How Soon Should You Expect Profitability from a Relationship?

Over the past couple of weeks, I’ve written a few blogs on the VCP Process® of networking and, since I’ve already covered visibility and credibility in detail, today I’m going to tell you what you need to know about profitability, the third and final phase of the VCP Process.

The mature relationship, whether business or personal, can be defined in terms of its profitability. Is it mutually rewarding? Do both partners gain satisfaction from it? Does it maintain itself by providing benefits to both? If it doesn’t profit both partners to keep it going, it probably will not endure.

The best piece of advice I can give you in regard to when to expect to get to profitability is to be patient. The time it takes to pass through the phases of a developing relationship is highly variable.  It’s not always easy to determine when profitability has been achieved: A week? A month? A year? In a time of urgent need, you and a client may proceed from visibility to credibility overnight. The same is true of profitability; it may happen quickly or it may take years, but most likely it will be somewhere in between. It will depend on the frequency and quality of the contacts and especially on the desire of both parties to move the relationship forward.

Shortsightedness can impede the full development of the relationship. Perhaps you’re a customer who has done business with a certain vendor off and on for several months, but to save pennies you keep hunting around for the lowest price, ignoring the value this vendor provides in terms of service, hours, goodwill and reliability. Are you really profiting from the relationship, or are you stunting its growth?  Perhaps if you gave this vendor all your business, you could work out terms that would benefit both of you.  Profitability is not found by bargain hunting. It must be cultivated. And, like farming, it takes patience.

Visibility and credibility are important in the relationship-building stages of the referral-marketing process.  But when you have established an effective referral generation system, you will have entered the profitability stage of your relationships with many people–the people who send you referrals and the customers you recruit as a result. It’s an essential part of successful relationship marketing and networking.

Moving from Visibility to Credibility

In last Thursday’s blog, I explained that visibility, the first phase of the VCP Process®, brings the opportunity to build credibility and that credibility is what will ultimately get you to profitability, where you’ll actually benefit from your networking and relationship building efforts.

So how do you move from visibility to credibility?  Well, once you and another individual achieve visibility with each other, meaning you’re aware of each other and the nature of each other’s business, you begin to form expectations of one another; once those expectations are fulfilled, your relationship can enter the credibility stage.  If each person is confident of gaining satisfaction from the relationship, then it will continue to strengthen.

Credibility is the quality of being reliable, worthy of confidence.  Credibility grows when appointments are kept, promises are acted upon, facts are verified, and services are rendered.  The old saying that results speak louder than words is true.  Failure to live up to expectations–to keep both explicit and implicit promises–can kill a budding relationship before it breaks the surface of the ground and can create visibility of a kind you don’t want.

To determine how credible you are, people often turn to third parties.  They ask someone they know who has known you longer or perhaps has done business with you.  So, how credible are you?  Would the people in your network vouch for you by saying that you are reliable and honest, your products and services are effective, you keep your appointments, act on your promises, deliver results as expected, and can be counted on in a crunch?  If you’re not sure, now is the time to make a strategic effort to build your credibility; without credibility, you can forget about achieving profitability.

If you’re interested in learning more about profitability (If you’re in business, it’s safe to assume you’re very interested. ;-)), the third phase of the VCP Process®, and when you should expect to achieve it with your contacts, be sure to come back and read this Thursday’s blog.

The First Phase of the VCP Process–Visibility

Last week I wrote a blog explaining the VCP Process, which is a huge part of the foundation of networking. Because this process is so crucial to effective networking, I promised to write a blog entry for each of the three phases (visibility, credibility and profitability), and today I’m going to talk about why it all starts with visibility.

The first phase of growing a relationship is visibility: You and another individual become aware of each other.  In business terms, a potential source of referrals or a potential customer becomes aware of the nature of your business–perhaps because of your public relations and advertising efforts, because of your social media presence or perhaps through someone you both know. This person may observe you in the act of conducting business or relating with the people around you. The two of you begin to communicate and establish links–perhaps a question or two over the phone or via e-mail messages about product availability. You may become personally acquainted and work on a first-name basis, but you know little about each other. A combination of many such relationships forms a casual-contact network, a sort of de facto association based on one or more shared interests.

The visibility phase is important because it creates recognition and awareness.  The greater your visibility, the more widely known you will be, the more information you will obtain about others, the more opportunities you will be exposed to, and the greater will be your chances of being accepted by other individuals or groups as someone to whom they can or should refer business.  Visibility must be actively maintained and developed; without it, you cannot move on to the next level, credibility.

