I recently co-authored an article about the return on investment (ROI) of membership in BNI (the organization I founded back in 1985). My readers here may find some of the results interesting:
The average amount of business gained from referrals in the last 12 months was $37,055. When asked about further orders they had received as the multiplier effect of participation, members were able to think of, on average, an additional $17,668 per year of membership.
Combining closed business in the last 12 months with the average value of 2nd and 3rd generation referrals in a year showed the true value of a seat as $54,720 per year. On average, members who were involved in the group for 7 years generated $383,038 since they joined, thereby underpinning the lifetime value of participation.
An associate of mine is conducting an independent study regarding ROI for any networking organization. He will share some of the results with me and I will publish them here on my blog. Please take a few moments to take the short survey (it will only take 3 or 4 minutes).
*** Take the SURVEY HERE ***
After you take the survey, post a message here with any questions that YOU would like to see in a future survey that I’m doing or recommending (like this one).
4 thoughts on “Networking ROI”
My Name is Chris Higgins, I have been in My BNI chapter for almost 7 years and I have been a BNI Director / Consultant for about 3 years now. I have a question regarding how to calculate the Value of the business. I have referenced BNI Show Me The Money Instructions Rev 8 ’09 Available from my regional BNI website and there seems to still be some confusion.
In the document it refers to “gross transactional value to members” and this is a difficult concept to members to grasp. I do like how the document shows WHY it is so important to measure and be consistent. However, I would like to see a simpler revised how to report closed business. Below I have included a possible replacement and some examples that are confusing in the 2009 document.
“The Value of the Product or Services to the consumer, provided by the member” If you use the cost to the customer it is VERY simple. Everything can be fit into 3 groups; Services Rendered – Services provided by the member and invoiced by the member, Products Sold – Products provided by member and invoiced by member and 3rd Party Product or Service – products or services member helped facilitate but invoiced by 3rd party provider.
1. Services Rendered – Services provided by the member and invoiced by the member
a. Real Estate Agent – The Members portion of the Realtors Fees (usually a percentage of Sale Price) Example $300,000 house with 6% Realtor Fee to be split between buyer’s agent and sellers agent. $9,000 each. Member would report $9,000
b. Lawyer – Example Lawyer prepares will and invoices $1,000. Member would report $1,000
c. Doctor – Doctor renders services and services billed to patient and or insurance at $500. Member would report $500
d. General contractor invoices $2,000 for home renovation. Transaction value is $2,000
e. Telecommunications Systems – Invoices $1,000 for installation Member would Report $1,000
2. Products Sold – Products provided by member and invoiced by member
a. Florist Invoices $2,000 for flower. Member would report $2,000
b. Car Salesman Sells a car for $34,000 Member would report $34,000.
c. Telecommunications Systems – Invoices $15,000 for equipment Member would Report $15,000
3. 3rd Party Product or Service – products or services member helped facilitate but invoiced by 3rd party provider.
a. Life insurance sales person sells a policy valued at $500,000 to a client at a premium cost of $40 per month or $480 per year. Member would report $480 annually for the life of the policy.
b. Business Health Insurance sales person sells a group health insurance policy to a business with a premium value of $40,000 per year. Member would report $40,000 annually.
c. Telecommunications Systems – Contracts customer for phone service with carrier monthly service $500 per month. Member would report $6,000 annually
The problem with some of the old examples is the question depends on if they are an employee or independent contractor. There should NOT be 2 possible ways to report the same thing. For Example with the 3rd Party product or service invoiced by another business If an independent agent sells a computer from Dell and Dell pays that independent $5 commission. In this scenario under the OLD method Member would report $5 Closed Business. But, If the member sold the same machine but was direct Dell Rep or Partner they would report $700. Under my recommendation of using the cost or value to the customer both would report $700.
A car salesman selling a $34000 car may make a commission of $200 to $500 (I’m not sure what they actually make.). That is the income he/she should report. Selling a car is not more lucrative than selling a few hundred pounds of bird seed, but it skews the results for the car sales member and distorts the BNI group numbers , misleading visitors with small transaction goods and services to offer, leading to disillusionment. When a financial planner takes over a $200,000 portfolio for a BNI client, report the 1-2% handling fee per year, not $200,000 which would also compromise the privacy of the person who trusted him with it. Some of these items may have been addressed already since your 2012 post.
Gary, the TYFCB report does not indicate the name of the person the member did business with so there is no privacy issue. Even medical professionals and legal professionals can use the system without violating their ethical guidelines.
For more details on the process for tracking referrals in the BNI program, listen to this podcast and download the PDF description:
Hi – Great article Chris – thank you for this!! I’m a new member and looking for updated ROI statistics for BNI networking (and in person networking) – looks like this article is 10 years ago. It comes up top in search results on google (https://www.google.com/search?q=bni+roi) – so it would be amazing if you could update this article with new numbers similar to what you have here … and maybe a graphic would be amazing.