What’s Your Networking ROI?

Return on Investment. Also known as, “What am I getting out of this?”

Whatever business investments you’re making, knowing exactly what the return will be is an essential part of knowing whether or not it’s worthwhile. When business owners think about ROI, they typically focus on investments like equipment, real estate or marketing. But there’s a time-consuming and sometimes costly investment that isn’t always evaluated effectively – networking, which is cultivating meaningful relationships for professional or monetary gain.

Step Away From The Pool

Before I go into evaluating your networking ROI, I want to send out a quick reminder that the summer isn’t a time to go into “networking hibernation.” Investing in networking is worthwhile year round, even when so many people are on vacation. In fact, networking in the summer can be extremely effective due to the simple fact that fewer people attend events and you have a greater chance of having a meaningful conversation with someone you’ve been trying to connect with. Plus, people are more relaxed in the summer, making them more approachable.

At any time of year, studies have shown that it takes at least seven “touches” with a potential client to make a sale. For every time you don’t show up to a networking event, you miss out on getting one step closer to a closed deal.

Evaluating Networking ROI

Let’s first consider the most basic investment costs:

Time and travel
Actual dollars spent on the event

Many networking events have one fee for members and a higher fee for non-members. Often as a member of a networking group you get extra benefits: your company is listed on the group’s website, you’re prominently featured in an ad, or you’ll receive priority seating at events.

Let’s calculate the price differential in joining the group vs. not joining the group. For example, to join the fictitious networking group “Amy’s Powerhouse Networking,” it costs $150. To attend the monthly events, it costs $25 for members and $45 for non-members.

If you went to every monthly event as a non-member, you’d pay $540 (12 months x $45/event = $540). As a member, you’d pay $450 ($150 membership, plus 12 months x $25/event = $450). If you go to every monthly event, joining the group is better from a cost perspective, plus as a member you get those extra membership perks.

Now that the investment cost is determined, are you getting any clients or referrals from the people you’re meeting at these events? Let’s face it – we all go to the events for the potential business (sometimes we go for the speakers, but we never go for the food!) If you gain even one client from attending the events and the sale is more than the annual cost of the networking group, then you have positive ROI.

If this particular networking path doesn’t bring a positive ROI in the form of sales, it may be time to rethink your networking choices and move to another group that has more ideal clients and referral potential. However, it isn’t always that simple, so there are a few other things to consider.

Timeline

If you have the kind of business that’s hard to refer to, perhaps you just need to stick around longer. For example, if you’re a criminal attorney, it will (hopefully) take a while for the people you’ve networked with to have a situation that warrants your services. But if you’ve effectively networked with them, you’ll be the first one they think of – and call – when their teenage nephew or niece is arrested for driving under the influence.

Be On Your Best Behavior

Maybe it’s you! Are you dressed professionally? Prepared with questions and interesting things to discuss at every meeting? Are you friendly, but not too friendly? Do you overdo it at the open bar? Be honest with yourself and brush up your act if it’s necessary.

Are You Following Up?

After every meeting, make sure you follow up with an email or phone call. Keeping in contact gives you an extra “touch”, bringing you one step closer to a sale.

Keeping all these things in mind can not only improve your networking ROI, but will help you make a better decision about when to keep investing, and when to get out.