Do “Dollars In Your Pocket”™ = A Great Return on Investment?
In this month’s blog, I want to remind each member that you MUST understand the ROI of networking to get the most out of your LeTip membership. That is and has always been my priority for you; to help you grow your business profitably.
What is ROI (Return on Investment)?
• Margin gained from tips received
• Improvement in public speaking ability that leads to getting more business
• Goodwill gained with your customers, suppliers, family and friends for the high-quality recommendations you make as to which businesses they should use, when they have needs that your chapter members can provide
o A study by Robert Davis of University of San Francisco concluded that participants in networking groups develop above average skills that result in more referrals and more clients as compared to business owners who do not participate in networking groups.
• Annual LeTip Dues
• Quarterly Chapter Dues
• Time Investment
Let’s start at the beginning of a year of membership and think through how to calculate your ROI. Start with how much your time is worth. As a business owner, you are looking for ways to grow your business, improve your business acumen, and retain your current customers. You only have so many hours each month that you can dedicate to these activities, as compared to hours that you need to spend on the operations of the business. Leaning too heavily on one side or the other results in problems for your business. Balance between sustaining the current business and seeking new business is a necessity for all of us.
If your goal is to bring home $100,000 this year and you work 50 weeks at 40 hours per week, then your average time is worth $50 per hour. Being part of a networking group requires you to attend 1.5 hrs of meetings each week. That equates to 75 hours a year which means you are investing $3,750 of your time in meetings. If you weren’t spending that time in meetings, you would be spending it somewhere else, trying to improve your business.
If your quarterly chapter dues are $200 and your annual LeTip renewal is $300, then you have cash out of $1,100 for the year.
Let’s round all of that up to $5,000 invested in your business networking activities.
Now let’s look at the returns you need to bring home the bacon.
The most obvious return for your business is the value of the margin you receive. First you get a new client from a tip provided from your chapter members. Example: a painter gets a job to paint a house for $5,000. The cost of paint, drop cloths, and the overhead from the truck you purchased last year accounts for $2,000, Then you have to pay your employees working on the job (you don’t do all the work yourself), which accounts for another $2,000. That leaves you with $1,000 in margin for the business. Your breakeven ROI would be 5 jobs received throughout the year.
5 × $1,000 margin = $5,000 invested in your networking activities.
Now let’s say that you are getting great leads from your members and you are able get the business from 5 out of every 10 Tips that you receive.
Now you know that you need to target a minimum of 10 tips received throughout the year to breakeven – that is if we ignore all of those other benefits you receive from the time involved in your chapter. Let’s assume that becoming a better public speaker and being a great referral source are all profitable to you above and beyond the breakeven on margin!
How do you get to that breakeven, but better yet, how do you double it or triple it?
LeTip has many opportunities for members to grow their ROI.
1. Training – Every new member (and every member who has been in for 5 or more years) should be taking the Network Training Seminar which is provided to you FREE OF CHARGE. In this training, you will learn the latest tips and techniques to become the best member you can be. Remember, this is a long-term plan. You are not in a networking group to hit and run.
a. Another study found that participants who stayed in networking groups longer identified their largest referral to be more than 50 times larger than those who stayed only one year.
2. Technology – LeTip has invested heavily to provide our members with the BEST networking portal and app available worldwide. Here are just three ways that using this technology can improve your ROI.
a. Build your profile like a storefront. If you don’t have a picture, bio and video introducing yourself, then how can your chapter members use that to introduce you to their clients. Imagine going to a kitchen supply store that simply had the name “K CHEN SUP Y” on its website or Facebook page. Would you think they had the best in town? Or would you continue looking?
b. Use the Invite Guest features in Wired to build your chapter. When you sponsor new members into your “exclusive” chapter and help them grow their business, they are going to feel obligated to tip you as often as they can.
c. Extend your reach and the reach of your chapter members with the Extended Network, which allows all of you to be in front of more family, friends, clients and suppliers every time they need to find some help.
3. Communication – read and watch about how other LeTip members are finding success. Each month we publish articles on successful members and chapters who relate information about how LeTip networking has helped them build their businesses. We also have an extensive library of documents and videos from past LeTip training that has been provided to member-led Webinars. Finally, you can also reach out to other members in LeTip nationwide to form support groups. We have some of these started for you with our weekly Lunch Bunches, Happy Hours, and monthly Leadership calls. But why not reach out to 5 members per month via email or phone that are in your category and ask them what types of things they do in their 30 second commercials or showboat tables and let them help you improve your communication and expertise in networking?
That wraps up my thoughts for today, but I always have more to say about this topic, in any of our training classes. Sign up for NTS, a board seminar, or our re-vamped White Badge training and make sure that you have a positive ROI from LeTip!