What Is a Leads Group for Sales and Networking?
What is a Leads Group?
A leads group (sometimes called a leads club) is a business association whose members gather on a regular basis (typically weekly) for the purpose of giving and getting referrals. Some of the popular associations include BNI (Business Network International), Le Tip and leads groups sponsored by chambers of commerce. Larger national and international associations usually have one or many chapters within a given region or metropolitan area.
Typically, annual membership dues are assessed to cover administrative costs (meeting room fees, website costs, etc.) and gain membership privileges. In addition to the membership dues, a meal fee may be required for any food and beverage consumed at each meeting. The meal fee may be a set fee or may only be assessed for menu items ordered.
Meetings are structured to give fair exposure to all members in the group. The meetings usually include an open networking period followed by a structured agenda that includes introductions, group administrative matters, education, testimonials and, of course, passing of leads and referrals. There may be a referral quota required of each member per meeting.
One of the primary benefits of leads groups for networking is exclusivity. In other words, once a membership is secured, it bars someone else in the same profession from joining the group. This gives members a competitive advantage over non-members.
Attendance is required, though a limited number of absences may be allowed. When a member will miss a meeting, he or she can send a substitute to represent him or her for that day. Substitutes usually cannot promote their own businesses during meeting, but may be allowed to connect with members during certain periods (i.e., open networking time). Rules on absences and substitutes vary by group.
Some groups may also host "open house" type events to attract visitors who are potential members. Visiting a leads group is typically allowed only a couple of times before the group will ask the visitor to apply for membership or discontinue attending.
Pros of Leads Groups
- Exclusivity. As mentioned earlier, this is one of the primary benefits a leads group can offer to members. The absence of direct competitors can draw favorable attention (and referrals!) to the one member holding that profession's slot in the group.
- Friendship and Relationship Building. Business friendships can be fostered through continuous and frequent contact at meetings. Leads groups also encourage 1:1 (one-to-one) personal meetings between members outside of the regular meeting format to further strengthen these relationships.
- Structure. Unlike looser networking venues where sales and connection opportunities can be haphazard, leads groups provide structure in terms of a standard meeting agenda, group organization, leadership positions and referral sharing procedures.
- Leadership Opportunities. Opportunities to demonstrate and develop leadership skills are typically available to members, whether it be through volunteering to lead segments of the meeting agenda or taking on an executive/management role.
- Focused Subgroups. Many leads groups have subgroups of allied professions which are designed to foster natural and logical referral sharing. For example, a healthcare subgroup may include a dentist, chiropractor, massage therapist and fitness trainer. These members may have similar types of clients which can be referred to other subgroup members.
- Vetting Process. Membership is not guaranteed and member applicants must go through an approval process prior to joining. The vetting process and usually significant membership costs can help weed out those candidates who are not serious networkers.
- Emphasis on Qualified Leads and Accountability. Some leads groups distinguish between "leads" and "referrals," with "leads" being less qualified and "referrals" representing genuine sales opportunities. Some groups will even discipline members who do not bring qualified or enough business opportunities to fellow members. This helps keep members accountable to the group.
Cons of Leads Groups
- High Dollar Cost. Adding up the annual membership fee, meal fees, costs to do 1:1 meetings with members, travel and more, the financial investment in leads groups can be very high.
- Exclusivity Games. In a desperate attempt to raise the number of members, some leads groups play games with exclusivity policies. For example, the "personal insurance" category might be broken down into three categories for life, auto and home. In the real world, though, people usually buy all three from one agent. Another example would be a health and beauty company where one representative says she'll represent skin care and the other says she'll promote makeup. This gaming of the system can actually can increase competition and infighting in the group.
- Stagnation. Because memberships are for an entire year, and many members may choose to renew, the group can become stagnant due to it being comprised of the same individuals year, after year, after year. If the group has an active referral stream among members, this may not be a problem. But what can happen is that the group becomes a friendly clique with no other objective for meetings than to hang out with friends.
- Referrals to Outside Sources. Members who are active in the business community may already have a strong network of sources outside the group for every imaginable service or product. So even if they do run across a lead for a fellow group member, they may be inclined to send it to their trusted outside source instead of the fellow member. This may not be done to intentionally hurt the other member; it's just that the outside source may be a better fit for the sales opportunity. That being said, it still can create dissent and disappointment which hurts everyone.
- Internet Competition. Who needs a leads group when you have the Internet? Indeed, the Internet has had a negative impact on leads groups because anyone's next perfect vendor is only one click away.
- Junk Leads. Finding leads and referrals for other people can be tough, really tough! So to save face in the group meetings, members may pass unqualified junk leads that never materialize.
- Personal, Pity and "One and Done" Sales. Many members hope that there's at least one cheap product or service offered by a fellow member so that they can give a referral for their own personal purchase to meet their referral quota. For example, a nutritional supplement seller member may get a bunch of personal sales from fellow members seeking to meet their referral quotas. As well, some may feel badly for other members and make a personal purchase out of pity. These are often "one and done" purchases, too, since there really was no need for the product or service in the first place. Sadly, these can give a false sense that business is being shared when, in reality, the group is made up of ineffective members.
- MLM Limitations. People who are representatives for multi-level marketing (MLM) organizations may be prohibited from soliciting their business opportunity in the group; some representatives may be banned entirely. Those groups that do allow MLM reps in, may restrict them to soliciting retail sales of their product or service only.
2 Key Factors to Consider
When considering a particular leads group or chapter, here are two key factors to consider when deciding whether it's worth the investment:
- Member Professions. Are enough professions represented in the group that are logical referral partners for your business? Is there a healthy mix of professions in the group or are there concentrations of artificially contrived subgroups?
- Size of Group. How many members are in the group? If the group is small, that may indicate a newly established group with opportunity. But if it's been around for a number of years, and is still small or has trouble attracting members, it could be an indicator of problems such as those discussed in "Cons" above.
More Reading on Networking
- What is Networking?
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- Types of Business Networking Groups
Networking groups are definitely not all the same. Nor are they all equal in terms of the sales and referral opportunities. Pros and cons of popular networking group types are explored.
- Networking Tips: How to Measure Your Networking Success
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© 2016 Heidi Thorne