Many organizations we work with are challenged with the prospect of achieving year-over-year growth of their sponsorship revenue. What many of these organizations don’t realize is that they often set themselves up for achieving mediocre results or even failure in reaching any kind of sustained revenue growth. That’s because they don’t spend enough time leveraging their current customer base. Here is a key strategy to get you started on the right path.
Organizations that consistently achieve year-over-year sponsorship revenue growth have a well thought-out Renewal Program. Just think about it – if you don’t have a strong renewal program, you’re starting at “zero” every year and will likely spend 50% to 70% of your total annual time on re-kindling these relationships to just get back to the same level you were at a year earlier. That leaves you with roughly 30% of your total time prospecting for new sponsors. Wouldn’t you rather reverse that and spend 70% of your time on increasing year-over-year revenue and 30% (or less) of your time on renewals?
An essential part of your overall sales program needs to be focused on achieving a respectable renewal target with your existing sponsors by a clearly defined date. If you are not achieving at least 70% to 75% year-over-year renewal rate, there’s likely something wrong with your sponsorship program and you need to fix it quickly.
If you rely on an annual conference/trade show event to drive most of your sponsorship revenue, a key strategy would be to achieve a 70% to 75% renewal target by 30 days following the event. Core renewal strategies would include an active pre-event campaign to let them know that you will be conducting a renewal activities at the event, an onsite campaign to meet with each sponsor to discuss their renewal options, a strong incentive program to provide them with a good reason for renewing their participation by a certain date and an active post-event campaign to close any unresolved renewal prospects.
Of the above strategies, the incentives you offer are likely the most important because they provide a strong business case for renewing at an earlier date. Incentives could include: same pricing as the current agreement, offering value-added year-round visibility or marketing benefits and providing first right of consideration on new sponsorship opportunities that become available.
There’s another good reason for renewing at some point during, or shortly after an event – this is the time when a sponsor is most likely to be enthused about their involvement, so you want to ask for the renewal when they are excited about the possibilities. This excitement wears off quickly and it’s more difficult to re-engage them when their attention turns to other matters.
If a company objects because they don’t know if they will have the funding in place, you can always have them sign a conditional agreement that allows them to back out by a mutually-agreed date if their budget doesn’t come through. The same condition could apply if the sponsor needs time to evaluate their results. A conditional contract is better than no contract at all and more importantly, it puts the emphasis on the sponsor to say they want out of an agreement vs. you letting them of the hook by allowing your current sponsorship agreements to expire.
Finally, a structured renewal program helps you nip potential problems in the bud. If you know you are going to have a renewal conversation by a certain date, you are more likely to pay attention to servicing details. Additionally, if a sponsor doesn’t want to renew at the time of the “ask”, you know that ROI may be in question, so you hopefully have time to resolve the issue or at worst case scenario, know earlier in the game, if you need to find another sponsor to take their place.