This is the nightmare for much of our industry. I’m guessing some of you may develop a facial tic just thinking about it! And yet, it happens. Sponsorships end, and if it’s unexpected or done without a lot of lead-time, you need an action plan and you need one fast.
So, it’s time to stop with the misery and crying in your beer. It’s time to stop with the wishful thinking and desultory casting about for ideas. It’s time for action, and I’ve got few steps to get you going.
If you didn’t see this coming, you’ve got to do an exit interview right now. Find out:
- What led to the decision?
- Whether it had anything to do with you?
- If it did, what could you have done to make their sponsor experience or results better?
If you’ve let them down, you need to wear that. You also need to fix the situation and communicate to your other sponsors that the issue has been identified and fixed, before they exit, as well.
If they’re blaming you for bad results due to their own failings, such as a lack of effective leverage, be gracious, but make a plan to educate your other sponsors so that they all have a strong vision for what can be achieved, and are leveraging and measuring well.
If the decision was strictly internal (restructuring, a global directive, etc) and they were happy working with you, ask for references to other potential sponsors straightaway.
Now, you need to think very carefully about what is and isn’t possible, and the main factor is lead-time. If you’ve just lost a huge sponsor, it’s going to take some time to find another one to step into that void.
If you’ve got lots of time, start prepping now to get into the marketplace without delay. If you don’t have lots of time – like less than twelve months for a really big sponsor – you should still get into the marketplace, but you will also need a Plan B. That could include:
- Downsizing your event/program/whatever to reduce your budget.
- Amplifying other revenue streams, like ticketing, merchandise sales, exhibitors, etc.
- Launching new, revenue-generating initiatives. Have you had a great idea for a while? It’s time may have come.
- Upselling your current sponsors.
- Rejigging your sponsorship structure, at least temporarily (see below).
There are other options – selling an equity stake, etc – but truth be told, I don’t know anything about that stuff. Talk to a really good accountant. They should be able to give you the right answers.
This may not work, but the very first sponsors you need to approach are your current sponsors. Ask any of them that may be appropriate at a higher level if they would like to see a fully customised proposal for a major or principal sponsorship. If they do, be sure that’s exactly what you give them.
Don’t just offer them a bigger version of what they have. Get creative, get strategic, get best practice. Otherwise, they will have no vision for what they could accomplish with a more comprehensive platform and they’ll just stay where they are.
Don’t waste time trying to outsource
If you already work with a sponsorship broker, get them on this project fast. If you don’t work with a sponsorship broker, don’t delude yourself into thinking that’s the miracle cure and focus on that. You need to get your sponsorship acquisition strategy underway.
If you can also search for a broker, go ahead, but don’t slow anything down thinking that a broker is the answer. Realistically, if you need to replace a big sponsor on reasonably short notice, that’s a hard sell. Good sponsorship brokers are in hot demand, and most of them would choose to work on something easier and less desperate.
Accept that the sales approach that got you that sponsor won’t get you the next one
Sponsorship has changed a lot in recent years. If you’ve become comfortable enough with that big sponsor that it hurts to lose them, chances are that sponsorship has grown more sophisticated since the last time you sold a sponsorship this size.
Get some good information. Get a book. Get a sponsorship coach. But whatever you do, don’t do the same thing you’ve been doing for years.
All hands on deck
To prepare to sell and go through the sales process, you will need to do some or all of the following:
- Update your marketing plan, including your brand positioning and target market segmentation (yes, sponsors care).
- Make a well-matched sponsor hit list, prioritised.
- Research all of the best-matched potential sponsors
- Contact all of the best-matched potential sponsors
- Brainstorm leverage ideas for each sponsor, on which to anchor the offer
- Offer pricing and formalisation into a proposal
- Presentation, follow-up, and negotiation
Because you will have to do most of this quickly, this could well be an all-hands-on-deck situation. Someone that knows and understands best-practice sponsorship should be driving each of these processes, but much of the work, particularly research and brainstorming, can be done with teams that aren’t necessarily all experts.
What you will need is a tried and true process that gets the best result out of people without much experience. I strongly suggest you get hold of The Sponsorship Seeker’s Toolkit, as it outlines all of the above step-by-step.
Consider splitting the category
You lost your naming rights sponsor? What about two principal sponsors instead? Or a presenting sponsor and naming rights to a sub-event?
There is absolutely nothing saying that you have to replace the departing sponsor with a sponsorship of the same size and type. What you have to do is replace the revenue, and if that’s going to be more achievable in, for instance, two medium bites instead of one huge one, then you need to be open to that.
Be prepared to go for more, smaller sponsors
I am a big fan of having fewer, larger sponsorships. It’s more efficient, gives each sponsor more space to do their leverage, and you have fewer relationships to manage. That’s all well and good, until you lose a huge sponsor and time is short.
The key to making this work without making yourself look desperate – and no one likes the stench of desperation – is to create new opportunities to sponsor. Create new angles or aspects of your event where a sponsor can take some ownership. This will look like innovation, not desperation.
Don’t invoke a fire sale
While we’re on the subject of desperation, whatever you do, don’t start offering a big sponsorship package at a ridiculous discount, just because you need some money in the door. Go to any or all of your Plan Bs, but don’t do a fire sale, because the damage to your reputation with future sponsors will be something you can’t undo. It’s unprofessional, you’re unprofessional, and that’s a perception that is hard to undo. Plus, on the off chance you do get someone this way, you’ll regret it. They are often squeaky wheels with entitlement issues, and despite what you may think, you will never get them to pay market rate for their package. Ever.
Make the first year of a multi-year deal much cheaper
If you have a potentially BIG sponsor interested, but the lead-time is getting short, you could offer them a multi-year deal (and all big sponsorships should be multi-year), but with the first year significantly cheaper.
This could get them over the hurdle of trying to find the full fee in their budget at short notice. It is also an acknowledgement that they may not get the full value if they don’t have time to plan and implement a full complement of leverage options.
This is NOT the same as a fire sale, which devalues what you are offering.
Keep communications positive
This is a tough situation to be in, but you can’t make it look tough. If you issue any statements, make them upbeat and optimistic, talk about your sponsor success stories, and never, ever knock the sponsor that has exited. You don’t want potential sponsors thinking, “Is that what they’ll say about us if our strategy changes?”
Even more than that, don’t go making statements about how desperate you are, in hopes that some white knight will come and save you. That actually works in like one in ten-thousand attempts. If you get any interest at all, it will more likely be from some opportunist who smells blood in the water, and will want everything while offering you a pittance.
Need more assistance?
For all you need to know about sponsorship sales and servicing, you may want to get a copy of The Sponsorship Seeker’s Toolkit 4th Edition.
If you could use some additional support, I provide sponsorship coaching, sponsorship consulting, sponsorship training, and if you need a fast, cost-effective start, the Jump Start program. If you’re interested in any of these services, please review the materials and drop me a line to discuss:
AU: +61 2 9559 6444
US: +1 612 326 5265
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