You want to grow your business with referrals, but what does it really take to see real returns? How many lunches should you spend connecting with people who can refer business your way?
I hear a lot of numbers from business owners and professionals (lawyers, accountants, engineers, consultants, and so on) who try this kind of networking and most of those numbers are low. These people are not investing in themselves or their referral sources and they give up ─ not because networking lunches don’t work, but because they underestimate the kind of commitment it takes to reap success.
I started my business with nothing but referrals. I’ve trained many business owners and professionals to build a referral-based business and I reckon I’ve gotten it down to a science. The number of lunches it takes to start generating a steady income is surprisingly doable.
You’ve got to eat. Why not be using that time to build relationships and generate referrals and introductions?
Read on to learn the numbers that will work for your business or practice.
I’ve been talking to a lot of people lately who are doing lunches, breakfasts and coffees in order to build up their professional network in order to grow their businesses and it got me thinking about what it really takes and whether the people I’m talking to actually appreciate what it takes.
I was talking to an accountant this week who was really proud that he’s doing one lunch a week. And for him that feels a lot. To me that’s not an extraordinary number. I hear that number from a lot of people and they’re all pleased with themselves for doing one lunch a week.
So let’s talk about one lunch a week and what that looks like when we pull it apart and think it through.
If you’re doing one lunch a week you’re probably doing something like 40 to 45 lunches a year. That takes into account that you’re on holidays 3,4,5,6 or 7 weeks during the year and there are other ‘things’ that come up and come along that make it hard for you to be at lunch with someone.
So let’s be realistic here. One lunch a week doesn’t mean fifty two lunches a year. The number is more like 40-ish. And that’s great if those lunches are producing the all the referral business you want.
Now it’s my belief that at least in the first three to five years of a relationship with a referral source you need to be at lunch with them four times a year. That’s how you build trust and understanding. That’s how you stay top-of-mind. That’s how you maintain the connection.
And in my networking course, I actually advocate that you not only do lunch (or breakfast) once a quarter/4 times a year, but you also email or do something to be ‘in touch’ a couple of times in between your lunches so that these people are hearing from you once a month. That might be that they receive an invitation to your drinks soiree or you might send them an article that relates to their industry or a funny story or something like that. Maybe you pick up the phone just to say ‘hello’ and update each other. It doesn’t mean that you’re devoting a lot of time to this, but you’re at least staying in touch so that you’re top of mind.
If you buy my argument, and I think it’s a legitimate one based on a fair amount of personal experience (that you need to see these people four times year) it means that at 40 or so lunches a year you can handle about ten referral sources. And that’s fine if those ten people can refer enough business to keep you going. If referrals are a big/important source of business for you, you need to be sure those ten sources are pretty good.
Let’s just pick a number. Let’s say we need those ten referral sources to send us roughly $1/2 million in business a year. Well then each one needs to refer about $50K in revenues. If your referral sources aren’t doing that for you then you need more than ten referral sources and that means you probably need to do more than 40 lunches a year.
I just want to put this in perspective for you.
This is really a math problem you’re trying to figure out. How many lunches does it take to grow a business or a practice? Answer. It’s the number of referral sources times 4 lunches a year. That’s your number.
So, if your revenue target is $1/2 million and you’re ten referral sources are each sending you about $50K worth of business then you’re hitting your target. And that’s great! However, if each of those ten referral sources are sending you only $25K in revenues you’ll need to bump up that number to something like twenty referral sources. Twenty times $25K is your $1/2 million a year.
By the way, I think twenty (referral sources) is a good number. With a methodical, systematic and disciplined approach to people it’s very possible to handle twenty referral sources. But twenty referral sources means 80 lunches a year which is more like 2 lunches a week.
So you have to know what your numbers are ─ then you can figure out how many lunches you’re going to need to do in order to hit your revenue target.
Now keep mind that when I’m using any of these numbers (i.e. 20 referral sources each sending you $25K worth of business) they represent a mature and productive referral network of solid relationships that are consistently generating business for you. You’ve invested quality time in these people, you’re staying top of mind with them and they are referring you a regular supply of good business. That does not happen overnight.
