If you mention sponsorship to most people, they will immediately think of major corporations and big sporting events. But this incorrect perception may be stopping many small and medium-sized businesses from taking advantage of this very powerful marketing medium.
Sponsorship doesn’t have to be a major expenditure. It doesn’t have to cost millions, or even thousands, of dollars to work. No matter what the size - sponsorship is a marketing tool used to achieve marketing objectives. And just as there are businesses of all shapes and sizes, there are a myriad of sponsorship opportunities. The key is to open your mind to smaller, more targeted, and often more flexible sponsorships that can deliver cost-effectively on your objectives, rather than focusing on flashy, but out-of-reach sponsorships like major sport.
If you are considering sponsorship as a marketing tool, there are a number of things that you need to understand before you will be able to harness this medium. If you don’t do this homework, you won’t be effective. It is that simple.
Who are you trying to reach?
Defining your target markets is the starting place for any sponsor, no matter the size. All marketing is about one or both of two things: Changing people’s perceptions; and changing their behaviour. Obviously, reaching the right people is critical to this process.
Many smaller businesses have a tendency to both overestimate and over-generalise their markets. This is the one place where enthusiasm can really get in the way, because as great a product as you may have, you have to be objective. This means admitting that not everyone is going to be interested in what you have to offer.
Your job as a marketer is to understand and prioritise your target markets, and this process has changed a lot in the past few years. Gone are the days of defining a marketplace based upon demographic factors, such as age and gender. Now, the key factors for defining target markets are psychographic - what they care about, what motivates them, and their priorities.
This process is called “segmenting”, and it will generally be based upon a number of factors, such as:
* Which of your products or services interest them and why
* How they use your product or service (or that of your competition)
* Their perception of your company and/or industry
* Their purchasing habits - company or product category (eg, do they purchase in bulk or at the last minute?)
* Their geographic location (if this is important to your company)
* Lifestyle factors and interests
Research is the best way to get this information and does not have to be expensive, as you can probably do it yourself quite easily. If you need a starting point, there two research questionnaire templates in our new book, The Sponsor’s Toolkit.
Once you have defined your markets, you should determine their relative importance to you. This could also be based upon a number of things, including the size of the marketplace, growth potential, influence among their peers (trendsetters are very important to some companies), and relative profitability.
Finally, you should always remember that even if you are working business-to-business, you are still marketing to people, not companies. They will all have their own reasons for selecting your company or product, and you need to understand these motivations.
If you understand all of these aspects, your markets will direct you to the best sponsorships, as well as the best benefits for which you can negotiate. The end result is that you will be far more effective in connecting with your target markets, rather than simply talking at them.
What are your objectives?
In addition to knowing about your target markets, you also need to define your marketing objectives. You can then create a menu of sponsorship objectives that are directly tied to your overall marketing objectives. If you think broadly, you will probably have 10-15 in total.
A sample menu of sponsorship objectives can be found below. Keep in mind that this is just a sample. Your list of sponsorship objectives may be very different, but that doesn’t make it any less valid.
Sample manu of sponsorship objectives
* Build database of qualified prospects
* Involve target markets in the event or program
* Increasing loyalty
* Increase direct sales (sales to your sponsee)
* On-site sales
* Anchor sales, media, internet, or retail promotions
* New product launch
* Educate your target market(s) about your business or products
* Showcase or demonstrate products, expertise, etc.
* VIP relationship building
* Gathering research
* Product sampling, testing, couponing
* Creating strategic partnerships
Once you have your menu of objectives, you should never invest in a sponsorship that achieves less than five of them. This ensures two things: It keeps you strategically focused while giving you the flexibility to consider many different types of sponsorship opportunities.
How will you be leveraging your investments?
Many companies - even major corporations spending millions of dollars - make the mistake of thinking that they can pay a sponsorship fee and then do nothing else but congratulate themselves every time they see their logo at an event. They believe that exposure alone will deliver on their objectives. They are very wrong. In reality, exposure makes up only a very minor part of the total value of any sponsorship.
