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Sponsor Retention Strategies For Tough Times   White Paper March 2012
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Sponsor Retention Strategies For Tough Times White Paper March 2012

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Sponsor retention strategies for tough times: …

Sponsor retention strategies for tough times:
Engagement and evaluation strategies for rights holders to maximise the “touch, tangibility and stickiness” of their sponsorship.

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  • 1. Sponsor retention strategies for tough times: Engagement and evaluation strategies for rights holders to maximise the “touch, tangibility and stickiness” of their sponsorship. By Ron Latham, Managing Director, Latham ConsultingAt a glance:Research has identified three critical areas of concern for rights holders as they fight to retain sponsor support, andtheir share of the sponsor’s advertising and promotional budget in this tough economic climate: Communication: 85% of sponsors agree with the statement that “There is a need for more open communication between sponsors and rights holders”. Benefits not understood: 46% of sponsors agree with the statement that “The benefits of sponsorship are not well understood in my organisation”. Evaluation: Key stakeholder feedback is seen as the most important evaluation measure (99%), but only 43% of rights holders undertake formal sponsor feedback surveys.Unless rights holders adopt strategies to address these concerns they risk a reduction in revenue, as scarce A&Pfunds are reallocated to other media that can demonstrate a better return on investment.Proactive strategies need to be developed to maximise the “touch and tangibility” benefits of the sponsorship withinsponsor organisations. Four possible engagement strategies to consider are: Work with the sponsor’s brand marketing, sponsorship and advertising and promotional teams to undertake innovative, low cost or free-of-charge, added-value activation initiatives that focus on expansion of the sponsorship, e.g. through more: exposure and signage, product association and endorsement, joint promotions, player appearances, client hospitality functions, social media activities etc; Make building the relationship with sponsors a priority to drive support and buy-in for the sponsorship. Encourage the entire rights holder’s team to increase engagement and have more communication with the sponsor organisation. In particular, focus on key decision makers and influencers in the “C” suite, marketing and sponsorship teams and in the sales, business development and customer-facing areas of their organisation, where it will have most impact and influence the continuity of the sponsorship. As part of this engagement and relationship building, ensure that all points of contact are “on-side” with the sponsorship and can appreciate the benefits and return to their organisation. Ensure they can “touch” the sponsorship and have involvement in some way, either at the venue or other promotional and support activities. Implement a Key Sponsor feedback program with the 20% that give you 80% of your revenue and undertake one or two reviews a year, Ensure your KPIs reflect sponsors ROI and ROO objectives and use a 360° assessment tool to gather feedback from all levels of contacts within sponsor organisations. Share and discuss the results with sponsors and ensure performance improvement plans are carried through.
  • 2. Sponsor retention in tough economic times:Engagement and evaluation strategies for rights holders to maximise the “touch, tangibility andstickiness” of their sponsorship within sponsor organisations.BackgroundRights holders understand that to sponsors they are But continuous involvement in sponsorship activation issimply a supplier of one of many mediums available to also essential to ensure that the complex activities pivotalreach their target audience and consumers and a part of to sponsorship effectiveness are accumulated throughthe marketing mix to sell their products or services. They experience and consistent effort.are competing for a share of the sponsor’s advertising andpromotional budget that is both fragmenting, with the The Economyemergence of new Internet-based channels, and shrinking The continued tough economic outlook for the next fewunder pressure in these challenging economic times. years presents rights holders / properties and sponsors with both significant challenges and opportunities.Research has identified three critical areas of concern forrights holders as they fight to retain sponsor support, and For rights holders, their key challenge is to retain theirtheir share of the A&P budget in this economic climate: major sponsors, through driving their partnership even Communication: 85% of sponsors agree with the harder to deliver on a sponsor’s objectives. statement that “There is a need for more open communication between sponsors and rights holders”. Sponsors wish to retain their competitive advantage and build on the brand equity and association gained. History Benefits: 46% of sponsors agree with the statement shows that smart brand marketers who can maintain their that “The benefits of sponsorship are not well advertising and promotional spend during a downturn understood in my organisation”. actually increase