictionary defines networking as, “the developing of contacts or the exchanging of information in an informal network as to further a career.” In its broadest sense, practically any type of social interaction could be considered networking. Most business people are familiar with the informal networking that occurs in Chambers of Commerce and other business organizations. But in a business environment where increased sales are the ultimate objective and “time is money”, informal and unfocused networking is inadequate. It is necessary to move to the description and definition of a more formal and focused type of networking.
Development of Win-win Relationships
In his book, Endless Referrals, Bob Burg defines networking as, “the development of mutually beneficial win-win relationships.” Bob says that “all things being equal, people will do business with and refer people to those they know, like and trust.” Networking, therefore, is about developing relationships with others who will do business with you and will send referrals to you because they know, like and trust you. Bob’s goal is to transform networking from an “informal process” to a “formal” process focused on generating referrals that result in sales and increased income.
Note that there is a requirement that the individual giving you the referral first know, like and trust you. It is necessary for you to allow others to get to know you, and they must like what they see and have trust in you before they will send you referrals. When building a referral network it is necessary for you to develop relationships of trust.
Selling Through Networking Partners
Power networking involves selling “through” those who are your networking partners not “to” them. There are two components of the business you derive from networking as Mr Burg describes it, business from those you know and business from those they know. The latter is far more critical than the former because the potential represented is hundreds of times greater – assuming every business person knows literally hundreds of people. The ultimate objective of formalized networking is not to sell “to” those who know, like and trust you, but rather to sell “through” them to the hundreds of people they know.
Power networking is, therefore, selling to people you don’t know with the help and cooperation of those you do know. It is “collaborative marketing” predicated on the assumptions that:
1. With minimal proper training you and a partner can effectively prospect for each other, and that
2. It is easier for each of you to prospect for the other within your sphere of influence than it is for the other person to prospect with those same individuals.
This definition points out another critical aspect of formal business networking. You must train others to promote your business for you. Clearly, however, in order to train others to promote your business, you must first understand how to promote it yourself. Effective networkers must not only understand who their prospects are and how to promote to them but must also be adept at teaching others how to identify prospects for their products or services and how to create the opportunity to make a presentation to those prospects.
Referral Partners – But why would this person, your friend who is generating referrals for you, want to work so hard to promote your business to others? What is in it for him or her? Obviously, he/she expects something in return and although that reward could take any form, the ideal form of remuneration is the referral of someone who could use his/her products or services. This reciprocity must exist in order for formal networking relationships to endure. And this concept of reciprocity leads us to yet another definition of focused business networking: it is the creation of personal wealth through the capture and exchange of referrals. If you want to receive referrals from others, you must be willing and able to give referrals in exchange for those you receive. If you do not give in return, the relationship will not endure and you will no longer receive referrals.
We refer to these special types of relationships where referrals are exchanged on a regular and ongoing basis as “referral partner relationships”. They are the pot of gold at the end of the rainbow, the mother lode! One such relationship can result in hundreds and even hundreds of thousands of dollars of referrals. The majority of your business networking efforts should be focused on finding and developing these relationships. Several such relationships can result in a flow of referrals sufficient to satisfy your needs for the lifetime of your business.
Strategic Partners – Closely allied to the “referral partner” concept is that of the “strategic partner”. A “strategic partner” is an individual who offers a product or service complementary to your own and who is willing to work together with you to offer your products together or to collaborate on marketing efforts. By collaborating with a “strategic partner”, you can broaden the range of products or services you are able to offer your clients, thereby increasing sales or broadening your customer base or, you can leverage marketing expense through joint marketing efforts, thereby reducing marketing costs or creating the opportunity for marketing efforts you might not otherwise be able to afford. Because they are dealing with the same or similar customers to your own, “strategic partners” can also be “referral partners”.
Traditional Networking versus Power Networking
Traditional networking, a style of networking where you market yourself by allowing others to get to know you and hoping that at some point in time they will either use your products or services or will refer someone else to you, is being replaced by what can be called “power networking”. Power networking is a style of networking where you market your business through the development of powerful, proactive partners who market your business for you in return for your help in promoting their businesses. Structured networking groups, both formal and informal organizations designed to teach referral based networking and to assist in the development of teams of referral partners, have sprung up to assist in this process. In this book, we will explore the nature of structured networking groups and their role in helping you apply the principles of power networking.
Myths and Truths about Networking
Myth #1: Networking is just belonging to a ‘Good Old Boys Club’ and is solely for the purpose of camaraderie and fellowship.
Truth: With proper training, networking can be focused to develop business relationships leading to significant referral business, rather than just meeting other people over a social lunch or at the bar during ‘happy-hour’.
Myth #2: Networking is a waste of productive time.
Truth: Networking with the purpose of developing referral partner relationships can be far more productive than spending time selling. One effective referral partner can result in hundreds or even thousands of sales over the lifetime of the relationship.
Myth #3: Networking is only for aggressive, loud-talking salespeople.
Truth: In networking, aggressive, me-oriented people seldom succeed. They find it difficult to build respect and trust which are the underpinnings of any referral partner relationship.
Myth #4: Networking brings people together who are struggling and have no real influence in the marketplace.
Truth: Networking attracts both successful and experienced business owners and professionals, as well as relatively less experienced individuals. The important point to remember is that everybody has a database of contacts with whom you have interest in connecting.
Myth #5: Networking takes too much time with little or no result.
Truth: Networking is a highly leveraged activity as you meet a number of professionals in a very short time. Those you meet are attuned to the development of referral partner relationships. As illustrated earlier, the results can be extraordinary.
Myth #6: Networking is expensive.
Truth: Networking is one of the least expensive forms of marketing available. Local Business Network (LBN) charges around $30 per month for members. Many members can recoup their expense for an entire year with one good referral. For some, the benefit to cost ratio runs in the hundreds.
Myth #7: Networking is primarily for small, non-professional businesses.
Truth: Networking can benefit all types of businesses. Experienced professionals like accountants and attorneys, technology firms, small retailers, home-based businesses and others are a few examples.
To summarize what we have learned in Chapter One:
1. Focused business networking involves the development of mutually beneficial win-win relationships called “referral partner relationships”.
2. These relationships are built on trust and involve collaborative marketing to those within each other’s sphere of influence.
3. To be effective, they require education and training on how to recognize prospects and generate referrals.
4. Referral partner relationships must be balanced and require both parties to consistently generate and exchange referrals.
5. Strategic partners are individuals who offer complementary products or services to customers similar to those you serve. Collaboration with them can broaden your product offerings, expand your markets, and create opportunities to leverage marketing expense.
6. Power networking refers to the marketing of your business through powerful proactive “referral” and “strategic” partner relationships.
7. Structured networking groups are designed to help you develop these partnering relationships