It takes a while to build relationships with people to the point where they are referring a steady supply of business to you. And so, when you’re priming the pump in the first few years ─ as you’re building mutual trust and understanding with people ─ you won’t get as much business as you would like from them. You haven’t bedded down those referral sources as yet. Nor have you ‘weeded out’ the weaker ones and replaced them with stronger ones so your numbers may not work out in the first few years. You may have to keep getting to know these people so that they trust you to send you the good business.
Then there’s always the issue of needing to ‘refine’ your referral network. You’re going to find that some of the people you’ve built a relationship with just can’t refer to kind of business you need. They don’t have the relationships themselves. So you’ve got to replace these people with better people and that means doing some ‘exploratory’ lunches. That means getting to know some new people and adding them to your list and seeing if they are going to be part of your referral network over time.
You’ve got to recognise that when you’re building your referral network, you’re going to be doing even more lunches because you’re adding more people into the mix.
So you need to play with this and give it some thought. It’s great if one lunch a week is working for you, but my experience is it’s not enough.
My experience is that people that try this networking approach kind of get started with a bang. In the beginning, they do two, three and sometimes four lunches a week and they actually get some people in their network, but then they cut it back to more like one lunch a week or one lunch a fortnight ─ and that doesn’t keep the machine going the way you want it to go.
Give all of this some consideration. If you’re just starting out; if you’re in that development stage you need to go harder. If you’re in maintenance mode than you can potentially go at a more moderate pace.
I know a guy who has built up a very busy and very successful mid-size law firm and he does three breakfasts every week (and sometimes four and five breakfasts a week in the lead up to the end of year holiday season). My point here is that it’s possible to do this. I can be done. It is being done.
If you’re already so busy that you’re going to say “I don’t have time to do all these lunches because I’m generating so much business already” then that’s fine. You don’t have a problem if the business is pouring in week in, week out. In which case you’re in maintenance mode. You just have to keep your referral sources on a regular cycle. And the reality is that once you’ve been doing this for a while and you have really strong relationships you can potentially stretch those lunches out even further.
You know how it is. You catch up with somebody you were friends with at university or worked with previously and it’s just like ‘bang’ ─ you’re right back in that relationship even though you haven’t seen each other in years. Well lunches can be the same. Once you already have that strong ‘connection’ then it’s easier to stretch it out a bit. My hope is you don’t have to do that and you find a way to incorporate these people into your life so that you’re bumping into them at industry events, at your kids’ parties and sports fixtures, in the clubs or groups you’re involved in or whatever. So lunch isn’t necessarily the only way that you maintain these relationships.
That said, having one-on-one time where you get to sit down and update each other without the distractions of everything else is an important part of maintaining your relationships. So don’t put those lunches (or breakfasts) off for too long, too often. You really want to stay in touch. And the best networking is accomplished one-on-one over a bite to eat.
Remember, relationships can change over time. There are other people (your competition) out there building relationships with your referral sources and whose goal in life is to be the person that gets these referrals instead of you. So keep that in mind. Don’t be complacent about your relationships.
I want you to think about the number of lunches/breakfasts you’re doing per week and do the sums. If that’s working for you, great. But at one lunch a week if you reverse engineer things my concern will be that’s it’s not generating for you what you could be generating.
I say this time and time again, you’ve got to eat and there’s no reason that you can’t use that time to be building your business.
So how many lunches does it take to grow a business or a practice? My gut tells me that it takes more than one a week to get where you want to go. If you can hit your targets by doing one lunch a week that’s really good. But my sense is that you ought to be seeing more people, connecting with new people and nurturing your network more than once a week and that it needs to be a big part of what you’re doing.
Going to lunch is such a powerful, such an effective way to grow your business. It’s the highest ROI thing you can do. You ought to do it!
This networking thing is not rocket science. It’s getting to know people, building relationships and staying in touch. Done right, it will without doubt grow your business.
So again, how many lunches to grow your business? Well one a week is good, but more than that would be a lot better.
Until next time.