Networking ROI- do you measure it?
If you are in business, you most probably attend networking events (or you should). These come in all forms and types from structured formal membership based groups, to casual meet ups, events, workshops etc. The scope and availability of these is vast and can sometimes get a bit distracting to the business owner, as you can become a networking ‘whore’ (and I use this word for emphasis only).
As a fairly new entrant to the business spectrum (3 years) I have been to many different types and found success along the way, but have also been involved with events or meetings where I have thought “what am I doing here and why?”. Rather than talking about what types of events to go to too much, the only thing I will say is it is important to find events that suit your brand and potential target market. You should be meeting with people who can ultimately help you with your business because at the end of the day, you network to grow your business not to make friends, although this can be a side benefit.
So how do you measure the return on such activities and what should you consider?
Some groups, such as breakfasts, lunches etc charge an annual fee to simply be ‘in’ the group. This can vary from several hundreds of dollars to much more. Some even then charge a weekly fee for meals etc. as well. Others are free and cost no financial outlay- does this make them better?
My view is each activity should be reviewed and tracked (like all your Marketing activities). It is not only the cost of the meeting, meal etc to consider but your time spent with that event or activity, as this is an opportunity cost to your business. Typically a 1 hour meeting will take you at least 2 hours of your time as you travel to and from, and rarely do you leave on time. So what is your time worth to the business? This is an area a lot of business owners neglect to consider. Your effective time may be worth $1-500 an hour or more depending on the return you can generate and the business you are in.
Let’s look at an example
Weekly breakfast group:
- $1000 membership fee annually
- $20 per week = $1000 (assume a couple of non attendances for holidays)
- Your time @ 2 hours per week @ $100 /hr = 50 x 200 = $10,000
TOTAL COST = $12,000 p.a
Note. This is for a bare minimal commitment and doesn’t include additional time spent meeting people outside the group or other activities.
Even if you were to remove the membership fee and weekly fee, a so called ‘free event could be costing you thousands of dollars in your time!
So if you are attending more than one networking events, then the potential cost to your business can quickly add up. Assuming you are networking to build your business via referrals or JV opportunities, the actual business returns from each group can now be offset against the cost of attending to determine the ROI.
Back to the example, if you sell widgets for $500, the above group would need to produce orders for at least 60 widgets to cover the costs of attending (but this is only in sales not in actual profit margin).
While we all enjoy networking and it is an essential cost to business and great tool to form relationships, partnerships and potentially clients, it is critical that you as the business owner places some process and tracking over the ROI.
How do you track your networking returns and what do you find the most beneficial?