If we were going to open a new restaurant, we would develop a business model before we create the menu. Similarly, if we’re going to develop an improved corporate sponsorship program, we should develop a business model before we create the list of sponsor benefits.
Why a Business Model for Sponsorship Programs?
When I worked at an association, a Vice President on staff said our not-for-profit association should not engage in business relationships – like sponsorships – with companies. I disagreed; “not-for-profit” is a tax status, not a business model. There is nothing inconsistent or inappropriate about a not-for-profit association having a robust sponsorship program.
From the vantage point of companies, sponsorship fees are almost always a marketing expense …. a business expense. Corporate expenditures for sponsorships are seldom philanthropy.
Therefore, from the perspective of the association and its prospective sponsors, a sponsorship program is a business endeavor.
What is the Sponsorship Business Case for Associations?
- Associations need more revenue and members need more services. According to “Association Economic Outlook Report” from Marketing General Incorporated, half of associations surveyed lack the revenue and personnel to develop programs for members.
- Associations face competition. According to “Looking Forward 2021” from Association Laboratory, 4 in 10 associations said other national associations are their competition; one-quarter said for-profit organizations are their competition.
What is the Sponsorship Business Case for Companies?
- Since sponsorships fees are a marketing expense, companies consider the wide range of ways they can accomplish their marketing goals.
- Association sponsorship is no longer an automatic commitment for companies that sell products or services to an association’s members. Many companies review sponsorship options based on the return on investment (ROI).
- When I’ve interviewed corporate sponsors on behalf of client associations, marketing executives explain they are seeking value beyond the several days of a conference sponsorship. Comments include “The conference is 3 days; we market 365 days a year” and “only 9% of conference attendees are of interest to our company.”
- Corporate sponsors also report that they want a partnership that is beneficial to the company and the association; “we won’t just cut a check.”
What are Associations Selling? What are Companies Buying?
Association members have four perceptions of companies:
- Visibility: they recognize the company’s name
- Awareness: they have some knowledge about the company’s product or service
- Attitude: they have a positive or negative perception about the company
- Behavior: they access information from the company, attend a company event, or purchase something from the company
The problem is that many associations are offering sponsorships that provide visibility – logo placements, recognition, and banner ads. At the other end of the spectrum, companies are buying behavioral change.
A successful business model is predicated on offering what customers are buying.
Can Associations Perform Like Marketing Agencies?
Associations can benefit by performing like marketing agencies because associations have many similarities to marketing agencies:
- Audiences: Members, non-members, and other stakeholders; associations can segment those audiences
- Communications channels: E-newsletters; magazines; website; social media; listservs
- Communications forums: Board meetings; committees and task forces; focus groups; conferences; webinars
Marketing agencies don’t sell their services in Platinum/Gold/Silver/Bronze levels; they offer customized services to meet the needs of each client. Associations can do the same.
How Can Associations Implement a Sponsorship Business Model?
Here are six steps:
- Ask prospective sponsors about their goals and objectives; ask follow-up questions. Don’t give companies a prospectus or a list of “sponsor benefits” or levels.
- Develop a proposal brief for a year-long sponsorship that is (a) based on what you learned from the company and (b) in alignment with your association’s mission and member needs.
- Review the proposal brief with the company; ask if the document accurately reflects the company’s goals and objectives; ask if the sponsor benefits align with the company’s needs.
- Develop a full sponsorship proposal incorporating changes discussed in the meeting about the proposal brief.
- Present the full proposal; discuss; close the deal.
- Fulfill sponsorship benefits like a marketing agency by having a staff person serve as “account executive”.
A sponsorship business model is a way for associations to increase sponsorship revenue and member value.
Bruce Rosenthal is a strategic advisor, consultant, and educator; he creates corporate partnership programs for associations that increase revenue and add member/stakeholder value. Bruce is also Convener of the Partnership Professionals Network.by Bruce Rosenthal