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A friend sent me a LinkedIn message this morning asking for advice on selecting a referral group for his wife to join with her new franchise business. As I started to formulate my answer to him...the more I thought about it the more I thought of articletime.
This answer used to be much faster and simpler when I owned multiple BNI franchises and was making my living off of membership fees. Of course, you should join a referral group and you should join one of mine! Now it is far from simple.
Becoming a member of a professional run and ethically led referral group changed the trajectory of my professional and personal life for the better. With that being said, I am generally not in favor of people joining referral groups...lets say that 75% of the time it is a bad idea because of the amount of variable risk involved with the model.
First rule: If you already have a good client base and a good network...you shouldn't join a referral group (you already have one). In your case, joining a referral group comprised of people you don't already know and trust, will be a tremendous risk of your time and reputation. Don't do it. If you want more referrals contact me and I can help you get them with far less effort and risk.
Second rule: If you don't have a good client base and don't have a good network...you might want to join a group, but, you better join the right one. I have seen more sales careers derailed by the potential time suck that a bad referral group can guarantee than I have seen great careers be launched.
Yes, joining the right referral group as a new sales rep or small business owner can be amazing...for a very small percentage of people.
You still want to be a member of one? Ok then. Here are my thoughts on how to select one:
- Are you a salesperson? If you have never been in professional sales before and have never read a book on sales I would start there. Get a copy of "Gap Selling" by @Keenan and read it asap. There are quite a few great books on sales out there, but, I love that one for people that have never had professional training. Once you are ready to sell...you are ready to network. (most referral groups fail because they are made up of people that don't want to sell)
- Do you have a defined target market and/or ideal client? I really, really hope so. Otherwise you are going to waste your time and the time of everyone you try to network with. If you know the profile of your ideal client, look at the membership of the group you are thinking of joining? In most cases, referral groups tilt one way or the other towards B2B or B2C. Are there experienced and competent professionals in your area of focus?
- How many members are in the group? This answer is will tell you how much time you are going to have to dedicate to recruiting members in addition to getting to know the current members. One thing that I consistently see overlooked by new members is the amount of time it will take to get to know the current membership. A large group has significant income potential for you...and significant time cost to access.
- What kind of leadership, internally and externally, does the referral group have. There are numerous international, regional and local referral group organizations and they all have flaws and strengths. If there is external leadership, such as in the case of BNI, what do the members of the group you are evaluating have to say about the support and 'value add' of them?
- What kind of training, both formal and informal, makes up the culture of your prospective networking home? How do they 'orient' new members and what ongoing training is in place to ensure that the group stays productive and vibrant?
- How involved socially, outside of the meeting time, are the members of the group and in what ways?
- Do they have records of how many referrals they give to one another, and more importantly, how much the average net profit the average member receives annually?
- Will you be the first member of your industry in the group, or, are you replacing someone else? Why did they leave?
- How does the group handle interpersonal conflict? There are a myriad of reasons why referral groups get off track: referral quality/quantity, unethical/unprofessional conduct, absences, and many more. It isn't a question of when, it is a question of what will be done to minimize the damage and get back to business.
- Do they have an interview process for new members?
- Most importantly, do you know anyone in the group and are you already referring them currently? If not, your chances of success just dropped precipitously. If you don't have at least one person that you are already working with in the group you are the smallest stack at the poker table...they all know each other and you don't.
I could go on and on...
Here is the direct answer: Being a member of a referral group is either great or awful.
I have seen far more people get a terrible return on their investment of time than I have seen folks get great results. They sell it to you as an investment and don't give you the prospectus...and too many people stay because of the relationships they form...hoping over time that (like Chicken Little) something will just happen.
If you are going to join a referral group have a plan. Get a mentor that is/was successful in one in your industry/field. Measure everything and be consistent. Read everything you can get ahold of about sales and you will at least make your money/time back.
For successful business people, especially in financial services, there is almost always a better way to grow your business than being in a referral group. This might sound negative, but, how many people in your profession are truly successful as a percentage of advisors? The same is true of referral groups.
If you are looking for average you won't have to look far. A referral group that is worth your time as a successful financial advisor...is almost guaranteed to already have one of your profession already a member and you might spend more time looking for one than it is worth...with no guarantee of success. Here are a couple of articles I have written just for advisors:
The Real Reason You Don't Get More Referrals
I have dozens of articles about referrals under my LinkedIn profile for your reading pleasure, but, remember this when it comes to referral success:
The secret is within your own network...not outside of it.
I am in the process of writing my second book on referral based sales and if you are a financial advisor and are interested in referrals please feel free to connect with me and reach out via private message. You might end up being mentioned in the book.
Each and every day I work with the best humans I know: people driven to do the courageous and difficult job of executing a life defined and measured by their values. I do this through individual coaching with high performers that own their own businesses, group coaching with select small businesses and an upcoming (1/4/21) private community coaching experience.
All of these relationships begin the same way: with a conversation about who you are and what your values mean to you. From there, helping you move forward on your quest to live a life of less regret is the greatest gift I can experience professionally. If I can be of help, please comment below, reach out in a private message or contact me at mike@valuesbasedmindset.com.
Related: The Information Age is Dead: Long Live The Decision Age!