Social Networking vs. Local Networking – The Truth

Social Networking groups are on the rise, but are they really worth your time? What is their perceived value vs. their actual value? Discover the importance of local business networking and how to grow your business through referrals

Written Feb 12, 2009, read 1910 times since then.

In any given week, I must get 3-4 invitations from various social networking groups asking me to join their network - all with the guise of easily making new connections and referrals. With the economy contracting, many professionals see these as a way to "get their name out" without spending any money. But there is a cost... a big one.

It is true that referrals are the highest quality lead you can get because they come from a trusted source, and it is true that many businesses generate 70-80% of their deals through referrals and past customers, but you need to dig a bit further.

You see, there is such a thing as "perceived" value and "actual" value. The perceived value is that you can join these social networks for free and instantly say "who you are" and "what you have to offer" and thousands of people will rush to you and use your service. Therefore, the more time you spend emailing others, the more relationships you will make, and this will lead to many deals. Again that is the "perceived" value.

The "actual value" is something quite different. Social networking can be a drug. You think that you are making all of these connections every time you send out an email, but the fact is you end up wasting a lot of time on it, especially when most people scan it very briefly as they are sifting through the hundreds they get each month.

Now to get me wrong - the idea behind it is good, the problem is the results are something else. The fact that you have connected to a web designer in Pakistan, or someone in human resources for Kraft in Kansas, or perhaps a real estate agent somewhere in Florida is fine, but do you have the time to wait for one of these very long shots to know someone in your area that might someday use you?

Now is the time you need to focus on what works...referrals. Specifically, non-competing business professionals in your area that are willing to refer you to anyone they know, in exchange for you doing the same thing. Acquiring local referral sources has and will always be the most efficient way to grow your business in the long run.

What do you think has more value, you spending 10 minutes building a relationship with a wedding coordinator in some other state that might know someone, someday, that might move to your city, and might think of you or...you spending 10 minutes building a relationship with a local lender, insurance agent, painter or other service provider that is meeting the same people you want to meet in your area every day? That is actual value.

Yes, the economy has slowed and you probably have alot more free time - invest it wisely. Don't allow yourself to have the attitude, "I will just wait for the economy to turn around." Build relationships with those people in your area that will recommend you to everyone they know. It will benefit you now, and exponentially when things improve.

Learn more about the author, Jordan Wexler.

Posted by Matt Hackett, San Diego, California | Feb 18, 2009

Hi Jordan-I agree with many of your points in this article. Quality vs. Quantity is a battle that I see many professionals tackle each and every day.

We (ABRA Networking) take it a step further and encourage our members to engage with their fellow chapter members outside of the regularly scheduled meetings. Cultivating loyal and lasting business relationships is much like cultivating a successful personal or romantic relationship. Although cavemen found success with a wooden club over the head, it doesn't quite work that way anymore. :)

Enjoyed the article!

Cheers to your success, Matt Hackett CEO | ABRA http://www.GoABRA.com
Posted by CAELAN HUNTRESS, San Isidro de el General, Perez Zeledon Costa Rica | Feb 18, 2009

I'd like to see a follow-up article about how to build those local relationships.
Posted by Stephen Lachuta, Seattle, Washington | Feb 18, 2009

I very much agree, even though I have a ton of "connections" in the online world, how many of those actually end up being real live patients in my office?? Not that many. The bulk of new patients I get are from me getting out and meeting people face to face. So while supplementing your business with online activity is great, actual face to face for my business is where it's at. ~Dr. Steve Lachuta Northgate Chiropractic
Posted by Jordan Wexler, Los Angeles, California | Feb 19, 2009

Very good comments. The purpose of the first article is to dispel those "dreamy-eyed" believers that broad social networking was their ticket to success, and that referrals from quality local professionals should be their goal.

In the next article (as Caelan requested) I will describe the next steps - including turning these quality relationships into valuable alliances. This requires several steps, education on how to properly network with others, practical application, and then face-to-face meeting events where people can interact.

At SmartGuy.com, we are finalizing those stages as well.
Posted by Kate Phillips, Seattle, Washington | Feb 20, 2009

Thanks Jordan, really great article.

I too struggle with the online "networks" and the time they can take. And how valuable is a potential connection on Facebook who adds you as a "friend" but can't even write a note to say why they want to be "friends"? (I swear I get one of those every day.)

One thing I like about Biznik is the combination of face-to-face with online. When you've seen someone at a few events, you really start to get to know them!

I know you're referring to BNI or LeTip type groups when you say "non-competing." I have seen those groups work better for some industries than others. I think this is the reason:

How many people need insurance of some kind? If you drive or own a home (or want renter's insurance), you need insurance! That's what, 98% of us? It's a no-brainer for an insurance agent to be networking in that way, especially with real estate agents, financial planners and mortgage loan officers.

People with more "niche" industries might not get as big of a bang for their buck from a group like that. If 98% of people need insurance an insurance agent, how many people perceive a need for a custom furniture refinisher or a recording engineer? 3%? 2%? 1%?

For some industries, it might make sense to find ways to cast a "broader" net than what can be found in a group of 20 or 30 people. It might make sense to meet as many people as possible, rather than meet with the same people week after week. It could make sense to attend multiple "meet-ups", events, and low-cost groups.

Or... it might make even more sense to stay at home and design a highly effective, targeted website or blog with killer SEO. And if you're an internet marketer, there might be no better plan than meeting a whole lot of people online.

