Called the "Father of Modern Networking" and the "Networking Guru", Ivan Misner is one of the leading experts in business networking and referral marketing. He is also a New York Times bestselling author. He's written 10 books, including his number-one bestseller, Truth or Delusion? Busting Networking's Biggest Myths, and he is a monthly columnist for www.Entrepreneur.com and www.NetworkingEntrepreneur.com, promoting networking as a powerful and cost-effective way to build your business.
Dr. Misner is the founder and chairman of BNI, the largest business networking organization in the world, generating millions of referrals resulting in billions of dollars' worth of business for its members worldwide. He is a keynote speaker for major corporations and associations throughout the world, and he has been featured in The Wall Street Journal, LA Times, The New York Times, and CEO Magazine, as well as on numerous TV and radio shows, including CNBC, CNN, and the BBC in London. He was recently named 'Humanitarian of the Year' by a Southern Californian magazine.
IVAN MISNER: Thanks, Ric. Thank you very much. I'm just glad they're calling me the 'Father of Modern of Networking' and not the 'Grandfather of Modern Networking'! I'll be really depressed when that happens!
RIC THOMPSON: You are the face-guy out there for networking. I know that there's a mindset out there of, "It's not what you know; it's who you know." Ironically, so few people put it into practice. What are your thoughts on that?
IVAN MISNER: Let's come back to 'it's not what you know, but who you know'. You say very few people put it into practice. I think you're absolutely right, and one of the reasons for that is that we don't teach this in colleges and universities anywhere in the world. Networking and word-of-mouth marketing, or referral marketing, is just not taught in school. I think there are a number of reasons for it.
First of all-and here's the one that really makes the professors ticked-off-you have to understand the curriculum for colleges and universities is controlled by the fulltime, tenured professors. I understand this because I taught for 18 years at a Southern California university part-time as an adjunct faculty. The curriculum's controlled by the fulltime, tenured professors. Most fulltime, tenured professors in business have never had a real job in their lives.
They've never done anything but teach, and so they don't understand the power and value of networking. They view it as a soft science. I know that because that's the phrase they've used. There's a reason I named one of my first books, The World's Best-Known Marketing Secret. That's a little bit of a paradox. How could something be a 'best-known secret'? If you go out and ask the average businessperson, "What's one of the best ways to build your business?" they'll say, "Word-of-mouth networking."
"How do you build your business through networking? Be specific." Most people don't have a clue; they really don't have a clue, and it's because we don't teach it in colleges and universities. I think that's why there's a problem with this.
RIC THOMPSON: You mentioned that a lot of people refer to word-of-mouth marketing, referral marketing, as being a great, powerful tool in their toolbox. Maybe I'm wrong here, but from my experience very few people are using it actively, in a very controlled fashion. What's your take on that?
IVAN MISNER: I think you're right. You opened up by saying a lot of people think it's not what you know, but who you know. I don't think it's either. I don't think it's what you know or who you know; I think it's how well you know them that really counts. It's all about the relationship. Oftentimes when I'm talking about networking, I talk about relationship networking.
Some people call me on the carpet and say, "Come on! What's the difference between networking and relationship networking?" There should be no difference; but the truth is that a lot of people think that networking is just about walking around and shaking hands when, in fact, it's so much more. It's really about building relationships with people. I have taught for a long time what I call the VCP Process of networking: Visibility, Credibility, Profitability.
It's a sequential process, and if you really want to understand networking, if you really want to understand this concept-that it's not what you know or who you know, but how well you know them-understand the VCP Process. That starts with visibility. Visibility is that people know who you are. You might meet them and they know who you are. They recognize your face, they recognize your name, but that's not going to get you business just being recognized.
You have to move to credibility. People have to know who you are, what you do, and they have to know that you're good at it. Oftentimes, that comes from third-party endorsements and testimonials, but it always comes from time. Time is what builds credibility. You have to go from visibility to credibility and from credibility to profitability in terms of a referral relationship. Understand that this is a referral process.
When I talk about profitability, I'm not talking about just closing a deal. I'm talking about getting people to refer you on a regular basis. Oftentimes, your very own clients are not at profitability. You're not at profitability with them because they're not referring people to you. From a referral perspective, you have to go through all three of those phases: Visibility, Credibility, and Profitability.