I’ll talk more about credibility next week, but it’s important to understand that visibility brings the opportunity to build credibility, and credibility is what will get you to profitability, where you’ll actually benefit from your efforts. So many times people try to jump straight from visibility to profitability, and that’s not real networking; it’s just an obvious ploy to get something from your new contacts. That’s nothing more than a bad attempt at direct selling and a big waste of time.

So, how do you go about creating more visibility for your business? What are some strategies that have really worked out well for you?  I’d love to hear your comments.

What is the VCP Process?

The key concept in referral marketing is relationships. The system of information, support and referrals that you assemble will be based on your relationships with other individuals and businesses. Referral marketing works because these relationships work both ways: They benefit both parties.

A referral marketing plan involves relationships of many different kinds. Among the most important are those with your referral sources, with prospects these referral sources bring you and with customers you recruit from the prospects. These relationships don’t just spring up full-grown; they must be nurtured. As they grow, fed by mutual trust and shared benefits, they evolve through three phases: visibility, credibility and profitability. We call this evolution the VCP Process(R)

Any successful relationship, whether a personal or a business relationship, is unique to every pair of individuals, and it evolves over time. It starts out tentative, fragile, full of unfulfilled possibilities and expectations. It grows stronger with experience and familiarity. It matures into trust and commitment. The VCP Process describes the process of creation, growth and strengthening of business, professional and personal relationships; it is useful for assessing the status of a relationship and where it fits in the process of getting referrals. It can be used to nurture the growth of an effective and rewarding relationship with a prospective friend, client, co-worker, vendor, colleague or family member. When fully realized, such a relationship is mutually rewarding and, thus, self-perpetuating.

This simple concept has made a bigger difference in more people’s networking efforts than any other single idea I’ve discussed. For this reason, I’m going to devote the next few blogs I write to explaining each step of the VCP Process individually. Come back on Monday to learn why it all starts with visibility . . . I guarantee you you’ll want to read this one!

Strengthening Relationships with Referral Sources

To be an effective networker, you should always be working on strengthening your relationships with your referral sources.  So, what’s the best way to do this?  It really depends on the referral source and what he or she responds to.

There are a number of actions you can take to build good will and credibility in your relationships, and the list below contains an array of examples.  Of course, this is not an exhaustive list, so you should feel free to add your own actions to it.

  • Send a thank-you card.
  • Send a gift.
  • Call a referral source.
  • Arrange a one-on-one meeting.
  • Extend an invitation.
  • Set up an activity.
  • Offer a referral.
  • Send an article of interest.
  • Arrange a group activity for clients.
  • Nominate a referral source.
  • Display a source’s brochure.
  • Include a source in your newsletter.
  • Arrange a speaking engagement.
  • Invite a source to join your advisory board.

This is an important topic so, in the coming weeks, I’ll be posting a handful of blogs explaining in more detail how to do each of these things effectively. Be sure to come back to find out more about this. In the meantime, I’d love to hear your comments about what actions have been fruitful for you when working on strengthening relationships with your network partners.

Get Your Act Together

Let’s face it: As a businessperson, you’ve got a lot going on. There are people to see, places to go and a whole lot of stuff to do. Can you do all this, and look and act presentable at all times, too?

Quite frankly, getting and keeping your act together can be a little overwhelming for even the sanest of people, so here are some tips:

1. Look the part before going to a networking event.  You’d be surprised how many people fall short in the fundamental area of appearance. If it’s a chamber of commerce networking breakfast, don’t dress casually–wear a good suit or outfit. You need to be well-rested and clearheaded when attending a morning networking session; make a conscious effort to get plenty of sleep the night before. If you’re not a morning person, hit the sack earlier than usual, so you don’t look like the walking dead. Regardless of how many cups of coffee you’ve had, people can tell if you’re not all there.

2. Make sure your body language sends the right message. When it comes to forming networking relationships, most of the important information–trustworthiness, friendliness, sincerity, openness–is communicated through nonverbal cues such as posture, facial expression and hand gestures. When engaging in conversation, look the other person directly in the eye and stay focused on what he’s saying. Lean a bit into the conversation rather than away from it; don’t stand rigid, with your arms crossed.

3. Be prepared. Make sure you know which pocket your business cards are in, and have plenty on hand. Nothing screams, “One of these days I’ve got to get organized!” louder than handing a potential referral partner someone else’s card.

