Almost a decade ago, when our event was brand new, we really struggled for sponsorship. One sponsor really stepped in with some much-needed cash. The problem is that we are now doing well and have grown a lot – in size, revenues, and sophistication – but this original sponsor hasn’t grown with us. They are now one of our smaller sponsors, never leverage, and keep exercising their right of first refusal, which includes category exclusivity. We could get a lot more money and find a much better sponsor in this category if they were gone. We have had two of enquiries from their competitors in the past couple of years. How do we get rid of this sponsor?
Quick primer on “first right of refusal”: This is a right that is often provided as a benefit of sponsorship and means that the sponsor has the first right to say “yes” or “no” to a similar contract at the end of the current agreement.
Many sponsees seem to believe that offering first right of refusal to a sponsor obligates you to offer them a similar contract at the end of the current one. Not so! All it does is prevent you from offering a similar contract to another sponsor without giving them a chance to say “yes” first. So, if your sponsor isn’t getting it, it’s time to raise the bar and see if they jump.
Create a brand new, more comprehensive, five-star proposal. Make it all about their target markets and objectives. Include lots of fantastic ideas for leverage. Make the package realistic, but commensurate with the type of sponsorship you should have in that category. Present it to them as a rethink and a great opportunity. Tell them that you want to continue to work with them, but it is inappropriate to continue with the relationship, as it currently stands. Do not back down if they want to renew the old contract instead. Make it clear that is not an option.
This is important: Be sure to go through this process in good faith. You never know, they may rise to the occasion and let’s hope they do.
Equally important: In case they don’t rise to the occasion, be sure to go through this process with a lot of lead time. There is no guarantee one of your prospects will say “yes” straightaway, so you may need time to sell to another sponsor in the category. Plus, they will need time to plan and implement a leverage plan.
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.
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