It’s a buyer’s market. This is no secret. Sponsors are rationalising their portfolios and becoming more strategic in how they make new investments. Sponsorship seekers are, out of necessity, having to raise their games to have any chance at gaining new sponsors.
It’s happened before. It’s a cycle, and in a few years, sponsorship will have recovered and the overall sophistication of the industry will be much higher because of the necessity to raise our games now. (We can consider that to be the “silver lining”.)
What I’m hearing more about – more than I ever remember hearing in 24 years in this industry – is sponsors bullying sponsorship seekers. My always busy inbox has been overflowing with dismayed sponsees caught in no-win situations:
- “Our biggest sponsor wants to renew with exactly the same benefits at a fee 30% lower than last year.” Multiply this comment by about 200 and you know what my inbox looks like.
- Also popular: “A new sponsor is ready to commit, but wants us to change our biggest event to suit them. Our members would hate us if we let that happen, but we really need the money.”
- And the unbelievable: “A long-time sponsor has never had a great relationship with our commercial manager, but our other sponsors love her. Now, this sponsor wants us to replace her or they won’t renew. I can’t believe they asked us to do that!”
What is the deal here? Why have so many normally well-behaved sponsors morphed into Sponzillas? Has the economy just awakened a whole bunch of latent power mongers? Most importantly, how do sponsees manage a relationship with someone who would rather bully than partner? It’s a minefield!
Okay, discounting first. Here’s the lowdown on discounting: Don’t do it.
If a sponsor is on renewal and are prepared to commit to the same package, they have made the decision not to rationalise you out of their portfolio while they have the chance. That is, they see that your event (or whatever) has value to their brand, and they’re just trying to power play you because they think they can. If you capitulate on this, you’re going to look desperate and will spend the remainder of your relationship with them in a one-down position.
To avoid that, I suggest you have three possible ways forward:
- If their concern is about the level of returns they are getting, take the opportunity to totally rework the sponsorship – providing fantastic leveraging ideas for the sponsor and a benefits package that supports those big ideas. In other words, help them get a better return. (This whole process is detailed in The Sponsorship Seeker’s Toolkit 3rd Edition.)
- If their concern is budget they really don’t have, offer to negotiate the sponsorship to a lower level that is more in line with their budget restrictions.
- Say goodbye.
As for the other types of bullying, don’t even entertain it. Making your events or organisation less relevant or appealing to your audience, just to appease a potential sponsor, is never in your best interest. Letting a sponsor make staffing decisions is just plain wrong (although you should definitely listen if they have concerns). When it comes right down to it, compromising your value, your values, and your organisational self-respect is not worth any amount of money. This is just one play in a long game. Don’t make a decision that will damage you long term.
(Warning: Personal philosophy ahead!)
I’m a big believer in making principle-centred choices, and that if you allow principles to guide your choices, it will all work out in the end. That’s not to say that you can tell a potential sponsor to take a hike and another will magically appear, but that you will not regret the decision and you will find another way to achieve your goals. In this situation, you could…
- Work with all of your sponsors to recreate their sponsorships, increasing your value to them, the probability of renewal, and positioning your organisation to new sponsors as an excellent strategic partner.
- Work with current sponsors to create leverage programs that achieve their objectives and increase your revenue (eg, encourage donations, create a new program and revenue stream, create a program that targets a new market, etc).
- Ask your current sponsors for referrals to other potential sponsors.
I know it’s tough out there – it’s tough for all of us – but letting yourself be bullied is not the answer.
For all you need to know about sponsorship sales and servicing, you may want to get a copy of The Sponsorship Seeker’s Toolkit 3rd Edition.