4. Remember to smile. Studies have shown that if you smile when you talk, you seem more open and forthright. Obviously you don’t want to go overboard with this, and start grinning and shaking hands like a hyperactive clown; just show that you’re having a good time, and that will send the right message.

Perception is reality when it comes to meeting people for the first time. If people perceive you as not being right for them, they simply won’t be inclined to refer business to you, regardless of the work you can actually do. However, by keeping the above tips in mind, you’ll go a long way toward creating the right impression in the blink of an eye.

Become a Customer to Become a High Priority

One of the friendliest and most natural ways to make contact with a referral source is to buy her products or services, whether in large or small dollar amounts.  It’s important to note that the purchase doesn’t necessarily have to be from her primary line of business–perhaps a ticket to a fundraiser, a used car, a computer, even a box of Girl Scout cookies from her daughter.

By purchasing something from your network member/referral source, you become one of her customers. As a customer, you are high on her priority list; she will be more inclined to do business with you and give you information, support and referrals.  This approach also increases your source’s interest in getting to know you and staying in touch.

Tips for purchasing from your network:

  • Analyze how you are spending your money now.
  • Decide how much you want to spend.
  • Test your relationship with the people you buy from now. Do they know you? Do you benefit from doing business with them?
  • Identify the products and services your sources offer that you want or need–or the purchase of which might benefit your business in the long run.
  • Are you buying products and services from people and organizations that see you as an individual? Do the people you buy from know your name and think of you as their customer? There’s a big difference between being a customer of Sears and being a customer of Joe’s Shoe Store.
  • Use your purchasing power in a way that gives you more benefits and builds relationships.  Buy at least half of your products and services from people you know; however, don’t do it in a way that makes them feel obligated to buy things from you.

It’s Not WHAT You Know, But WHO You Know–True or False?

How many times have you heard the phrase “It’s not what you know, but who you know” when it comes to determining success??  I’m willing to bet that over the course of your life to this point, you’ve heard it a lot.  Do you think it’s true?  Well, it’s not–it’s false.  It’s not what you know, or who you know–it’s how well you know them that really counts.

Here’s the difference.  How many people do you know?  Open up your e-mail address book and count the names.  You know as many people as are listed n your e-mail address book and probably a lot more.  Now, reach into your pocket and pull out your car keys.  How many of the people you know would you hand your car keys to?

Surely, now you understand that the importance of how well you know a person.  A contact is a person you know but with whom you have not yet established a strong relationship.  A connection, on the other hand, is someone who know you and trusts you because you’ve taken the time to establish credibility with that person.

Your network must not only be broad but also deep.  When you rely on others to cross-market your business or promote your program to a client, you’re not asking a simple favor.  For true referral networking, you need relationships that are deeper than mere contacts; you need strong connections, established well in advance.

So, beginning this week, focus on taking the time and energy to cultivate deep relationships by giving your referral sources anything and everything you can to help them succeed.  These will be the relationships you can count on when you need powerful connections because it really isn’t what you know or who you know–it’s how well you know them, how well they know you, and how well they know the people you want to meet.

Get to Know a Knowledge Network

Professional associations, or knowledge networks, have been around longer than almost any other kind of group, from the medieval guilds to crafts associations to today’s professional groups and industry associations.  The primary purpose is for the exchange of information and ideas, whether intraindustry or interindustry.

Some of these groups limit membership to their own industry, but quite a few groups that represent industries other than your own will allow you to join as an associate member (as opposed to a full member). This can put you in contact with a concentrated target market, including many top-quality potential contacts.  Many of your best current clients, looking for their own competitive edge, may be members of industry associations.  Ask them which open-membership groups they belong to, and try to join a few of them.  This can give you an opportunity to meet prospects of the same quality as your clients.

The other part of your knowledge network should be groups in your own industry. Yes, you’ll be rubbing elbows with competitors, but there are advantages.  You’ll stay abreast of developments in your industry, find out what your competitors are up to, study the competition’s brochures and presentations, and discover opportunities to collaborate with competitors whose specialties are different from yours or who need help on a big project.

Knowledge networks present great networking opportunities. So if you’re looking to build more relationships and increase your word of mouth, start investigating local professional associations today, and find out which ones you might be able to join.

Business Relationships That Last

We all know that businesses grow through lasting relationships. There’s a book called Businesses Relationships That Last that gives some very simple, yet powerful advice on how to think about and build relationships that last.