their share of voice, visibility and top-of- Evaluation: Key stakeholder feedback is seen as the mind awareness, whilst those who cut A&P budgets suffer most important evaluation measure (99%), but only declines which make it difficult to catch up when the 43% of rights holders undertake sponsor feedback economy improves and budgets return to normal levels. surveys. The challenge for sponsors, in assessing whether toUnless rights holders adopt strategies to address these continue their commitment is to demonstrate that theconcerns they risk a reduction in revenue, as scarce A&P sponsorship achieves their Return on Investment andfunds are reallocated to other media that can demonstrate Return on Objectives targets and that this is wella better return on investment. understood within their organisation.In this environment, proactive strategies need to be In this environment rights holders’ engagement withdeveloped to maximise the “touch and tangibility” benefits sponsors is critical, along with evaluation measures toof the sponsorship within sponsor organisations. support the continuity of the sponsorship.Sponsorship as a competitive advantage Threats to SponsorshipSponsorship is a way to persuade consumers indirectly Whilst the economy and pressure on sponsor budgets, isthrough an association with a rights holder / property. If currently the biggest threat for sponsorship retention, it isused strategically, a sponsorship programme can be cyclic by nature and beyond the rights holder’s control.developed into a distinctive competence, thus creatingcompetitive advantage. Three other threats that are constant, and where rights holders have control, are with their sponsor relationships.Gaining a competitive advantage is becoming more of a These are essentially based around the people andchallenge within a cluttered market place in which there dynamics in a sponsor’s organisation, i.e.:are increased incidences of ambush marketing. This has  Senior Management: In many instances whenled sponsors to explore new ways to leverage their sponsorships commenced, particularly sports relatedinvestments and maximise sponsorship return, particularly ones, they were arranged at a business owner, Boardthrough an integrated approach using sponsorship with member, CEO or senior management level, oftenother elements of the communications mix (publicity, without any real ROI assessment and thought aboutadvertising, sales promotion, personal sales). A synergistic brand “fit”. Sponsorship decisions were often emotionalapproach will not only maximize communications ones and justified as being “our way of putting backeffectiveness, but also contribute to building brand equity. something into the community that has supported us”. In all probability the sport/event is dear to the heart ofResearch has shown that the competitive advantage the decision maker and a chance for recognition.achieved by a sponsor, through a sponsorship, isdependent on the strength of the link between the sponsor With the evolution of sponsorship and the addition ofand the sponsorship property and is far more effective, if support promotional activities designed to leveragethere is a logical fit, or “perceptual match”, between the and maximise the sponsorship investment, effectivebrands of the sponsor and property. control has moved from the boardroom and “C” suite, to the marketing and sponsorship departments.The objective for maintaining a sponsorship investment However rights holders should continue to retain andover time is to build an association between the sponsor build relationships with their senior management andand the rights holder / property in the minds of consumers. board contacts, as their influence will be invaluable.
  • 3.  Middle Management: With the evolution of the sponsorship relationship to that of The days of employees staying with a Company for a “Strategic Partner”, what new capabilities will sponsors their working life are well gone. Gen X and Y demand of their rights holders? How will the dynamics of managers are career driven, lack company loyalty (as account management need to change? a result of continued retrenchments of middle management), are very aware of building their CV and Rights holders will need to focus on two key areas to always have their eye on their next career move - and enhance sponsorship performance and improve their a successful sponsorship, particularly with associated relationship with sponsors: sales or market share increases, looks great on their CV.  Customer focus: They must adopt a customer focus culture with a more agile, responsive organisation that For marketing and brand managers in multi-national responds to specific sponsor needs. Some rights companies, sponsorship, advertising and product holders may require a dramatic paradigm shift in how promotions are often the only quick way for them to they select, manage and sustain their account “make their mark” during their relatively short tenure. management teams. Many must pursue changes in their culture, people, relationships and processes to With Global brands now requiring consistency in elevate customer focus to the level of importance delivery, today’s marketing and brand managers have demanded by the sponsor organisation (particularly few opportunities for movement in the four “Ps” of marketing and brand management) to drive