Sponsorship: Build an Effective Strategy and Start Growing
Sponsorship: Build an Effective Strategy and Start Growing | MCI Group | EN
June, 27 2019
Building a comprehensive and cohesive revenue generation strategy is key to any association’s growth. Learn new approaches to sponsorship, how to increase value and align with sponsors’ ROI and ROO from one of our experts.
In today’s landscape, associations are often experiencing flat or declining sales. Research highlights that in 2018, 65.8 billion dollars were spent on sponsorship globally, the majority in Europe and North America.
However, if you take a closer look at where this money is invested, the largest sum (70%) goes to the sports industry, while associations only benefit from 3% of the pie, which equates to 1.95 billion dollars.
Despite the small percentage, this remains a considerable amount.
So, how can membership-based organisations leverage that and build a cohesive sponsorship strategy? In other words, how to get this money? When? From where?
In this article, you’ll have the chance to learn how one of MCI’s leading sponsorship teams plans and deploys multiyear strategies for American association clients to expand in the MENA region while growing their sponsorship partner community.
Sponsorship: top concerns for associations
Based on data provided by our association clients, these are the main concerns that arise when approaching potential sponsors:
Laying out an effective strategy: how to get more revenue into the association?
- Identifying and working with good partners: how do you identify them? What are the qualities to look for?
- Cultural differences: different markets have different ways of operating and engaging with sponsors. How to find a common ground for collaboration?
- Lack of business capacity: associations often complain not having enough people on board to help raise funds for their organisation
- Competition coming from other types of associations both at a national and international level
- Timing and business cycles: when is it the right time to go to market? Which and whose business cycle needs to be followed, international, national or regional?
Understanding sponsors point of view
Before developing a plan and looking into how associations can build a sound strategy, it is important to consider the perspective of the counter-part, the sponsors: what are they seeking?
- Return on investment: even though the measurement metrics are difficult to assess, ROI is one of the main factors that cause sponsors to reduce or increase their contribution.
- Return on objectives: easier to measure than ROI, it is one of the main priorities when it comes to activities carried out with associations.
- Strategic long-term partnership: sponsors are less inclined towards ad hoc activities, but rather, they are interested in building long-term relationships.
- Valued partner to the association: once these strong partnerships have been created, sponsors see themselves as intrinsically linked to the community they are supporting.
- Recognition: of course, sponsors want to be recognised for the investment they devote to an organisation.
The second element to consider from the sponsor’s point of view is which benefits are valuable to them. These are illustrated in the table below:
As you can see, the top two benefits sponsors are looking for are category exclusivity and presence on digital and social media. In particular, the latter has been increasing steadily as an effective way for sponsors to measure their ROI and gain visibility.
Building a sponsorship strategy
The starting point for any successful strategy is getting the basics right: effective strategies are simple and clear.
- Plan ahead: if you don’t have a plan in place before going to market, you will only generate confusion for your association and your partners. Lay out a conscious plan for the annual activities (meetings, certifications, programmes with the community, B2C activities...) and put together a proper budget.
- Structure a revenue strategy: following the planning phase, you will have an idea of how much money needs to be raised from the marketplace for all those activities.
- Timing: it is always best to go out to market as early as possible to let sponsors decide in advance whether they want to be part of the activities and how much money to commit. For this reason, it is critical to check the budget cycles of organisations and be prepared to work within those timings.
- Understand markets: each marketplace has its own characteristics and timings. American organisations will have a different budget cycle from India, and it is important to take these differences into account.
Taking an alternative approach to sponsorship strategy
The traditional way of approaching sponsors is to create a product or activity-based funding with title, gold and diamond sponsors among others. However, this strategy has proved to generate little engagement with sponsors and a low commitment level that disconnects the community once the activity is finished.
For this reason, we advise associations to follow an alternative approach aimed at creating a partnership, rather than an ad hoc relationship. These are the steps to follow:
- Establish strategic relationships to grow with the sponsor who is looking for a long-term partnership.
- Identify common objectives
- Establish win-win go to market strategies for both association and sponsor
- To protect your members’ data and your association’s values, make sure the strategy is compliant and works within regulations. Sponsors will respect the framework you lay out for them
- Ask for a high price because of the value you provide to the sponsor in terms of long-lasting strategic engagement. Remember that sponsors are looking for ROI and ROO, and if they can get them from this relationship, they will pay a higher value.
- Seal a long-term, multiyear relationship so that sponsors will keep on supporting the community regardless of the general economic conditions of the market.
In conclusion, planning in advance, being up to date on current and future market dynamics, identifying partners and building key relationships at a strategic level are fundamental factors that can really make a difference for associations to grow and stay relevant in today’s marketplace.
To find out more information on the topic, download the related webinar here.