Do You Really Need a Sponsorship Policy?

safety netSponsorship is an exciting, vibrant, creative, and ever-changing industry. We’re lucky to be a part of it. But like all jobs, there are parts that are definitely less sexy than others. Right at the bottom of that list is creating a sponsorship policy. But just because it’s one of the least sexy parts of this job doesn’t mean it’s optional, because whether you’re a sponsor or a sponsorship seeker, a strong policy is like a giant, sponsorship safety net that will make your life and your job much easier.

Policy vs strategy

You need both a sponsorship strategy and a sponsorship policy. Many organisations on both sides of the equation try to wedge both of these into one document, but that’s a mistake.

A strategy is your game plan. It’s how you’re going to achieve your marketing and business objectives with various target markets. You may invoke different strategies to achieve different objectives or connect with different target markets or with different brand lines.

A policy is the rules of the game, which apply across every objective, brand, and target market. It is a concise document – generally 4-5 pages – that creates a framework within which your strategies must exist. It will probably be reviewed every year or two, but is unlikely to change a lot between one year and the next. It should be signed off at the highest level of your organisation, becoming basically organisational “law”.

Why corporate sponsors need a policy

There are a number of salient reasons that corporate sponsors absolutely need a bulletproof sponsorship policy, and many of those reasons are about saving you from the biggest headaches in your job.

It defines what sponsorship is and why you are doing it

This is an opportunity for you to make crystal clear that you are doing sponsorship to achieve marketing objectives – to change perceptions and behaviours of your target markets. It’s not a donation, it’s not about “warm fuzzies”, it’s a strategic marketing investment that must reap returns. So there.

It defines the no-go zones

If there are types of sponsorships that you absolutely can’t do, then these would be defined. Note that I said “absolutely can’t”, because there may be circumstances that you’d consider some sponsorships that may, on the surface, seem like a bad idea. Winery sponsor a children’s charity? You’d think not, but what about their annual gala dinner? My advice here is to keep this list very short. There are other ways – through the process (see below) – to determine suitability.

It spells out the process

The biggest component of your sponsorship policy will be an outline of the process by which new and renewing sponsorships are assessed, negotiated, formalised, leveraged, managed, and measured. It also includes a brief rationale for each of the steps. Why, for instance, do you seek to get buy-in from various departments before committing? The rationale for that is one or two sentences. Any more than that as rationale for any step and you’re trying to turn it into a strategy.

This whole process piece is critically important, not only to outline what you do all day – which so many in your company probably don’t understand – but to ensure your whole approach is consistent, objective, and in line with your larger business approach. Below, you’ll find a couple more reasons that outlining the process will make your life easier.

It curbs sponsorship of pet projects

One of the most useful results of spelling out the process is about pet projects. If you’ve ever had a senior executive or regional manager spend marketing funds on their favourite team or charity or what have you – without proper assessment – you know what a headache these white elephants can be.

The process outlined in your policy will invite anyone in the company to put a potential sponsorship into the funnel at the start of the process, but it will demand that ALL of them go through the same rigorous process of assessment.

It reduces the perceived “risk”

Have you ever noticed that everyone thinks they’re an expert at sponsorship? And a lot of them, particularly senior management, can want to micro-manage the process? This is often driven by an irrational fear that sponsorship is risky. When done well, it’s actually one of the least risky of all marketing media, but a lot of people don’t really understand that and think they need to oversee every little decision.

When you create a policy, it’s like telling your whole company that you know what you’re doing, and look… just LOOK at the rigorous, well thought out, signed-off process that those sponsorships go through before committing. Once your colleagues know that you know the rules and they agree that the process is sound, they’ll back of. And thank goodness for that.

Why sponsorship seekers need a policy

These rationale aren’t vastly different from the rationale for a sponsor policy, but the benefits to your role and your organisation are somewhat different.

It defines what sponsorship is and why you do it

This is your big chance to say that you don’t just do it for the money. Other benefits include access to new markets, access to sponsor leverage activities, and the sponsors adding value to the fan experience.

You also need to outline that sponsors don’t consider this free money, and that you have to meet and exceed their commercial expectations, and behave in a manner consistent with any other commercial opportunity they may have. For some organisations, this may be obvious, but many organisations – I’m talking to you charities, culture, and government – making this clear to your whole organisation may be the most valuable part of the whole document.

It spells out the process

Like a sponsor policy, the biggest component of your sponsorship policy will be an outline of the process by which new sponsors are identified, researched, approached, negotiated, formalised, managed, serviced, and renewed. It also includes a brief rationale for each of the steps.

Curbs the expectation that sponsorship is easy or fast

As part of the process, you also need to outline the typical lead-time you need to achieve all of the steps leading to a sale.

You should also define the timeframe at which your sales window is closed, as continuing to sell will make you look desperate and is unlikely to be successful or get you a realistic price. (For more on that, see How to Get a Fire-Sale Sponsor to Renew at a Realistic Level.)

Stops handshake deals (and other counterproductive meddling)

Have you ever had your senior executive or a board member do a handshake deal with a sponsor? If so, at least one of the following probably also happened:

  • They sold it for way too little – maybe even less than it will cost to deliver.
  • They sold a category that you could have sold for a lot more money.
  • They sold it to a buddy at the top of the corporate ladder, but the brand is actually a poor match for you.
  • They promised benefits that you can’t deliver, either because you’ve already promised them exclusively to another sponsor, or because you don’t actually have that benefit to sell.
  • They sold it at the C-level, meaning that this dog of a sponsorship is now going to be inflicted on a marketing team that doesn’t like it, and won’t that be fun for you to manage?

The policy will make it clear that your expectation from the senior executives and/or board is to provide introductions and high-level insight into potential sponsors, and you’ll take it from there.

It defines the roles in a federated structure

If you’ve got regional or local branches, your policy needs to outline specifically how a national sponsorship will be delivered:

  • How you’re going to get buy-in and participation from all regions.
  • What the expectations are, in terms of delivering benefits to a national sponsor.
  • How the national sponsorship income will be split between the national office and regions.

This can all be done lots of different ways, but consistency is key, which is why this belongs in your policy.

It addresses your budget

This is critical. You need to outline that sponsorships must be priced to cover both the cost of sale and the cost of servicing, and still have enough “profit” to put back into your event or program. Many boards and senior executives think, “We need $20,000, so let’s raise $20,000”, leaving you nothing with which to deliver the sponsorship. (For more on pricing, see Sponsorship Pricing Basics.)

For non-profits, you also need to be absolutely clear that sponsorship is unallocated funds. It doesn’t matter which of your programs or events the sponsor is sponsoring, as long as you deliver the benefits around that specific investment, you are under no obligation to put the money into that specific pot. This is money to cover your overheads or whatever you need money for, and it’s none of the sponsor’s business where the money goes.

Making policy easy

There is a lot more to sponsorship policy than I’ve been able to cover here. For lots more, I suggest you pick up one of these two books:

Both of these include the whole process for sponsorship and lots of tools and templates. They also include big sections on policy, including a checklist that will make creating your first draft very straightforward. Already have a policy? This could be a great way to double-check you’re covering everything important.

Need more assistance?

If you could use some additional support, I provide sponsorship coaching, sponsorship consulting, sponsorship training. If you’re interested in any of these services, please review the materials and drop me a line to discuss:

Kim Skildum-Reid
AU: +61 2 9559 6444
US: +1 612 326 5265

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