When you invest in a sponsorship you are investing in opportunity. The only way you will achieve a marketing return is to actively leverage the investment.
One of the simplest and most cost-effective ways to leverage sponsorship is to integrate it across your existing marketing activities. A very easy way to spot an opportunity for integration is to make a list of all the marketing activities you undertake or could undertake - everything from advertising to direct mail to what you play when people are on hold. Then, you should look at each activity and ask yourself how a good sponsorship could improve or add-value to these activities.
A good rule of thumb is that you shouldn’t invest in any sponsorship unless you are prepared to meaningfully leverage it in at least two different ways.
How will you quantify the returns?
It would be very easy for me to say that for every dollar you spend you should achieve a return of at least $1.50, or some other formula. Unfortunately, that’s not the way it works. It is no more reasonable to expect to quantify a sponsorship in dollars than it is to quantify the results of an ad campaign in dollars, although people try to do it all the time. There are just too many intangibles. For instance, how would you put a value on making an occasional customer into a loyal customer? Or turning someone into an advocate for your brand?
With quantification, it is always about objectives. If you know your objectives, you will know what will constitute a success. The key is to determine both your objectives and quantification mechanisms before you commit to a sponsorship. And always be sure to benchmark - you can’t know what you have achieved if you don’t know where you started.
How to find the right sponsees
You’ve done all of your preparation, now how do you find the right sponsorship for your company?
Your first consideration should be whether it matches your needs. As a baseline, it absolutely must be a target market match, as well as an objective match. If a sponsorship investment doesn’t match both of these, then don’t do it.
If it does, then you should look at your attributes. If you were to describe your brand’s attributes or personality, what words would you use? Do the same for the potential sponsee. If there are any matches, that is a big bonus. Warning: Do try to match attributes that are unique to your company. Every company says they are about “excellence” or “teamwork”. Matching these attributes with a sponsee does nothing to set you apart.
You should try to reach your target market with the least waste possible. This is called “narrowcasting” and it is the opposite of broadcasting. Generally, the more people you reach, the more it will cost, so you want to be sure you aren’t wasting your precious marketing funds. It is far better to reach 1000 people with a sponsorship if they are all within your core target market than to reach 10,000 people if only 500 of them are in your target market.
Finally, you should think broadly about the types of sponsorships that could be right for you. Sponsors now have more choice than ever before, with many new types of organisations, such as educational institutions and government programs, seeking sponsorship. Don’t limit yourself to sports just because it gets the most attention. It may be right for you, but then again, it may not. Your options include:
* Arts organisations
* Educational institutions or programs
* Professional associations or organisations
* Community or government events or programmes
Keep in mind that many of these options have many different levels - elite, grassroots, local, association - with all of them seeking sponsorship. Work with the level that is right for your organisation.
Sponsorship isn’t easy - effective marketing of any kind requires a lot of work - but the rewards can be fantastic for organisations of any size. Whether you have a few hundred dollars or a few thousand to invest in this very powerful medium, the results will be far better if you do your homework before you start. And remember that creativity and resourcefulness in execution are a far better indicator of the success of a sponsorship than the amount spent on the fee.
Warnings for first-time sponsors
* Don’t be dazzled by getting lots of “exposure” - it tends to be mostly cosmetic
* Don’t go too big to start - most SMEs will be able to get all they need from low level sponsorships
* Negotiate for only the benefits you need that will help you to achieve your objectives - your goal should be to have no waste
* Do not be afraid to offer contra (in-kind) for all or part of the fee
Kim Skildum-Reid is a Sydney-based corporate sponsorship consultant, speaker, and co-author of industry best-seller The Sponsorship Seeker’s Toolkit and book, The Sponsor’s Toolkit. For more information visit Kim at http://www.powersponsorship.com
Originally published in Her Business magazine.
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