Businesses with same clients swap ideas

SMALL BUSINESS

February 01, 1993|By JANE APPLEGATE

Business networking groups were the rage in the 1980s, with a blizzard of business cards exchanged every week at breakfasts, lunches and dinners. But after a while, people met the same people and often found more dead-ends than valuable leads.

A new approach to business networking has emerged for the 1990s, with diverse businesses serving the same types of client joining together to swap marketing ideas as well as leads.

The Quality Group, comprising nine home improvement companies in Virginia and Maryland, and LANS, The Local Alliance for Networking Systems, a group of Orange County, Calif., computer software companies, have formed similar alliances that can serve as a model for small-business owners anywhere.

"The difficult part was choosing the right companies and getting them to trust each other," said John Cotter, executive director of The Quality Group in Burtonsville. "Our first meeting, a lunch party, was like a dance: Everyone was gracious and polite. The second meeting sounded more like a boxing match: All the fears, anxieties and egos came out."

Mr. Cotter, a former marketing director for an interior design firm in the group, said six months and many meetings later, The Quality Group has nine members who pay $150 a month to belong. He produced a glossy, color brochure used to cross-promote the members' products and services. Some members also list Quality Group members on the back of their business cards.

Their alliance makes sense because they all serve the same upscale clientele. One company remodels kitchens, another installs security systems. Other members include a landscaper, an interior design firm, a pool and spa company, a fence company, a video and stereo installer, a carpet company, and a heating and cooling equipment company.

"One of our members said he knew he was in the right group when he pulled up to a tony home in Potomac, and noticed several other members' trucks were already there," Mr. Cotter said.

Ed Johannemann, a former police officer who now serves as sales manager for Cain Security Systems Inc. in Alexandria, Va., said companies belonging to The Quality Group gain more credibility from each other's reputations.

"One of the keys to success is that we pay no finder's fees to anyone," said Mr. Johannemann. "No one here exchanges checks."

He said another key to success is having a professional director pulling everyone together and keeping track of leads.

Does membership in The Quality Group increase his sales? Mr. Johannemann said he can attribute a small percentage of his increased sales to the referrals he's received from other members.

"Our business is 85 percent referral," he said. "Most of our business comes from word of mouth."

Other members interviewed said it was too soon to quantify the amount of new business, but they planned to stick with the concept. One new marketing idea: Cain Security is planning to sponsor crime-prevention seminars for homeowners at Barrons Custom Kitchen & Baths' showroom in Gaithersburg.

Across the country, members of LANS are formalizing their fledgling relationship.

Joe Thorpe, president of Advanced Inter Systems Inc., in Anaheim, Calif., is the catalyst behind the group. He said he has been informally referring clients to colleagues whose work he trusts. Seven members, all in Orange County, have been invited to join so far. One company specializes in computer software for the medical profession, another for the restaurant business. Other members offer accounting programs, computer-aided design software packages and office automation systems. (LANS can be reached at 714-630-4912.)

"We are sharing reputations," said Sigmund Fidyke, president of Customer Software in Irvine, Calif. "Clients are relieved and happy they can work with someone they can trust."

(Jane Applegate is a syndicated columnist and author. Write to her through the Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.)

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