Desperate times call for desperate measures, and since the cash flow problems were for good reasons, i.e., high growth, I felt that cutting back on employees or job-related costs wasn’t the right answer. Further, since I wasn’t getting paid a salary most months, in order to help the cash flow, adjusting my costs would have had no effect either. Finally I came to realize that what I really needed was more sales during the down months, but at no extra cost to the firm. In other words, I personally had to get back out on the street and start creating some new revenue.
Thus it was towards the end of 1993 I decided that I had to become a full-on salesperson and to ensure I would get results, I set myself the goal of meeting at least 20 new people a week. Why that number? Because allowing for the Christmas/New Year’s break, this adds up to the nice round number of 1,000 potential new business contacts each year. It seemed to me at the time that even if I only converted 1% of these meetings, I would still be getting 10 new sales (just under one a month) for my company. Besides, 1,000 is an easy number to remember!
But numbers alone would not help me with my overall objective of getting more business for the company. I also had to ensure that the meeting with each person was good enough quality that at some point in the future I could send them email (i.e., solicit them for new business. Therefore, I decided to only count those encounters which resulted in my having at least some kind of verbal interaction with the person – sufficient that they would remember me at least.
This type of goal has been very productive for me over the intervening years. In fact, 15 years later, I now have a personal name card database of about 20,000 people. I still try to meet my goal, although I admit that it’s getting harder as the various companies grow. Most encounters will help me meet 1-4 new people, so I try to get in at least 5-10 meetings a week (roughly two intensive days a week). Another way I compensate if I’m falling behind is that I’ve increased my public speaking. Now these larger audiences provide me with ten or twenty worthwhile card exchanges at each event.
Am I obsessive? Perhaps. However, from what I’ve seen of other entrepreneurs and high-performing sales people in various industries (not to mention politicians), numbers and quality encounters are the name of the game, and so long as you follow up later, you should be able to grow your own network in Japan.
This got me to thinking, how much is your contact database actually worth? Certainly if it helps you get another job, then it’s worth your salary at least – especially if you’re competing against another candidate and you have the best client contact list. Companies love hiring well-connected employees.
Another measure of your personal network is how much it cost to build it. Thus, for my 10 meetings a week – roughly taking 40% of my time and 30% of my secretary’s time, as well as the various meeting and event fees, I’m probably spending about JPY 600,000 per month. That’s JPY 7.2m a year or a surprising JPY 108,900,000 over the whole period!
Another measure is what the open market will pay for your network if you wanted to retire and your client contact database was the main thing you had to offer. In fact, with the privacy laws having been significantly tightened up, the market for contact databases has also dried up. Nonetheless, if you were to stay with the business in some capacity, then you are doing no more than using your own information, and this seems to be acceptable.
In such circumstances, the buyer will pay what the database would have cost them to build, plus the time you’re saving them, plus the actual quality (likelihood to do business) of your contacts. I have seen people retire from their 5-person consulting firms with earn-outs in the millions of dollars, thanks to the size and quality of their databases, despite having very few other assets to sell.
But this doesn’t mean that everyone has the right to sell or even reuse their own database of contacts. I’ll explain more in next week’s article.