and marketing - Product, Price, Place (distribution) and maintain mutually beneficial relationships. Promotion. Product formulation, pricing and distribution  Broadening skills and capabilities: Key account options and strategies are pretty much fixed, so their managers often lack the client management and only opportunity to drive awareness, trial and sales is analytical skills required to build and maintain the through promotion. They have learnt that a well relationship and need to become more broad-based in targeted and brand-aligned sponsorship, and its their business capability. support activities, is a far easier, faster (and often significantly cheaper) way to add to their CV, than To improve performance in this area, account developing a great creative idea and gaining a massive managers and teams must better understand the advertising budget to sell it. sponsor’s business and shift from a focus on “selling sponsorship” to a focus on “addressing their Middle management can be rights holder’s greatest requirements”. They will need to develop new skills supporters in the sponsor company. But constant which will enable them to meet shifting needs with “churn” of key functional managers, with “ownership” of greater agility and impact. At the same time, the sponsorship, is a threat that rights holders need to however, traditional relationship-building and sales be aware of and have strategies to safeguard their skills will still be important. The key will be to relationship. develop business management skills, while maintaining strong sales ability, to benefit the rights Corporate Strategy: holder in the long run. “Change of direction” by a sponsor is often the biggest threat to sponsorship retention. Often a change in Sponsor Engagement and Communication corporate strategy, or direction, is linked to (or because Research indicates that not only is there a lack of open of) a management change, whether at board, senior or communication between sponsors and rights holders, but middle level management. Developing and that many do not understand the benefits of sponsorship. implementing new, or changes in, strategies is a common way for new aspirational managers to make their mark in a Company, and add to their CV. Communication: % Agree with statement For a rights holder this justification for withdrawal from a sponsorship is perhaps the hardest to combat. Only There is a need for more open 85% two things will assist you to mount a good case for communication between 77% retention: The ability to demonstrate that the sponsors and rightsholders sponsorship meets their ROI targets and that this is well understood within their organisation and the The benefits of sponsorship are 46% strength and support of relationships with the people not well understood in my 38% above and around the manager seeking change. organisation 0% 20% 40% 60% 80% 100%Managing complex sponsor relationships: Source: Repucom sponsorship outlook 2010 Sponsors RightsholdersSponsor relationships have evolved from “one point-of-contact” between the rights holder and sponsor to“multiple points-of-contact”, often coordinated by a key 85% of sponsors and 77% of rights holders agree “There issponsor/account manager who orchestrates the activities a need for more open communication between sponsorsof the rights holders’ team. and rights holders” and 46% of sponsors say the benefits are not well understood.The sponsor account manager will often work across theorganisational matrix. To help them perform this role more Both issues gain in importance during challengingeffectively, rights holders will need to seek ways to provide economic times and may put the sponsorship at risk.their account managers with a holistic view of all Rights holders must be proactive with communication andsponsorship activities, including access to information. engagement strategies with their key sponsors.
  • 4. Three possible engagement strategies to consider are: Sponsorship Evaluation – Importance Work with the sponsor’s brand marketing, sponsorship 2010 research by Repucom, in their Sponsorship Outlook and advertising and promotional teams to undertake Survey, shows that Key stakeholder feedback is seen as innovative, low cost or free-of-charge, added-value the most important performance measure, with 99% activation initiatives that focus on expansion of the seeing it as either “Extremely, Very or Quite important. sponsorship, e.g. through more: exposure and signage, product association and endorsement, joint promotions, Seven of the eight other measures that rated highly in player appearances, client hospitality functions, social importance are quantitative measures related to the media activities etc; brand, i.e. awareness/attitudes, participation in promotional activity, sales figures etc, or audience reach Make building the relationship with sponsors a priority and participation and media exposure metrics. to drive support and buy-in for the sponsorship. Encourage the entire rights holder’s team (Directors, Importance of Performance Measures officials, account teams, players, support staff etc) to increase engagement and have more communication 27% 39% 33% Key stakeholder feedback with all levels of the sponsor organisation. Brand research /tracking 33% 58% 6% In particular, focus on key decision makers and Media exposure analysis 24% 46% 