Oftentimes, this is where people don't understand networking. They try to jump straight from visibility to profitability. We're at a Chamber mixer and we shake hands, "Hi, Ric. My name's Ivan. We need to do business. Let's do business." I try to jump from pre-visibility-you barely know me-straight to profitability, and it doesn't work that way. If you want to build your business through referrals, you have to understand and really practice the VCP Process: Visibility, Credibility, Profitability.
RIC THOMPSON: Before we start digging into some of the specifics of applying this and why they need to be doing it, I think we probably ought to back up a step, because there are a lot of misconceptions or myths out there about networking. You are the absolute expert on that, so what are the top things that we need to correct in people's mindsets here before we can start moving forward and applying this?
IVAN MISNER: There are few, and for your listeners who really want to hear a lot of them and see a lot of them, I did a book a few years ago called Truth or Delusion? Busting Networking's Biggest Myths. As a matter of fact, the website is www.TruthOrDelusion.com if you want to get information on it. There are a lot of them. Here's one of my favorite ones. Truth or delusion? If you provide good customer service, people will refer business to you.
Most people say, "Yes, it's truth. If you do a good job, people will refer you." False! Not true. People are more likely to talk about you when they're unhappy with you. Every survey I have ever seen has said this, that people are more likely to talk about a business when they're unhappy with the business than when they're happy with the business. One of my favorites was a researcher in Texas who found that the average dissatisfied bank customer tells 10 people.
The average dissatisfied bank customer tells 10 people, and if those 10 people tell five more it results in over 50 horror stories from the average unhappy bank customer. We're not talking about the bank customer who is really, really ticked off at the bank; we're just talking about the average unhappy bank customers. Does the average happy bank customer make sure that 50 people find out about their good experience? No.
It would be nice if they did. Business would be so much easier if the average happy person spoke about our business as much as the average unhappy person. Good customer service alone is not enough. Sometimes people take me wrong here, and they think I'm saying that customer service isn't important. That's not what I'm saying. Getting a client, customer, or patient is difficult so you want to make sure to take good care of them.
However, if you think good customer service alone is going to get them out there talking about you, think again. You have to do other things to build your business through referrals. Good customer service alone is just a union card; it allows you to continue to do business, but you have to do other things to get them to refer you. That's the first of myths, and probably the biggest.
RIC THOMPSON: What would be the second-biggest in your mind?
IVAN MISNER: There are a lot. Here's a really common one. If it's not the biggest, it's probably one of the most common. Truth or delusion? You have to be a real people-person to be good at networking. The answer to that is delusion. You do not have to be a real people-person, or let's say extrovert versus introvert. A lot of people think that introverts can't be good at networking. The truth is that they can be very, very good at networking.
That's if you understand the process of networking. Remember, I called it relationship networking. You have to get to know people. The extrovert is really good about meeting new people; they're really good about that. They don't mind. They'll walk up to anybody and start up a conversation. Extroverts love talking about themselves, so they'll walk up to anybody and start a conversation.
The truth is that if you want to move to credibility with people, you have to create that relationship and you have to get to know who they are. There, the extroverts are not good. On the other hand, the introverts are good. The introverts are good at listening, and I believe a good networker has two ears and one mouth and uses them both proportionately.
You're paying attention more than you're trying to talk. The introvert is better at building a relationship, but they have a hard time with making that first introduction. The extrovert is great at making the introduction, but they're not really strong about building the relationship. A well-rounded networker is someone who is able to do both fairly well.
There are techniques that both introverts and extroverts can use to help strengthen the areas that they're weak in. There are things that extroverts can do to help listen and to get other people to speak, and there are things that the introverts can do to introduce themselves to other people that make it feel a little more comfortable. You don't have to be a real people-person to be good at networking.
You've got to like people. If you don't like working with people, this isn't for you. If you're the accountant in the back doing number-crunching and you don't like to do any sales development or business development, then this isn't for you. If you're the programmer on computers and you'd rather look at a screen than a person, then this isn't for you, but you don't have to be an extrovert to be good at networking. That's a really common myth.
RIC THOMPSON: On a personal note, I can very much relate to that because I am an introvert, yet I'm a huge fan of networking and have made a very conscious effort to develop that skill set because of how much power there is for it. Then there's the fact that it's cost-effective, too. It's kind of hard to beat that.
IVAN MISNER: Yes, it's very cost-effective. It takes time, but it's not much money to do.
