Networking and the Pareto Principle

• Mark Herring (Urbano Network)
• Tuesday 7 May 2013

Many people in business are fond of quoting –or, indeed, misquoting - the Pareto Principle where 80% of consequences stem from 20% of causes.

Nowadays, we can handily and quite confidently say that 80% of our profit comes from 20% of our customers, or that 80% of our problems are created by 20% of our clients.

I prefer to think of Pareto as 'The 1 in 5 Rule', especially when it comes to new business. Having worked at agencies and by speaking to countless others in a new business role, I think it is quite a handy rule of thumb to say out of every five pitches or tenders, one will see you land the contract.

You can then extend this to opportunities or invitations to present or even meetings. One in five will see you get a tangible return on that meeting, pitch, or tender.

When it comes to networking, I think it is quite handy to think that one in five encounters will lead to something concrete in terms of a sale, new contract, client or work. However, I think this is overly optimistic.

To bend Pareto to perhaps where he shouldn’t be bent without breaking him into pieces, I advice those networking to think that 1-5 encounters will be worth following up and that from those subsequent follow-ups - meetings, emails, or telephone calls - 1-5 of those will lead to a tangible return that can be traced back to that initial encounter.

So, for every 25 people you meet at networking events, you could expect to generate one tangible piece of new business.

And so applying Pareto to the networking equation: Contacts become Connections. Connections develop into Relationships. Relationships lead to Opportunities, the opportunities absolutely depend on the number of contacts you make.

However, Pareto is inherently random. If you look at the types of contacts you are making that are delivering the opportunities, in terms of type of business they are, where you met them, their drivers for choosing you (location, price, service etc), you should be able to improve your rate of converting contacts into opportunities.

But two important factors can also help improve this. Firstly, by redefining what you count as an opportunity. I have introduced companies who have gone on to form lasting associations, become partners on tenders, passed on introductions, or even shared offices or resources.

I have also connected individuals who have become tennis partners, become friends, and even got married. Some have also been more temporary but no less enjoyable and all opportunities.

Opportunities may be presenting themselves to you through your networking encounters without you realising because you are too fixed on developing new business NOW. Sometimes networking takes you down a circuitous route and it may not seem obvious at first what the opportunity will be, or how the relationship will develop, or what the connection is when you first meet a contact.

But by staying focused and open – the zen or paradox of networking – many more opportunities will present themselves to you – hopefully, many more than one in five.

www.urbanonetwork.co.uk

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