Penny Wise and Time Foolish

mikemacedonio_77.jpgMy  good friend and partner in the Referral Institute, Mike Macedonio (pictured here), is my guest blogger today.  He recently wrote a great article about referrals that takes an interesting look at the two investments involved in referral marketing–time and money.  If you want to learn how to avoid falling into the trap of being penny wise and time foolish, I recommend that you read this material–it’s great content.

Penny Wise and Time Foolish
By Mike Macedonio

Is it just me or is anyone else shaking their head at the assertion that “word-of-mouth marketing and referral marketing are FREE advertising.” Clearly, referral marketing (done properly) is a cost-effective way to get businness, but the only way I can possibly see making it FREE is to do nothing at all.

So what is the investment for referral marketing? There are two investments with building your business by referral: time and money. I’m surprised when I ask business owners how much they are investing in referral marketing and they don’t have any idea. Is it because it is so cost-effective that they don’t think it is worth budgeting or tracking? Maybe. However, I also see businesspeople turn down opportunities to get involved in networking organizations, acquire training, attend conferences or sponsor strategic alliance events for financial reasons.

What about the hidden cost? How much time are you spending networking and meeting with referral sources?  What is your time worth? Often when I ask that question, I get the billable rate.  Here is the simple formula I use. How much you earn, divided by how much you work. For example, if you’re making $120,000 a year working 40 hours per week, 50 weeks a year, your time is worth $60 per hour. You may be billing $150 per hour; however, after you factor in everything else you are doing, this is what your time is returning to you.

When you consider that the serious active networker will spend eight hours a week attending networking events, networking online, meeting with referral sources and giving time to activities with his network, that works out to 400 hours per year or $24,000 of time invested a year. Hmmm, that doesn’t sound like FREE to me.

Referral marketing is the most cost-effective way to grow your business. Getting the best return on your time and money requires a clear referral marketing plan. Will you be spending your time doing the right things, with the right people, in the right organizations? Investing in referral marketing knowledge will help you get the best return for your time investment.  Be careful not to fall into the common trap of being penny wise and time foolish with your referral marketing.  Create a budget and invest appropriately in your referral marketing.

I’d love to pass your feedback about this article along to Mike, so feel free to leave any comments below.

12 thoughts on “Penny Wise and Time Foolish

  1. I really enjoyed this post. So many people have no plan at all in regards to marketing. The analogy Mike makes about $24,000 is important- think carefully about where you’re spending time! And do it now, no, better yet, RIGHT NOW. After all, when you’re dying of thirst, it’s too late to think about digging a well!

    Shawn McCarthy BNI ED Ventura County, Ca.

  2. Excellent point about the clarity of the plan. Too many people try to market by word of mouth without any plan or clear goal in mind, then wonder why they don’t succeed. Thanks for sharing this important information.

  3. I concur with the feedback that it is a great article to remind us of the importance of investing and measuring our referral acctivities. I also suggest that you consider the amount of administration/communication time for referral marketing and that you plan for it in your scedule.
    Best wishes

  4. It’s a fundamental truth. We are always concerntrating on looking outwards that we don’t always put a value / cost on our time. For me in the UK BNI has proved invaluable and is not only cost effective but time effective too, if you approach it in the right way. Like any aspect of business we should always have set goals and a structured path that allows us to monitor effort against results.

  5. A great article in with clear insights of net working.
    As a new entrant to BNI, it is a great learing. keep up the good work

  6. Referral marketing is a commitment of time and and investment. The rewards are many: more business for you and your power partners, visibility and growing credibility in your community, skill-building as you hone your ability to network effectively, and some great long-term relationships.
    The pay-offs to your time investment are immeasurable.

Leave a Reply

Your email address will not be published. Required fields are marked *