The True Cost of Business Networking Groups

Its no secret that business networking groups have long baffled me. The way I see it, it is a bunch of people pitching products to other people who fall outside of their target audience - week after week. There is no shortage of business networking groups, just this morning I passed a community center with 9 vehicles outside plastered with various information about companies - insurance agents, home inspection, gift baskets, a real estate agent with adhesive vinyl letters peeling from her vehicle, the list goes on.

Most business networking groups meet on a fixed schedule, often times weekly. Membership is more or less the same "dedicated" members who make the same "pitch" each time. Even more befuddling, is that many of these individuals share memberships at other networking groups. Meaning, one individual is pitching their product/company/service to the same people over and over.

And what is the result?

How many times can you tell the same people what you do, on the same day of the week, at the same library/community center/restaurant/hotel/conference hall before you realize that they may not be your target demographic.

A complaint I hear often is, "I didn't get any business from it." Well... duh.

Let's look at four areas that could help change the statement above - and help increase your bottom line.

1. DEMOGRAPHICS

Who goes to business networking groups? Likely, other business owners, right? Is your product or service geared towards other business owners? I cannot even count the number of products represented at business networking groups that were actually supposed to target consumers - not other businesses. We refer to this as B2C (Business to Consumer) or B2B (Business to Business). Don't say, "well anyone is a consumer of my product." Just because someone is a human being, does not make them a qualified target of your product.

HOMEWORK

1. Define, very specifically, who a qualified target is for your product.
2. Research where your qualified target spends their time.

2. TRUE COST

The second area to evaluate is true cost. "But, its free" some would say.

No its not. Day #1 of Economics 101 teaches us that nothing is free. Everything has a cost associated with it.

In its most basic form, something either costs time or money - often, its both.

Consider that each networking meeting is 90 minutes long (on average, I have suffered through a networking meeting nearly 3 hours long). Multiply that times your hourly wage - conservatively $45 per hour.

Next, factor any membership dues, fines, tips, etc the group imposes - perhaps $250 per year. Now, many groups meet at restaurants with either a "meeting fee" or food costs. I have never escaped one for less than $12.

Now, if this hypothetical group meets weekly, your costs for that one meeting alone is $83. Yikes. That assumes you only go to one networking meeting a week. What if you're like most small business owners and attend two or three? That works out to be $250 a week. Or $1000 per month.

It is not free.

3. ROI

Ok, to be fair, let's assume that many people do not value their time or attend 2 or 3 meetings per week. We will cut that number in half; to $500 per month. How much business have you gotten from that one group you have been attending for the past year? You have invested approximately $6000 into the group, how much business have you earned? Remember, you cannot look at just your gross sales, because you need to factor in your time actually spent providing those services, right? Less your expenses and such. If you can correlate upwards of $12,000 in sales - and at least $6,000 in profit, then you are at least breaking even. If not, read on:

4. ALTERNATIVES

What else could you put $500 per month towards? Are there other exposure avenues that could give you a better return on your investment? Online advertising campaigns, if managed properly, could net anywhere from 60-100 leads per month with that budget. What about giving fifty $10 gift cards (to a partner company) for each new customer referred to you? Think about that power! You and another business partner up to combine resources and only give gift cards to the referrer of a new customer - not just a lead. Stop playing with weak, expensive, leads and take your business seriously. Focus on getting new customers!

HOMEWORK:

1. If I had $500 per month, what would I spend it on to grow my business?

If you would like more information on marketing online, or operating your business more efficiently, please contact me. I deal with companies that are serious about growth, not ones looking for something for nothing. No one benefits in that type of business environment.

About this Author

Shaun Nestor is an online marketing advisor and founder of Never Mind Marketing. He is passionate about helping small and locally-owned businesses use the power of online marketing and social networking to build their brand.

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