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Turning Networking Contacts into Referral Relationships

Turning Networking Contacts into Referral Relationships

We all know about New Year’s resolutions – but summer is characterized by its own set of resolutions, particularly in business. When people resolve to slow down for the summer, they tend to go into overdrive by reaching out to networking contacts “one last time” before checking out.

As a result, our inboxes are full of emails and our phones are pinging nonstop – all because people we met at networking events are bombarding us with messages to see how we can “align our strategies in a mutually beneficial relationship” (A.K.A. “promise to give each other referrals”). It’s a transparent, sales-based approach – and often, it doesn’t work. Think about it: How many times have you responded to those types of messages?

Here’s why it doesn’t work: We don’t have real relationships with those people. These days, we place so much value on networking that real relationships have taken a backseat. When you receive those “one last time” emails right around Memorial Day, that becomes abundantly clear.

“Contacts” Aren’t Really Contacts

My company used to venture out to every networking event imaginable. You name it, we were there: chambers of commerce events, association chapter meetings, start-up meet and greets and a whole gambit of others. It kept us busy and looked great on the surface. At the end of each event, we returned to our office with stacks of business cards from new “contacts.”

But here’s what we didn’t realize at the time: Networking “contacts” aren’t true contacts until you actually know them. Many of the names on those cards belonged to people who asked us to refer clients to them, promising to reciprocate by sending business our way. But did they? Not very often.

For that matter, I didn’t normally refer business to them either – because it occurred to me that maybe it wasn’t a good idea to refer my clients to someone I just met over appetizers and a drink last month. In my business, the alternative financing method of invoice factoring, I’m careful about who I expose my clients to because part of my business is helping them protect their assets. Regardless of your industry, you should be careful about who you expose your clients to as well. It’s a vital part of preserving your relationship with them.

With that in mind, here are the questions I started to ask myself about each contact:

  • What do I really know about his business?
  • Is he as good as he says he is?
  • Do I know someone in his industry who does his service better?
  • What does he really know about my business?

From my perspective, the initial introduction at a networking event is just step one to making a permanent contact; these questions must be answered before you decide to proceed. Step two – when you reach out to these people by phone to speak one-on-one and learn more about their business – is the contact that really counts. For many of us, it isn’t possible to take step two with every person we have a business card for because we just have too many. To mitigate this challenge, here’s the strategy that works for my company; I call it the Bucket Strategy.

The Bucket Strategy

My company is a pure invoice factoring firm that only accepts transactions with B2B companies. As a result, some of our best contacts are with bankers, brokers, tax accountants and attorneys—professionals who have clients in a B2B industry. These contacts are highly valuable to us; their cards go in Bucket A. Bucket A contacts are people we want to get to know better. We want to learn more about what they do and how they can help our clients. As we build that relationship, we are able to find out how good they are at what they do. If we feel they are a high quality service provider, then we refer our clients to them. It doesn’t happen overnight.

Of course, the Bucket Strategy includes a Bucket B. When we come across networking contacts that deal directly with consumers – say, home repair contractors or mortgage companies – we know to refer them to a colleague in our field who is better suited to handle their B2C financing needs. They go in Bucket B. There’s no point in expending our valuable time on building relationships with networking contacts that will not be mutually beneficial.

By acknowledging that networking contacts are not truly contacts until you build a relationship – and then, by using the bucket strategy to whittle down your list and determine who you want to pursue relationships with – you can provide your clients with high quality referrals. In my experience, that is the best way to achieve a truly mutually beneficial relationship.

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by Don D’Ambrosio // President of Oxygen Funding, Inc., an invoice factoring company located in Lake Forest, California. Contact him at [email protected] or visit www.oxygenfunding.com.

Opinions expressed by contributors are their own.