The first time I went to a referral network group was in the late 1990’s. It was at the Detroit Athletic Club and the attendees were predominately older men. As I sat there, images of Fred Flinstone’s secret fraternity handshake for the Loyal Order of Water Buffaloes came to mind. I definitely got the vibe there was a secret handshake involved.
Referral networks actually do have a handshake that forms their foundation, but it’s no secret. The primary purpose of the marketing group is to help members grow their business through—
- passing qualified leads
- education on how to network for leads
The pact: members commit to using each other’s services as much as possible and to serve as a quasi-sales force for one another. Everyone in a group agrees that only one person per professional specialty can join. People who are successful in referral groups are the type of people that are good at mining social capital.
For insights on how to reap qualified leads from a referral marketing group, view the below presentation that I recently gave to a Huron Valley Chamber of Commerce group.
The groups have their pros and cons. Members of Business Networking International (BNI), the largest business networking group and referral marketing organization, realized $3.1 billion in revenue last year. Across America, chambers of commerce and other groups sponsor referral network groups because they are effective.
The biggest con, really, is for generalists; as you are limited to only promoting your specialty area. For example, if another member is a residential real estate broker, a real estate broker that handles both residential and commercial accounts may only be able to promote their commercial services.
The secret to the success of any referral network group is not the one hour meeting they commit to attending every week (or in my case, every other week). The meeting mainly holds people accountable and provides a formal process for passing referrals.
The secret is that while a referral network is about generating business, it is ultimately RELATIONSHIP focused. It takes time—on average 6 months—to develop relationships to the point where you get a lead. Sure there may be low hanging fruit, a gold nugget in the river so to speak, because luckily you joined right when someone’s family needs estate planning and you are an estate planner. More often than not, leads start producing after you have developed your social capital.
You don’t have to be a social butterfly and good at small talk. The key is to be authentic and to work it!