A Network that Really Works

Business referral networks are not about socializing—they’re about developing leads

Many business owners are too busy to pursue much of a social life, especially during the week. Even opportunities to bump into potential customers or partners--at Rotary or Chamber of Commerce lunches, say--seem like a big investment of time, with little chance of a payoff.

But there is a more focused kind of business-networking venue—called a referral network—that, according to members of these groups, has a clear and present payoff. Just ask Tom Croft, a stockbroker in Santa Rosa, Calif., Six years ago, he joined a referral network called Sonoma County Executives Association, a group of some 70 business owners and executives who meet weekly for the sole purpose of exchanging leads. Now, most of Croft's new clientele derives from the group.

Croft is tapping the power of perhaps the ultimate networking machine. While it's unclear exactly how many business referral groups exist, participants and observers say the number is growing. Most cities have at least one and, in some cases, as many as five or six. A franchise, called Business Network International http://www.bni.com, operates at least 2,700 groups worldwide, up from 350 in 1995. What these groups have in common is a simple mission: Through regular meetings, members come to trust one another, to learn the types of prospective customers each seeks and to provide help in cultivating new clients. Only one representative from each industry is allowed, so no direct competitors are ever in the same group.

There isn’t a lot of pleasant chit-chat and polite card-passing, on the off chance that a referral will ensue.

“You're not being subtle,” says Croft. “We're here to share leads to help each other expand our business.”

For that reason, meetings tend to follow a streamlined structure. For example, every Tuesday at the Prestonwood Country Club in Dallas 45 members of the Prestonwood Business Networking Group meet for lunch. It starts with a 30 to 45-second “elevator speech” by each person, introducing his or her company. About 30 guests — people interested in joining — also give a similar speech. Any member who has received help from a fellow member during the previous week stands up and acknowledges that effort. After that, participants discuss specific referrals they're seeking. Other groups provide each member the chance to give a 10- to 15-minute talk every few months or invite prospective members to make longer presentations.

Still, it's in the more informal meetings held at other times during the week that the real relationships are formed. Most groups require that membership hold frequent one-on-one get-togethers, often at offices of the members. There, members have the chance to provide a more intimate look at their businesses.

How do you join? In some cases, applicants just need to be nominated by a member and appear before the group. Then they're voted in by the membership or an executive committee. Dues range from $250 to $1,000 or more.

The Marietta Breakfast Leads Club in Marietta, Ga., keeps a waiting list of interested applicants; when someone in a particular profession or line of business drops out, members consider a replacement for that specific area only from contenders on that list. Applicants also must provide three business references. At the Prestonwood group, applicants must demonstrate their ability to provide referrals, especially to people in related, or “synergistic,” professions.

Those synergies, in fact, may be the lifeblood of any referral network. Most successful groups include mini-clusters composed of people in complementary professions and businesses likely to provide referrals in the natural course of their businesses. Financial advisors, for example, tend to cluster with CPAs, tax attorneys and mortgage specialists — and they tend to get a large number of referrals from that group.

At the same time, you can't expect instant success. Generally, it can take anywhere from three months to a year for members to feel confident enough in a new colleague to recommend their services. But you can increase your chances of getting faster results by volunteering for a committee — say, the membership committee or board of directors. Another way is to hold as many informal one-on-one meetings as you can, to help members get to know you as quickly as possible.

And, membership can bring more than referrals. Connie Weems-Scott, with VeraVest Investment, has been a member in the Marietta Breakfast Leads Club for 15 years. She says she's come to regard the group as an unofficial board of advisors and a source for everything from how to improve her public speaking style to developing more effective personal business skills. “Every week, I'm going to be right in front of the highest-end professionals in the city,” says Jeff Thomas, a member of the Prestonwood group. That’s certainly worth the price of admission.

This story was adapted from “Group Therapy,” which originally appeared in Registered Rep. magazine in December, 2003