Episode 235: Working Smarter, Not Harder

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Synopsis

Scott Simon of the Metropolitan St. Louis BNI, who manages more than 100 BNI groups, joins Dr. Misner to help show BNI members how to work smarter, not harder.

Here’s some important background information:

• According to Stephen Covey, who spoke at the BNI International conference this year, trust is an economic driver. It speeds up the sales process. (See the book The Speed of Trust for examples.)
• Most companies spend almost all their money on traditional marketing and advertising when a small fraction of that money spent on networking would get the same results. (It takes 200 cold calls to get an appointment.)
• 98% of businesses rely on referrals, but only 3% have a strategy to get them.
• Since most people know about 1000 people, joining a BNI group with 24 members is like having access to 24,000 people.

An examination of chapters in Scott’s region showed that participation in BNI yields an average of 1 new customer per 5 hours invested versus 1 new customer for every 32 hours expended using traditional methods.That makes BNI membership 6 times as efficient as cold-calling—and a lot more fun, too.

Brought to you by Networking Now.

Complete Transcript of BNI Podcast Episode 235 -

Priscilla:
Hello everyone and welcome back to The Official BNI Podcast brought to you by NetworkingNow.com, which is the leading site on the net for networking downloadables. I am Priscilla Rice, and I am coming to you from Live Oak Recording Studio in Berkeley, CA. I am joined on the phone today by the Founder and Chairman of BNI, Dr. Ivan Misner. Hello Ivan, how are you?

Ivan:
Hi Priscilla.

Priscilla:
Do you have a guest with you today?

Ivan:
I certainly do. I have a good friend and long term director, Scott Simon. Scott is an Executive Director of BNI in metropolitan St. Louis area and actually the four-state area. Scott handles a very large area with his wife, Teresa. He has over 100 BNI groups. He manages over 100 chapters. Since 1994, Scott has been an Executive Director. He has over 2500 members. Scott, you told me before we went on, quoting here, your region did over $373,000,000 in sales. Is that right?

Scott:
That’s correct. It’s actually a 73% increase over 2008, so our region is very proud of that.

Ivan:
You should be. That is truly amazing. Because of that and your success with BNI, we wanted to ask you to come on the podcast and talk to members a little bit about some of the things that you teach there in your region that I think can help to get those kinds of numbers.

Today we are going to talk about working smarter not harder. Let me jump right into it. How is it that members can work smarter not harder? What in particular are you suggesting they do?

Scott:
It was really interesting at the BNI International Conference when Stephen Covey was speaking. It gave me one of those aha moments, one of those thought provoking concepts when he said that “trust is the economic driver.” He went on further to explain that when there is low trust, it takes more time to build rapport between people, which increases the time and dollar expenses of the transaction. Conversely, when there is high trust in a relationship, it takes less time and fewer dollars expended to actually consummate that sale. He went on to give an example of Warren Buffet closing a $23,000,000,000 acquisition in 29 days with absolutely no due diligence done because he and the seller had implicit trust in each other.

You know, Ivan, I spent 20 years selling commercial real estate and our average sale contract was 70 pages long, took 18 months to close, and unfortunately, none of those sales that I brokered ever came close to $23,000,000,000 in sale. The moral that I got from that story is that trust is the foundation of relationship, and because people prefer to do business with people they like and trust, it inevitably saves them time and money.

Ivan:
If I can just come in. I think that was an amazing story. It is in his book. If members want to pick up that book, I highly recommend it. It is called the Speed of Trust. I believe he talks about that very story in the book. Sorry, go ahead, Scott.

Scott:
No problem. Also in another book that you had co-authored with Jay Abraham, Money on the Table, Jay says and I quote “Most people spend all of their time, effort and money on conventional, externally focused advertisement marketing program when a small fraction of that time and money would give them many times the results if they developed a formalized referral system.”

When mentoring business people today, I often hear them complaining about how they are so busy that they need 25 hours in a day, so I ask them to describe their daily activities. Inevitably, they tell me that they spend the majority of their marketing efforts cold calling. To that I say yuck. To which I ask, how has that been working for you? Like pavlov’s dog, they often say, “It’s working okay.” Then they qualify it with, “Well, sort of okay.” Deep down they understand that it is a time-intensive and psychologically degrading process.

I know few people who wake up in the morning, look in the mirror and say, “I love rejection.” The American Marketing Association polled some top performers in the financial services industry that use cold calling as a primary way of marketing their services to determine how much time they spent to close one new customer. Here is what they found out.

