Have you ever been blindsided by a sponsor exiting? Thought a renewal was a sure thing, or at least a strong probability, only to get a “no”? There were probably signs along the way, but as much as rightsholders read a myriad of motivations and probabilities into every stage of the initial sales and negotiation process, they don’t read between the lines when coming up to a renewal.
Honestly, I don’t think most sponsors are trying to keep their partners in the dark, but no one likes to break bad news, and sponsors are no exception. Sometimes, they will drop hints instead, hoping that gets them off the hook for addressing it directly until it’s renewal time and they say “no”.
Below are a few warning signs, followed by some advice on how to handle it if you’re seeing any of them.
As a consultant who works primarily with sponsors, I have to say that I think portfolio reviews (AKA, “audits”) are a good thing. But usually, that’s an internal process and the partner is unlikely to hear about it… unless there is a strong chance of an exit.
If a sponsor tells you that they are undertaking a review of all investments, understand that they’re probably not telling everyone. There’s absolutely no reason they’d tell a property they’re planning on keeping that they’re doing a portfolio review. In fact, they may have already made their decision and this is their way of breaking it to you gently.
There’s also the chance that they’re really not undertaking a formal porfolio audit at all, and they’re just using this as an excuse to exit, with minimal blow-back.
Like telling you about a portfolio review, if a sponsor laments to you that their budget is being cut, that may or may not be true. It may just be another way of warning you not to count on a renewal. That way, they can tell you later that you’re not being renewed and they can pass along the blame to some unnamed bean-counter.
If you are a proactive partner, you are likely requesting regular meetings and wanting to discuss renewals and new leverage plans well ahead of time. If you’re doing that and the sponsor is having problems scheduling meetings, or if they start making excuses about why they can’t meet right now, this is a huge warning sign. There is a possibility they’re genuinely unable to meet, but there’s also the very strong possibility they’re putting off the inevitable conversation about exiting.
If a sponsor is trying to decide whether to renew or not, they may start asking you for extra information – reports, assessments, etc. As a responsive partner, you would already have been reporting on the benefits provided and the progress of the sponsorship, while the sponsor will be measuring their results. If they’re asking for additional information, however, it could be a sign – especially in conjunction with any of the above.
None of these are absolute, and they could have nothing to do with a planned exit. That said, you do need to pay attention, and if you start getting any of these signs, you need to ask the hard question. Actually say…
If an exit is on the cards, it really is better to know earlier, so you can get straight to work replacing that lost revenue. You also need to know why, because if it’s an issue with how you’ve delivered the sponsorship, you need to fix that approach before you lose any more sponsors.
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. You may also be interested in my white papers, “Last Generation Sponsorship Redux” and “Disruptive Sponsorship: Like Disruptive Marketing, Only Better“.
If you need additional assistance, I offer sponsorship consulting and strategy sessions, sponsorship training, and sponsorship coaching. I also offer a comprehensive sponsorship capacity-building service for large, diverse, and decentralised organisations. Please feel free to drop me a line to discuss.
Please note, I do not offer a sponsorship broker service, and can’t sell sponsorship on your behalf. You may find someone appropriate on my sponsorship broker registry.
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