Five reasons why lead exchange groups won’t work for me
Last month I was invited as an observer, not a member candidate, to a local meeting of Business Networks International (BNI). The accountant who invited me is a great person and an impressive professional. The meeting and individual members made a strong positive impression on me. The individuals I met were dynamic, outgoing, personable and, in short, the types of business people I’d like to hang around with more often. The meeting ran efficiently with all of the scheduled parts coming together like clockwork. The country club setting was perfect for the weekly meeting and I am grateful that under club rules, they even treated me to breakfast.
Yet it quickly became apparent that there are a handful of reasons than BNI won’t work for me.
First of all, the primary source of revenue over the entire span of my working career has been connected to paid reviews or endorsements of some type. Sometimes the client pays, sometimes the vendor pays. But there wouldn’t be any reason for me to be getting involved in an endorsement unless somebody was willing to pay for my work. For the two decades that I ran MedSave, an online first generation insurance exchange support service, for example, my primary role was writing reviews of insurance products and referring people to specific products for commission or referral fees. Even now, a significant source of my residual revenue come from referring people to specific financial service companies. I do not do paid product reviews or endorsements any more but that doesn’t mean that I’m closed to the option if demand resumes for that service. That is the opposite of the way BNI works. BNI is based on a swap model where leads are the currency. Generally BNI members make referrals with no expectation of direct compensation but with an expectation that other members will make referrals to them.
Second, I take this role of evaluating and referring quite seriously. If a client asks me for a referral for a mortgage, for example, I might run a screen through dozens of possibilities and speak with several before making the referral. I typically document these screening conversations o that I have a solid basis for the referral. Under that scenario, the statistical chances that the referral will go to my BNI partner are slim. My client expects me to report “I’ve scanned the possibilities, narrowed it down to these four that I interviewed and here and outlined in this summary sheet and this is why I think you should go with xxx…”. Under my business model, I would lose credibility if I said “I know a great mortgage guy in my networking group. Why don’t you give him a try?”. Clients who ask me for help with a service or transaction tend to expect quite a bit more than casual hand off to a networking partner.
Third, since I market online nationally, I have clients geographically scattered. I have no bias toward a close-by regional customer base here in the Delaware Valley. This is different from most BNI people who are looking for local clients. Since I simply do not have a high percentage of my best business contacts in the local area, this would hurt my value to the networking group. When I attempt to refer business from another region to a provider with a local business model, it often does not work out. As a general business strategy, a national lead generator should work with a national service provider.
Fourth, I believe that I should disclose all sources of compensation to my clients, regardless of whether that compensation is in cash or other consideration (leads trading) and regardless of whether that disclosure is required by law. That doesn’t seem to fit with the BNI model. It would be unethical IMO, to not say to a client that a referred vendor was in a leads group with me. I know that most accountants do not share this same interpretation of professional ethics standards and I am not implying that the AICPA code of professional conduct requires this type of disclosure for leads swapping. I’m simply saying that I would feel obligated to make a disclosure that I’d really rather not have to make.
Finally, BNI is arranged as a one person per industry model to avoid competition within the same group. A business chamelion would not fit well. In my work, for example, I might refer a business client to a payroll company one day and, even though I do not market payroll services, I might handle payroll service myself for the next client in a different situation. Similarly, the investment person in the BNI group noticed my domain name “wealthmangement.us.com” and expresed concern about overlapping competition. In reality, I don’t overlap with him at all but I have been known to send plenty of clients directly to Vanguard for investment services. That would not go ever well even if I believe that it is the best interest of the client. And when it come to insurance, I spend more time convincing people why insurance is not the panacea they believe it is than I do in endorsing insurance agents. So just because I’m not a payroll service provider, an investment adviser or an insurance agent does not mean that I would not get involved, where appropriate, to deliver the service.
So, in conclusion, I realize that this great business-building organization does not fit my business strategy. My sense of independence and the need for freedom to discuss referrals without external influences cause me to close the door on the possibility of joining a leads group.
Since that date of the BNI a few weeks ago, my business coaches and I agreed that we will add screens to avoid efforts to build business relationships with BNI or LeTip members. They are great people working in a great environment; it’s just a shame that it won’t work for me.