I've been thinking about this lately... I'll call it the marketing maze. The best way to nagivate the maze and come out the other side with clients will not be the same for each of us.

But you raise some excellent questions here. No matter what your business, there is a difference between quality and quantity. (Even an internet marketer can benefit more from one quality joint venture partner than 10,000 low-quality "leads".)

Thanks Kate
Posted by Jordan Wexler, Los Angeles, California | Feb 20, 2009

Kate,

Thanks for taking the time to respond in such a detailed fashion. Very good points. It seems you have a very good understanding of the subject.

Local networking groups are very effective, but limited. Within a few months, you have met those people and pretty much exhausted the leads you will receive from them.

Adding the SmartGuy tool allows these groups to meet not just those within the group, but everyone they know...and everyone they know... It also allows the groups to mesh with eachother.

This way, even the furniture refinisher or recording engineer you speak of will get referrals since the "net" that you mention is so much broader.

Can you imagine the combination if SmartGuy and Biznik combined efforts? You would have (1) supervised social networking, (2) live meetings, (3) consumer directory (to drive consumers to the businesses), (4) a referal management system that allows professionals view leads send a received, AND (5) an affiliate system that paid businesses to build their own referral networks? In other words this whole system would end up FREE!

Hmmm...

Something for people to think about... Dan you listening? 8)
Posted by Shannon Evans, Bainbridge Island, Washington | Feb 22, 2009

My thoughts revolve around the fact that networking only works when there are true relationships built between real people. This all fits into what I call conversational marketing. Hard print sales no longer work as effectively as they once did as they are forms of blanket marketing aimed at a desensitized public. Direct marketing is interesting to study but it too does not always pay off either. The idea of inbound and outbound links is usually associated with a website the principles can be applied to networking too. Outbound only networking will work for 2-3 minutes. What works is when you build inbound links (gathering information that is useful to others in your circle and sharing it with others) that are sincere, useful, and conversational in tone. I take a slightly different approach to the idea of networking and referral...I believe in open dialog between people even if they are in the same field that I am in...I learn from the way my competitors speak and market and hopefully they learn from me. They are not "the enemy" or "the competitor, " they offer a service similar to mine but from a slightly or vastly different approach. So while I may belong to a referral group for networking purposes I also feel that an open group like Biznik has a different value to me. Conversational marketing requires balance...and continual tweaking to make it work.
Posted by John Sedgwick, Sedro-Woolley, Washington | Feb 25, 2009

Thanks Jordan, this is a provocative piece. My belief is the real value lies somewhere in the middle. There is no question that "traditional" face to face networking works well. There is nothing like being able to look into a person's eyes, shake their hand and see and feel the truth. You can't do that online. On the other hand online social networking is really just an extension of traditional face to face networking. The models are similar. It's all about people connecting in the context of community. In fact, this is what we are all doing right now on BizNik. If there were not value in the online BizNik community none of us would be here. One of the keys to BizNik's success is the local face to face value the network brings to its users. The local face to face events, workshops, the after hours socials at the local brew pub are where solid social networking happens. I believe there is tremendous value in online social networking. I also believe you must carefully evaluate the opportunities and participate in those that work for you. Just like I am selective about what face to face networking opportunities I attend locally and regionally, I am equally discerning about which online social networking opportunities I participate in. The middle ground is empowering because the true power of social networking is in how we weave BOTH online and face to face “social networking” into a vastly expanded network of personal and community contacts.
Posted by Kelley St. Germain, West Jefferson, North Carolina | Feb 27, 2009

Yes! Jordan confirms what I have been turning over in my own brain. The rush to worship at the alter of social media makes me think of the proverbial pendulum swinging too far in one direction....

Social media has value, but it can also be SUCH an incredible time vacuum. I guess (maybe) it could depend on your business...but I don't see how it could ever replace the value of local networking and relationships.
Posted by Kathy Salazar, Silverdale, Washington | Feb 28, 2009

Hi Jordan, I think that it probably fills that space of "instant" and "easy" that so many are looking for in various industries right now. When it comes down to it, you just can't replace hard work and personal connection and a little be of creativity........
Posted by Jordan Wexler, Los Angeles, California | Feb 28, 2009

Yes Kathy, SmartGuy.com is a real good first step for businesses looking to align with one another. After that, they will come together in local face-to-face gatherings (i.e. networking groups, Chambers of Commerce, restaurants and of course, all Biznik gatherings!
Posted by Alan Boyer, Liberty, Missouri | May 29, 2010

Jordan, you are dead on that most networking, local or virtual results in almost nothing.

The way people do it, and who they choose to network with is certainly one of the big issues. But another is their own goals for that networking meeting and relationship.

Most people do their networking like most do marketing. I call it Hope and Pray marketing, and the same for networking. In other words they do a little of this and a little of that and Hope it'll work.

However, when marketing . . . and/or networking you must develop a strategy, a step by step approach that first identifies the ideal person to network with (either because he already knows who you want to meet or is that person rather than hoping someday they will), then leads to a specific event and relationships with a predetermined outcome. In other words a goal for the outcome rather than hope and pray, and then heading for it with a call to action that leads you and your new networking partner to a specific result . . . both of you getting more business because you've done something together.

I look for people who are doing business with my ideal client. Then I don't will put together a strategy that will help him . . . and coincidentally, me, get to more clients between the two of us.

And I'll also open my HUGE virtual entwork to him, while he opens up his. Between the two of us we know a LOT more people and will develop a strategy to work that large group between us.