Why is building an Introduction Based Business (IBB) critical for profitability and efficiency?
Let’s look at some rough numbers, and if the value of referral based business development is not intuitively obvious, we at The Intro Machine can not help you as you literally can’t see our value. You should stop reading and go find a job where you never have to interact with people because you are not ready for a position in sales or influencing. If you have already agreed with the thesis that introductions lead to efficiency in networking and sales, please keep reading.
Various studies in financial services have shown that an introduction is worth ~$100 for someone relatively new in the business. So if a new Financial Representative/Agent/Advisor can get just four Introductions a day, that would translate into a $100k a year revenue. Learning to get four introductions a day is not that big of a deal. But let’s contrast this against the alternative approach.
Let’s say you decide to cold call instead. 100:2 ratio of calls to meetings if you are better than average, or a little lucky. For many Real Estate Agents this is half of their weekly activity goal. Unless your potential payoff for these deals is five figures each, there is probably not enough revenue to keep you in your business, whether it is real estate or coaching or consulting. You need more activity, and of a higher quality to survive and thrive.
Ignoring the time needed to actually meet these clients and run them through your sales process (financial planning, real estate sales, legal services, etc), what does it take time wise to set these meetings, knowing that introduction initiated meetings are more efficient than the alternative?
Assuming that it takes only 2 minutes to process an attempt to set an appointment on average for a cold call (most will hang up on you if they even pick up, some will talk for a minute or so then say no, a very few will discuss and set an appointment), 100 cold calls will take 200 minutes of pounding the phone assuming no breaks and maximum efficiency. In reality it will take over four hours, an entire half a day to get those two meetings. So an entire business day to get four meetings for the week, if you are lucky.
Think about that: all of Monday grinding on the phone, being rejected again and again as you call until your fingers hurt from dialing, to have most people not pickup, and if you are lucky to give a spiel to someone that doesn’t know you from the Marquis de Sade and will most likely be rude and even insulting to you. An entire day of masochism, to get one appointment a day for the balance of the week scheduled. Who are more likely than not to blow you off. Sounds like fun, if you are into pain and self harm.
Now before we discuss a better way, let’s look at the impact on you as a professional:
1. 20% of your time needed to even start your process. This is a huge waste of your most precious resource and your life..
2. 100+ times being ignored. What does this do to your psyche?
3. 50+ people hanging up on you. Further mental abuse.
4. 40+ people actually saying “No” to you. Beating you down.
5. 2% saying “yes, let’s meet” if you are lucky/good.
6. Over 50% of these meetings will actually not result in business being conducted.
7. 99+% wasted effort.
8. The 1% that does business with you on average will not do business with you again.
9. Repeat the soul grinding process again and again and again.
Without even digging into the economics, does this sound like a good deal? Something you look forward to doing, week after week, month after month, for years? Is this what you signed up for, hoping to be lucky as opposed to being effective? Whatever happened to your job getting easier over time instead of being as difficult five and ten years in, with no increase in reward for your sacrifices?
As Joey Davenport, President of The Hoopis Performance Network states: cold calling is God’s punishment for those that don’t learn to get referrals. It is unending pain, no relief in sight, and 100% your fault. Sisyphus with his rock, forever rolling down the hill and having to start over again.
Let’s assume one out of three introductions you receive will go through your process. In some fields like insurance, 75% flow through is not unreasonable. But at one out of three, that means that to have four new appointments you would need 12 introductions that get called. Assuming five minutes a call ( as opposed to two as you will actually have discussions instead of constant instant hang ups that take little time), that is one hour of calling a week to have the same output as an entire day of cold calling.
A savings of seven plus hours. What is that worth to your psyche, and to your wallet? Seven hours of drudgery, failure, and mental abuse avoided. Seven hours that can be re-allocated to more productive use, like calling more introductions or actually seeing clients and generating revenue. That is an entire business day you have magically created out of thin air by just getting a few introductions a day consistently.
Even if you are only worth $30 an hour when actually working, this is over $200 a week, $800+ a month of revenue. A $10,000 raise for learning a basic skill and applying it for five minutes a day. Are you willing to take an hour and a half a week of that time where you are beating your head against the wall making cold calls, and learn to build an Introduction Based Business? Is the return on investment of time greater than picking up the phone to call people that don’t know you, don’t want to talk to you and will damage your mindset? Undoubtedly so.
So here is my plea to you: allocate 20 minutes a day towards building an Introduction Based Business instead of making those 10 cold calls. 20 minutes, every day to improve your skill set, investing in your future as a professional. Then for every introduction you get in a week, decrease your cold calling by ten minutes. Keep increasing your introduction focus and swapping out time from cold calling. When you are getting 20 introductions a week in two to three months, you should be fully transitioned from cold call Hell to a fully Introduction Based Business, an elysium by comparison.
Or you can continue to receive God’s punishment and remain in cold call Hell because you are too stupid to listen and change. Your choice. Chose to build an Introduction Based Business and come to the land of milk and honey and money.