Return on Engagement
Andrew Gall, E-marketing Director
The Gall Group, Inc.
We network every day. We pay our dues, buy our lunches, carry our business cards, and wear our name tags. So many of us invest so much of our valuable time at these kinds of events, and often never ask ourselves, what do I have to show for it?
In business school, we were taught early and often that the most powerful three letters on any organization are ROI or Return on Investment. Class after class reiterated the importance of knowing your ROI on any given venture. If the cost is x amount of money, then what is the return? We were assured that our success in the business market would rest heavily upon the shoulders of this all important acronym.
ROI is the first thought that springs to the mind of any professional marketer when confronted with a potential expense. We evaluate everything from our phone bill to the coffee service to the Office Depot invoice. “What is this costing us?” we ask. “How much is it making us?” we inquire.
Then, in a flurry of good business thought, we spend hours a week, at the cost of our organization, in the community shaking hands, exchanging business cards, meeting people, and making introductions. We network like savages, each doing their best to maintain the most in networking group exposure. We pride ourselves on the number of faces we recognize at the many events we attend, we name drop without shame, and through all of this, we give little thought to the money being spent on this valuable network we work so hard to maintain.
The question begs to be asked then, what is the profit in all of this? So many dollars are used on the time we spend networking, but where is the accountability for that money? What is the gain, the return, in dollars and cents? Do we even think about it? The obvious answers come quickly and well-rehearsed:
“I’m making valuable contacts.”
“These relationships are the source of many weekly leads.”
“My leads group is important!”
And on and on it goes. But if asked to put real numbers, real money under the Networking column on the ledger, those voices are frequently and strangely silent.
The concept is simple. We are all aware of the time, and ultimately, money, that is invested in networking. It is money well-spent, there is no denying. Doing business by referral is often and repeatedly proven as the most effective method of growing one’s business. But, especially in a struggling economy, it is important to know the results of this investment. Enter the new metric, Return on Engagement (ROE).
As we meet and greet, shake hands and make acquaintances, it is supremely important to measure the success and return on these relationships. How much is that monthly Chamber luncheon actually worth? For the $25 you spend on lunch and $50 you spend in time, what is the return? Did you do $75 worth of business as a direct result of your attendance? If not, you’re losing money, and none of us can afford that kind of a liability in this economic climate. If you can’t point to any business that resulted from that meeting, that’s a $900 loss annually. Do you have that kind of money to throw away every year? I don’t either.
So how does one measure their ROE? These 5 steps will get you going in the right direction:
1.) Know what your investment is. Before you’re able to evaluate how much of a return you are generating, you need to know the scale of your investment. Sit down with your calendar and list each and every networking venture you’re engaged in, and how much it costs you. Everything you do in business has a cost. Even a free event costs your time and you need to know the literal value of that.
Evaluate the cost of your time. If your company pays you to attend networking functions, you need to consider the cost of travel to and from the event, the actual amount of time you spend at the event, from the time you walk in the door to the time you leave, and the time you spend following up on the referral sources you cultivated in your time there. Whether you get paid by the hour or are paid a salary or on commission, you ought to already know what an hour of your time is worth. Use this figure to calculate the amount of money you invested in your networking group. You’d be surprised to learn how much you’re spending.
Follow this same process for each of the events you attend in a month and you can get a good idea of how much money you are investing into your networking efforts in a given month.
2.) Estimate your return. After all that time, all those shaken hands and distributed business cards, each of those follow-up calls and e-mails, what do you have to show for yourself? How many appointments did you set? Of those, how many sales did you close? Work out the numbers and be honest. Use last month or last year as a template.
You should be generating a return on the engagement you are investing. After all, we’ve established that you are spending real money to have a presence at these events, so what do you have to show for it at the end of the month?
3.) Define your profit or loss. This is where the rubber really meets the road, so to speak. You’ve placed dollars and cents on the time you spend in a month networking. And you’ve calculated how much money that investment generated. Now do some simple subtraction and find out whether you’re in the black or in the red.
Engagement is the most important factor in building a referral relationship. People, as we’ve always heard, do business with those they know, like, and trust. Those elements do not come about simply through a handshake and a business card. Relationships that generate lasting, qualified business require time and effort. But we shouldn’t simply be blasting our time and effort all over the place with no rhyme or reason. As we engage our potential clients, we have to do so with purpose, and with the idea of a specific return in mind, a return on engagement. If I have to inform five uneducated buyers about my brand in order for one of them to buy, I need to know how much time that requires. And I need to structure my engagement to maximize that effort.
There is so much written and spoken about the importance of building relationships, but so little said about the importance of tracking what those relationships, and the effort required to build and maintain them, is costing. I whole-heartedly encourage you to build and maintain solid, effective referral relationships. But do so with a planned and purposeful approach so that you can be proud of your Return on Engagement.
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