The author of the book is  a colleague of mine named Ed Wallace, who has more than 25 years of experience being a No. 1 sales producer and vice president of business development for a firm that grew from $1 million to more than $120 million in revenue.  After achieving such significant success over the course of his career, he has concluded that creating outstanding relationships is, hands down, the true secret to success and Business Relationships That Last clearly and simply illustrates Ed’s proven, relationship-building principles.

The book outlines five steps to transform contacts into high-performing relationships and uses some pretty interesting real-life stories, examples and insights gathered from Ed’s success as a sales leader.  It’s a step-by-step program specifically designed to advance business relationships and, in my opinion, it’s a book that every serious networker should add to his or her library.

To find out more about Business Relationships That Last or to purchase the book, CLICK HERE.

The Nature of a Referral Relationship

Over the years, I’ve run into countless people who believe that joining groups and organizations and becoming active by volunteering, taking on responsibilities and working side-by-side with other people on a common goal will cause people to get to know them and refer business to them.  However, this is not how things work.

Granted, it’s easy to think that if you rub elbows with someone long enough he or she will spontaneously start sending you business opportunities. But that’s really nothing more than an entitlement mentality.

Getting referrals usually takes three things: visibility, credibility and profitability.  Ordinary participation in an organization, even a strong-contact referral group, will get you visibility and perhaps some credibility; it won’t automatically get you profitability.  That takes a much more focused approach, along with some explicit talk about the kinds of referrals you want.

By nature, referral relationships are rewarding and valuable when they are created purposefully and by design. If you are assuming that the idea of giving you referrals is going to pop into someone’s head spontaneously if you hang around long enough, you are definitely misunderstanding what a referral relationship is supposed to be.

Woody Allen once said that “90 percent of success is just showing up,” but he wasn’t talking about referral marketing.  “Just showing up” will get you a seat at the table, but you have to pass the food to others and snag your own steak whenever it comes around.  It’s not “netsit” or “neteat“–it’s network!”  If you want to build your business through referrals, you have to learn how to deliberately work the networks to which you belong.

You see, participating in a group is one thing; performing is another.  To get referrals, you have to perform.  If you don’t perform–talk specifics about your business, your specialties and your ideal referral, and refer business to others in your group–how are they going to know what you do and what you need?  You have to take specific actions to let people know how they can refer business to you.  Being a good citizen is the right thing to do, but it’s not enough to get you the referrals you need to run your business by word-of-mouth marketing–you need to actively feed and water your referral relationships, so to speak, in order to significantly grow your business through referrals.

The Speed of Trust

I’m in Cancun this week, participating in the Transformational Leadership Council (a network of transformational trainers and profesionals started by Jack Canfield in 2004).

I had an opportunity again to hear my friend Stephen M. R. Covey speak about his book, The Speed of Trust, and it reminded me just how much I love this book and why it is so important to networking.

During his presentation, he told how Warren Buffet bought a company from Wal-Mart in one single meeting of two hours. Both parties shook hands and, 29 days later, Wal-Mart had its money. In Buffet’s annual report he said; “We did no due diligence. We knew that Wal-Mart would do what they said, and they did.”

In this day and age of long contracts and huge legal bills, this sale was done quickly because there was high trust on both sides. The result was a deal done in less than a month, saving millions of dollars.

Trust is the most compelling form of motivation. Covey spoke about “Three Key Ideas” to move at the speed of trust:

  1. There is a compelling business rationale for trust. It affects cost. There are economic benefits. High trust is a divedend and low trust is a tax. When trust goes down, speed goes down with it. When trust goes up, speed goes up and costs go down. This is a dividend, a high-trust dividend. Trust is a qualitative and quantitative factor. Nothing is as fast as the speed of trust.
  2. In today’s new global economy, the ability to establish trust is key to every organization. We are interdependent. In a cluttered world, trust helps you cut through the clutter. It is a performance multiplier. When people trust you, everything else you do is enhanced.
  3. Trust is a competency. It is something we create and can get good at. It all starts with self-trust and personal credibility. Are we behaving in a way that builds trust and transparency? Are we keeping commitments and talking straight?

One of the best ways to obtain trust is to extend trust. When trust is reciprocated, it moves faster.

Covey ended his presentation by asking, “Are there people that you work with that you could extend trust to who you can make a profound difference for?” Now the key is to follow your conscience. Develop relationships and extend trust.

I love Covey’s book and I highly recommend it to anyone wanting to build and improve his or her personal network.

Shown in photo – Stephen M.R. Covey, Ivan Misner and Greg Link (Covey’s business partner at Covey-Link).

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