On average, they may 50 calls per day. It took them 100 calls, two days’ worth of phoning, to get one appointment. On average, it took them two face to face meetings to make one sale. Therefore, it took them over 200 phone calls, two appointments and four days to secure one new customer. Traditional marketing methods like cold calling, in my opinion, is hard work.

Ivan:
And not fun. A lot of people don’t know this, but I used to teach a sales force in the computer industry cold calling. I taught them how to cold call. I think you will agree it works. It’s just a lot of work and it’s no fun. Who wants to do that? I don’t.

Scott:
Absolutely. As you well know as the father of networking, BNI has been a pioneer in relationship or referral marketing since it is taught in few places versus traditional marketing methods. Yet it is the number one way in which people want to do business. As a matter of fact, 98% of businesses rely on referrals to gain new business but only 3% of businesses actually have a strategy for obtaining those referrals.

Here’s how BNI is actually changing the way the world does business: First, let’s consider in Entrepreneur Magazine, there is an article that said on average, an individual knows about 1,000 people. That’s what’s known as their social capital. The average chapter in our region has over 24 members. Because referral based marketing is not about who the members are but who the members know and how well they know them, it translates to a chapter of 24 members times 1000 people in their network. It’s actually like having 24,000 people in the room.

Ivan:
A lot of people don’t understand that, Scott. I think that is a critical point because they look at it like there are 24 people in the room and that’s not enough. It’s not the people in the room, it’s the network of the people in the room that makes any personal network powerful. You have just done the math to show just how powerful it can, in fact, be. Go ahead.

Scott:
Isn’t that absolutely amazing? Most interestingly about that, I wounder how long it would take someone to go out through normal networking events and meet 24,000 people. And how much longer it might even take them to build actual credible trust with them so that they would want to do business with them.

What we did in our region is take a look at the average BNI member who’s practicing giver’s gain. Here is the time investment that they had. They practiced two hours before, during and after their weekly meeting. In addition, he meets with another member outside of the meeting to get to know them better and for that member to get to know him better. That averages out to about two hours. Finally, they will spend time inviting visitors to meet their other referral partners at the meeting and/or generate a referral for another member. Therefore, he expends maybe one hour marketing his partner’s businesses to his social network. That is a total of 5 hours per week.

The results that we found is that he generates 1.5 referrals per week with over a 70% conversion ratio, amounting to closed business. That equaled to about one new customer closed transaction per five hours invested doing BNI through relationship or referral marketing versus the 32 hours expended using traditional methods such as cold calling.

Isn’t it amazing that BNI utilizes 1/6 the amount of time or develops 6 new customers in the 30+ hours spent otherwise?

Ivan:
It is to me. I think it’s an important thing. You are talking about the average. So people who have been doing this longer get better at it. Their average, I would guess, goes up as you get better at building the relationship. Do you not agree?

Scott:
Absolutely. In BNI studies that we have conducted, we find that a member who just stays a member into their second year will do far greater than what they do in their first year.

Ivan:
Very true. Well, we are running out of time, Scott. Do you want to wrap up this discussion and then we will talk very briefly about what we are going to discuss next week because I will have you back next week to talk about a little more.

Scott:
Absolutely. I have to finish by saying that is why I always smile when a perspective member tells me they can’t afford time to attend one more meeting, to which I always reply, “Have you ever considered working smarter versus harder?”

Ivan:
That’s what we are trying to do in BNI, get people to work smarter not harder and work smarter by building relationships and generating their business through referral, which takes less time to find a prospect and has a higher closing ratio. Agreed?

Scott:
Absolutely.

Ivan:
It’s just great stuff. I like the math that you put to it. I think it’s very powerful. I want to bring you back next week because you have more material and we didn’t have enough time in just one podcast. Next week we are going to talk about BNI behaviors and credibility. Do you want to just give us a real quick preview of what that discussion will include?

Scott:
Absolutely. You coined the phrase a long time before I was even part of BNI. That phrase was, “BNI is not net-sit, nor net-eat but network.” Today I get that saying. It means that you have to work the network in order for the network to work for you. So there are certain things that you have to do in order to be able to reap that harvest.

Ivan:
That is what we are going to talk about next week. BNI behaviors that increase your credibility, destroy your credibility, and questions to help build your credibility. Scott Simon, thank you so much. Executive Director for four states for BNI. I appreciate your information, and we are going to have you back on next week to talk about those other subjects. Priscilla, back to you.

Priscilla:
Thank you, both so much. I would just like to remind the listeners that this podcast has been brought to you by NetworkingNow.com, which is the leading site on the net for networking downloadables. Thank you so much for listening. This is Priscilla Rice and we hope you will join us next week for another exciting episode of The Official BNI Podcast.