Retailer2Retailer: Why networking works

April 07, 2015

March 30/April 6, 2015; Volume 28/Number 20

By Scott Perron

Screen Shot 2015-04-07 at 2.11.03 PMI read an article recently written by one of the industry trainers for whom I have a great deal of respect, speaking negatively about the “art” of networking. My goal is never to bash a colleague and I’m not going to start now, but without a doubt in my mind, networking is not only a phenomenal way to build a business, but it has many other hidden benefits as well.

As newbies to this market for the last two and a half years and being in business under our new brand, 24-7 Floors, since October 2014, we needed a way to launch our company and get connected to the people who are in the know here in the Sunshine State.

So let’s talk results. In the first five months of our business almost 85% of of our tickets and 79% of our revenue has been generated by some form of networking. The only advertising dollars we spent outside of those efforts was for a two-month stint in a local direct mailing piece that yielded enough dollars to cover the ad costs but resulted in one-sixth the return on investment of networking.

Let me explain a few things about how our operation differs from the mainstream flooring retail locations. We operate out of an industrial location off the beaten path, and we do not maintain typical retail hours. As one might imagine, this frees us up to go out and hunt down work while others are waiting for it to come in. In addition, we utilize technology to communicate with our clients in ways most of our competition cannot get their hands on. We are also working on perfecting the system through which a referral or lead enters our business, all the way to the delivery of our thank you gift. It used to be, “Build it and they will come,” but for us it’s “Build it and they will call or email.”

Between our sales staff of two, we spend approximately 10 to 16 hours per week networking directly with those who can refer us business. It varies, as some networking includes weekly meetings or lunches, and some happen monthly. In calculating the dollar volume we have received from just one networking group we attend, from Oct. 1 to Feb. 28 we received $42,000 in closed business with an average margin of more than 40%. The annual investment for this group is $1,100, including a meal each week. That is an average of $8,000 per month which, annualized, could spell close to $100,000 in business and possibly $35,000 to $40,000 in gross profit dollars for $1,100 in cost and 75 hours of time for the year. My guess is you spend a lot more time making much less money.

Other benefits include introductions to new businesses with qualified professionals whom we will use personally and refer to clients. In fact, last month I gave out 18 referrals to one of my groups and, in turn, they referred me. When I remodeled our building I used at least 10 contractors and professionals in our groups for everything from insurance to painting.

We watch out for each other, listen for referrals to give our partners and spend time together in social settings. I am most honored to call these people my friends, and from the infancy of our involvement I saw long-lasting relationships being forged as many of these folks have been together for years.

If networking is a bad thing, then I should undoubtedly be in a timeout.

 

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