RIC THOMPSON: One of the things that is really standing out here, Ivan, is the fact that a lot of people view networking as something that happens sort of passively. That's not what you're describing here at all. What you're describing is something very active.
IVAN MISNER: You're right. A lot of people think that word-of-mouth is like the weather: pretty nice, fairly important, but there's not much you can do about it. There is a lot you can do about it. There's a great deal you can do about it. I argue that you have to plan and structure your networking activities to build referrals in the same way that you plan and structure your other marketing activities.
When you sit down, you have a plan for your advertising. You have a plan for your various marketing programs. You need to incorporate into your marketing efforts, into your marketing plan, a networking plan as a piece of your overall marketing. You have to plan it and structure it the same way that you would plan and structure your other mechanisms and mediums of advertising.
RIC THOMPSON: Let's go down this path a little bit here. Let's assume that I am an entrepreneur and you've already hooked me in the last 10 minutes of conversation. I know that I am under-using this, and I know that this is going to be a great addition to fit into my marketing budget because of the cost-effectiveness. Where do I start? What are some steps that I can take to get jumpstarted in this area?
IVAN MISNER: There are two or three things. First of all, you have to diversify your networks. You have to participate in a couple of different kinds of networking venues. Most businesspeople, I find, are basically cave-dwellers. They get up in the morning; they're in this large cave with a big-screen TV. They go out to their garage, and they get into this little cave with four wheels called their car. They drive to this other really big cave with computers called their office.
They stay there all day long, and at the end of the day they get back into their little cave with four wheels, and they drive back to their large cave with the big-screen TV. They can't figure out why no one is referring them. Networking is a contact sport. You've got to get belly-to-belly with people if you want to build your business through referrals. Ric, have you ever gotten a haircut over the phone?
RIC THOMPSON: I can't say I have!
IVAN MISNER: It's kind of hard to do, right? It's one of those things where you've got to be there. Like I'm telling people with networking, they don't go to the networking events and then they can't figure out why they're not getting referrals. People complain about Chambers, "Chambers aren't getting me any business." Chambers are great organizations because they give you tons of visibility and over time, of course, you can establish credibility.
Chambers are great, but you've got to work them. I see people who go to a Chamber meeting two or three times over a six-month period, and they can't figure out why they're not getting business. Groups like BNI, the organization I founded more than two decades ago, where you're meeting every single week, you're connecting with people regularly. That face-to-face networking, getting belly-to-belly and connecting with somebody, is very powerful.
You need to take a look at two or three different types of networks-groups like a Chamber of Commerce, BNI, maybe a service club like Rotary, Lions, Kiwanis-and participate in two or three different kinds of groups where you get out of that cave and actually connect with people to build relationships. It's relationship-based; that's what networking is all about. The only way to do that is to go out and meet people. You can't build a relationship on the Internet very effectively. At some point, you've got to meet.
RIC THOMPSON: What would your advice be to somebody who's getting involved in this who says, "All right, Ivan. I get it. Let me go get active in the Chamber," or "back to being active in the Chamber." The next biggest area of problem that I see for a lot of people is how to kick off that relationship, and then how to bring that around toward profitability. What can we expect there as we get into it?
IVAN MISNER: The answer to that question is counterintuitive to most businesses. The answer to that question is that the best way to build the relationship is to not try to sell them something on the spot, but to help them in some way. You want to build your network. Think about this. I keep talking about relationship, relationships, relationships. What's the best way to build a relationship? Help somebody.
Somebody is always grateful when, no strings attached, you give them a hand, and you help them. That's one of the best ways to build a relationship. Really, you need to go about networking from the perspective of meeting people and looking for opportunities, not to close a deal, but to help them. In the networking process, they're going to know what you do. If they're looking for your product or service, you'll get a sale.
Unless you go to a business mixer and just stumble across somebody who needs your product or service on the spot, that happens about as often as a solar eclipse. It's a gift from God. You certainly want to take that, but what happens is people are out there trying to close deals. They're direct selling and thinking that that's networking, when in fact networking is really about building relationships.
You go around, and the answer to your question is to look for ways to help people. I'll give you a really good example of what I'm talking about. One of the 'truth or delusions' in the book is this. Truth or delusion? You can network anywhere, anytime, anyplace, even at a funeral. Would you say that sounds like a truth or a delusion? I'm putting you on the spot here, Ric.
