By Tim Wood and Bruce McKaskill
(Reproduced from the November 15, 2018 issue of The Sponsorship Report)
Does your sponsorship hierarchy look like a wine decanter? Narrow at the top and fat at the bottom? If so there’s a likely reason and an even bigger problem.
If you’re like most organizations, your current sponsorship portfolio (and, potentially, the ensuing headaches) evolved organically. In the early days someone knew someone who was willing to ‘sponsor’ your organization. Other sponsors came on board and were placed above, next to or below the first. Ten years later you have a hierarchy that is brimming with complexities.
This scenario is fine, until it’s not. And the ‘not’ comes when the work to service the various tiers within the sponsorship portfolio hinders or even outweighs the benefits that the individual partnerships can offer.
Few organizations suffer from too much dollar volume. However many organizations are suffocating under the weight of too many individual sponsors. Their hierarchy looks like a fat bottomed wine decanter: plenty of sponsors at the bottom of the hierarchy and relatively few at the top.
What’s the problem with that?
All sponsors need to be serviced, but as a general rule, small-ticket sponsors require more service per dollar of revenue than big-ticket sponsors. The more sponsors you have, particularly at the bottom end, the harder your team has to work, and the payoff is relatively modest when weighed against servicing cost.
More importantly – and here we can return to the wine decanter image – many of these sponsors are like the sediment that settles on the bottom. They will never rise to the top, and they will continue to consume resources that could be put to far more profitable use.
Your hierarchy is no longer serving you. You are serving it!
How did you get there? Simple:
- There will always be more demand for lower end sponsorships;
- Boards and bosses will rarely be happy with the status quo. If you do well, you will be challenged to do better, whether or not you need it or can service it.
Rarely does management look at sponsorship and calculate the ideal mix and, critically, know when they should look elsewhere for funds.
So what’s the solution?
Stop thinking of a hierarchy as static with empty spaces and tiers that need to be filled. An ideal hierarchy is dynamic and aspirational. Why?
Big ticket sponsors have significant issues, problems and needs that you are expected to help them address. That’s why they sponsored you. The bigger their problem, the more they’re spending with you, and the more of your attention they deserve. They belong at the top of your hierarchy.
However, your top sponsors likely didn’t start there. Many will have tested the waters with you first and increased their investment as the partnership proved its worth. Your hierarchy has to accommodate low-investment partners with strong upsell potential as well.
But what about everyone else, the sediment that has settled at the bottom of your sponsorship decanter?
First, do your own ROI calculation for each partner at the bottom of the hierarchy. That test should ask:
- Are they a positive contributor to your own growth objectives?
- Can you earn a genuine 50% profit margin at a minimum from the partnership (based on out of pocket costs, not existing overheads)?
- Can they grow upwards in the hierarchy?
- Are they already the right partner in the right level?
If you can’t answer any of these questions with a ‘yes’, respectfully explain your position at your next review and decline to renew.
Once you have worked through your hierarchy, which may take some time, be disciplined and planned in acquisition and elevation.
And remember, your hierarchy should serve you, not the other way around.
The Fit Sponsorship Academy is led by Tim Wood and Bruce McKaskill, principals of Australia’s Fit Sponsorship Group, a sponsorship sales and consulting agency that has been delivering results for the arts, cultural, community and cause sectors since 1999. Learn more at https://www.sponsorship.academy.