CHAPTER 14
Renewals and Exits
All good things must come to an end, and sponsorship is no exception. Whether the sponsorship has been short or long term, the time will eventually come when it will either be renewed or exited.
This scenario causes a lot of angst among some sponsorship seekers, particularly those who think themselves lucky for having signed up a sponsor in the first place, but it really doesn’t need to. Like death and taxes, it is just part of the process.
Renewals
It is usually far easier to renew an existing sponsor than it is to find a new one, so taking the right approach to renewals will save you a lot of time, money, and angst.
Start Early
Many contracts have a specific time by which the renewal process will start, but our advice is to ignore it. Start the renewal process as early as you can, making it essentially an extension of your servicing activities. Throughout the sponsorship, you should be working with the sponsor to understand and meet their needs. As you get closer to the end of the contract, your vocabulary should shift from focusing on the coming year to a focus on the bigger picture and how you can continue to develop your relationship through coming years and events.
The timing of when you will want to start discussing renewal in earnest will vary from one event to another, but you will need to keep the following well in mind:
• It takes most sponsors at least four to six months to create and implement a leverage program for a sponsorship. If their needs, and the benefits package you are offering to meet them, have changed significantly, you need to give them enough time to get a new leverage program together.
• Give yourself enough leeway so that, just in case the sponsor doesn’t renew, you have plenty of time to resell the sponsorship.
Start Fresh
Many sponsorship seekers make the mistake of offering a sponsor the same benefits package again at renewal. This may be easy, but you will be missing out on a great opportunity to improve your relationship and their results.
The beginning of the renewal process is the ideal time to sit down with your sponsor to discuss their current needs, objectives, target markets and any new initiatives so that a new package can be developed that really does the job for them.
• Go through the same information-gathering process that you would if they were a new sponsor. You may even want to use the Sponsor Information Checklist as a guide.
• Speak with decision makers across the sponsor’s business units. You may be able to create a package that meets more of their needs.
• Be open with the sponsor regarding your organization’s marketing needs and challenges. This is a golden opportunity to re-create a relationship that achieves mutual marketing objectives.
• Suggest a leverage planning session with their team before you make a new offer, allowing you to reinvent the sponsorship and then to reinvigorate their buy-in.
• Don’t be constrained by set benefits packages. Be flexible and creative in your response to the sponsor’s needs. Use your inventory!
Exits
When a sponsor doesn’t renew, it can be very stressful on an entire organization, and it can be very tempting to start apportioning blame. This is always counterproductive. Most sponsorships are exited for strategic reasons, not because your organization has done anything wrong or because the sponsor is being unfair or arbitrary.
There are a number of reasons why a sponsor may want to exit a sponsorship, including:
• A major shift in objectives or target markets
• The sponsorship was entered into for the wrong reasons or it wasn’t a good match from the start
• Lack of interest, and therefore integration, across the business units
• Consolidation of the sponsorship portfolio into fewer, larger investments
• A new sponsorship or brand manager who wants to overhaul the sponsorship portfolio whether it needs it or not
• Budget cutbacks
• A global directive to concentrate on a specific sponsorship or type of sponsorship (e.g., the Olympics)
• A corporate merger resulting in the duplication of some sponsorship investments, a major change in the type of event, and/or its audience (e.g., your organization has shifted from presenting a consumer travel show to a travel trade show).
Then again, the sponsorship may have simply passed its prime, and it’s just time to do something else. It is widely accepted that the lifespan of a fully leveraged sponsorship averages around seven years. Even if the sponsorship has been livened up every year, at some point the returns gained by the sponsor are going to start diminishing and it will be time to move on.
Again, if you have been doing a good job at servicing your sponsor, the fact that they don’t plan to renew should not come as any surprise. In most cases, you should know far enough ahead of time to find another sponsor to take their place.
Even if it does come as a surprise, try to take it in your stride. There have been many cases where sponsorship seekers have thrown the equivalent of a tantrum—going to the media, badmouthing the sponsor—and all they ever accomplished was looking like a bunch of idiots and scaring off potential new sponsors. After all, what sponsor would want to work with a sponsee who may try to damage the brand if the relationship doesn’t go on forever?
Next Steps
As soon as you find out that your sponsor is not renewing, there are a few things you need to do:
1. Debrief the sponsor so you can understand exactly why they aren’t renewing.
2. If your organization is at fault in any way, accept responsibility and go about fixing the problem. You should also discuss the problem with your other sponsors to let them know it is being addressed.
3. If your organization wasn’t at fault, ask the sponsor for referrals to other sponsors who may be a better fit. You should also ask the sponsor if you can use them as a reference.
4. Ask your other sponsors for referrals.
5. Look at the benefits package you have been providing the sponsor. Is there an opportunity to use those benefits to increase your other existing sponsorships?
6. Take the opportunity to update your inventory and proposal template.
7. Get out there and find another sponsor.
What If It’s Your Organization That Doesn’t Want to Renew?
It happens. Sometimes a sponsor is unresponsive. Sometimes they are painful to work with. Sometimes they just don’t fit well with your image or audience. Sometimes there is a better, more profitable, more active, and more partnership-oriented sponsor waiting in the wings. (If that is the case, count yourself lucky.)
Before you write off a sponsor, be sure you have done everything you can to get the relationship on track. If it’s just not happening, try to afford the sponsor the same courtesy you would expect from them. Give them plenty of notice that you are not intending to go forward with the sponsorship and, without vilifying them, tell them why.