How do you work out ROI for networking?

[Avatar Consulting]

Hi All

In todays world of getting cost effectiveness in all our advertising methods, how do you calculate the cost effectiveness of networking?

Do you add up time spent networking, multiplied by your hourly rate, then divide by number of sales generated?

Do you add the lost opportunity sales because you spent unpaid time 'networking'?

MMMmmm?

Paul

[Adam Randall]

Yep thats pretty much exactly what we do.

We use a PSA system (professional systems automation) that works on whats called service boards.

It has a marketing manager and an oportunity module.
When we do any work relating to marketing and that includes attending seminars or going to morning breakfasts etc, the time is put against the marketing service board to its appropriate category eg: construction mailout

We still mark the time as billable, however it bills the time automatically to our own company.
We do not pass this amount onto our financial package so that the figures can be reported but do not effect actual real world accounts.

Expenses however (like stamps) are mapped and passed onto the appropriate expense account in quickbooks.

We also setup seperate "oportunity sources" so for instance I have been doing a mail out to the construction industry in Adelaide.
Any business we get from these marketing campaigns are attributed to my "construction mailout" campaign or whatever campaign they are generated from.

This includes any one off purchases and also re-occuring revenue so I can look back in 5 years time and say - OK that particular mail out generated us a total of $25,000 over 5 years.

We have campaigns for:
Employee generated (with sub categories for names)
Website
Toastmasters
East side Business enterprise centre
Rotary
Client referal
Family referal

Others but I cannot remember now

I also should clarify, we treat networking as just a branch of our general marketing strategy, we do not treat it as a seperate entity.

[Ric Willmot]

Previous post made on Flying Solo about networking

Rgds,
Ric

[ActiveCounselling]

Don't forget the potential education value of some networking. Being in touch with the outside world can broaden the mind.

[Candise]

One of the most common reason stated by small businesses for not embracing social networking is that they can’t measure or, worse yet, don’t believe there is any solid return on the investment of participation. I get emails almost daily from frustrated marketers who want to dive more fully into social networking, but can’t convince the boss that it’s worth it.

My response to the ROI roadblock is this - How does your boss measure the ROI of attending Chamber mixers, participating in Associations, and dropping in on networking luncheons? Done correctly, social networking on sites like Facebook is really no different - you don’t measure participation based on direct sales, you measure success based on identifying one potential strategic partner, acquiring one actionable bit of advice, or striking up a conversation or two that may eventually lead to developing a new customer. That kind of sounds like a set of solid networking objectives doesn’t it?