RIC THOMPSON: Yes, you are. I would say there's probably some truth, but at the same time there are certain situations that I think would be significantly more difficult.
IVAN MISNER: Yes, I'll buy that. The answer is truth, but there are two caveats, so here are the caveats that will make you feel better, I think. One is that you must always honor the event. If you're at a funeral walking around passing out your business cards, it's probably not good form. You don't want to do that. That's the first thing; honor the event and don't do something that's inappropriate.
The second thing is this. My definition of networking is about building relationships and building relationships by helping people. If your goal is to help people, then where is it inappropriate to network? I'll give you an example of what I'm talking about. A couple of years ago I went to a church function. I was in Southern California on a nice, bright, sunny Sunday.
After church services there was a potluck thing where everybody got together. There was this businessman who I wanted to meet. He ran a very successful, very big business, and I wanted to connect with the guy. I started asking him questions. That's the way you start to make a connection; ask some questions. "Tell me about your business. What's your target market? Explain the widgets that you make."
There's a whole series of who, what, where, when, why kinds of questions about the business. Make it casual and comfortable, not like an interrogation. Then there's one question that I generally ask that almost always gets the answer that I'm looking for, particularly with somebody who I don't know really well. I'll say, "What are some of the challenges you've got in your business?"
This guy shared with me an unusual challenge. He said, "The truth is that my business is doing great, and I really don't have any big challenges in my business. My biggest challenge right now is in charitable giving. My business is doing so well, we're making a lot of money and I want to give back to the community, but I'm not a big enough business to create my own foundation.
"That takes a lot of money. However, I'm big enough to have extra revenue that I want to set aside to use for things in the future, but I can't. I have to either give it all away that year or not. I want to give away more than I am, but I just don't know how to do it without creating my own foundation." I said, "Have you ever heard of community foundations?"
He said, "No, what are those?" A community foundation is a local foundation, and they go by the moniker 'community foundation'. They generally create funds underneath the primary foundation. You can call it the XYZ Foundation or you can call it whatever you want, but it's basically a fund underneath their foundation, and you have to meet all of their charitable-giving requirements.
You then create this fund, and sometimes it's for as little as $10,000, although it can be more. It can be as little as $10,000 depending on the community foundation. You now have what looks like your own foundation. It is very powerful and allows you to donate the money, whatever you have that year. If you don't have anything that year, that's fine, but it accumulates and it's donor-advised, so you ask the foundation to give the money away to charities-it's got to be to charities.
They'll do it as you've asked. He said, "Oh, my goodness! That's exactly what I'm looking for. I have never heard of an organization like that. Do you have a contact there?" I said, "Yes, and I know the development director." Now here we are at this church function, where you don't usually walk around passing out your business cards, but he handed me his card and he said, "Will you please put the two of us in touch?" and I said yes and I did.
The very next day I put the two of them in touch, and he ended up opening up a fund with the local foundation. It's the California Community Foundation here in Southern California. Here's my question. If two weeks later I picked up the phone and I called him cold, would he take my call?
RIC THOMPSON: I'd have to say absolutely yes.
IVAN MISNER: Yes. Absolutely yes. Why? Because I helped him out, no strings attached. I didn't ask for anything. I didn't try to sell him anything. He'd take my call. If I invited him to a business mixer or invited him to my home for dinner or something, he would probably do it because I helped him out. What tends to happen instead is that people go to these networking meetings, and it's almost like watching two boxers in a ring.
They're doing the jab, they're bouncing back and forth, and they're trying to close a deal. They don't want that knockout. "I'm meeting this guy, and I want to do business right now." No, no; that's all wrong. Instead, try to build a relationship. The best way to build a relationship is to look for opportunities to help somebody. It may be putting two people together. That's what I did.
I connected this person. Learn how to become a connector; find ways to help people. That builds the relationship, that creates credibility, and that helps lead to profitability. Does that make sense?
RIC THOMPSON: That's fantastic. Let me take you on a slight tangent to this. You talked a little while ago about your satisfied customers and how, on average, they're not likely to spread your name around via word of mouth. Yet, at the same time, I think that's because most business owners are approaching that, again, very passively. From this discussion and the lessons we just talked about, what can be applied toward your current clients or customers to get them to spread the word for you?
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