24% influencers in the “C” suite, marketing and sponsorship teams and in the sales, business development and Attendance figures 27% 36% 27% customer-facing areas of their organisation, where it Media reach (TV audience) 27% 36% 24% will have most impact and influence the continuity of 15% 55% 18% Promotional participation the sponsorship. Independent research 21% 36% 21% As part of this engagement and relationship building, Rightsholder health trends 6% 46% 21% ensure that all points of contact are “on-side” with the sponsorship and can appreciate the benefits and return Sales figures 9% 21% 27% to their organisation. Ensure they can “touch” the 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% sponsorship and have involvement in some way, either Source: Repucom sponsorship outlook 2010 Extremely important Very important Quite important at the venue or other promotional and support activities undertaken. Sponsorship Evaluation – The gapIt is vital to establish personal relationships with all levels There are many market, media and specialist sportsand touch points within a sponsor’s organisation, so that research companies that provide a wealth of quantitativeeven if key people leave the organisation, relationships information to evaluate the effectiveness, impact andcontinue at other levels and can be used to leverage and return on investment of sponsorships, including: TV &build relationships with new people. radio ratings, advertising expenditure; Media exposure (TV, Print, Radio, Internet); Consumers: consumer attitudes, interest, attendance, passion, sponsorshipSponsorship Evaluation – The business case awareness etc, and many have become the benchmarkRights holders, event owners and sports organisations, are used by rights holders and sponsors alike.businesses and need to regard their sponsors as strategicpartners and treat them as if they are key account However, it is the qualitative research and sponsorcustomers. They need to build relationships and provide feedback area that is most important and leastadded value so that sponsors may build on the undertaken. Latest research shows that key stakeholdersponsorship with support activities that link to and extend feedback is seen as the most important evaluationthe visibility of the association and their brands. measure (99%), but that only 43% of rights holders undertake sponsor feedback surveys.In order to retain the strategic partner relationship andsponsors, they need to undertake evaluation of thesponsors’ satisfaction with the sponsorship and whether itmeets their objectives.For rights holders there are important benefits fromsponsorship evaluation, i.e. to: Better understand the needs of brand sponsors in order to work with them to meet their objectives Identify sponsors at risk, or where they could improve the added value they provide to the relationship Ensure their relationships are strong and the benefits well understood at all levels in the sponsor’s organisation Demonstrate they deliver ROI for brands, with success stories to attract and retaining sponsors As part of their sponsorship evaluation process, rights “For knowing afar of the evils that are brewing, they are holders should undertake one or two formal feedback easily cured. But when they are allowed to grow until surveys annually – one at the end of the season/event and, everyone can recognise them, there is no longer any remedy to be found.” Machiavelli where the activity covers a season, a mid-season review - so that any issues may be identified and discussed.
  • 5. Key Sponsor Feedback Surveys – What Sponsor Feedback Surveys – the processmakes us different The critical steps in a successful sponsor feedbackMost sponsor satisfaction surveys are undertaken using program process are:traditional market research practices of: Random  Define specific KPIs and metrics;sampling, perhaps stratified, directed to random  Survey sponsors:contacts, with anonymous responses and reporting at an o Key stakeholders rate your performance.overall level, perhaps with some demographic analysis, o Rights holders can rate their own performance.e.g. sponsor size (value range). The problem is you don’t  Reportsknow where the “noise” is coming from or how important o Individual reports on results, by stakeholder group;the source is and risk reacting to the “squeaky wheel” o Overall reports showing sponsor comparisons;syndrome, rather than responding in a targeted manner.  Review - Meet with sponsors to identify strengths and prepare action plans to address any areas ofOur sponsor feedback programs are based on proven perceived underperformance.performance management techniques:  Specifically targeted at your top sponsors – the 20% that give you 80% of your revenue;  Directed to key contacts/decision makers and influencers by inviting all contacts at all levels (“C” suite, Senior, Middle and day-to-day contacts);  Anonymous responses, but reporting at a sponsor level, with analysis by each of the assessor groups;  Now you know where the “noise” is coming from, and have individual discussions about improvement.360° Feedback: Is a multi-dimensional assessment toolcommonly used in HR applications for leadershipdevelopment. We also use this tool and concept inprocurement/supplier and B2B customer satisfactionsurveys and for key stakeholder surveys to assess theperformance of an organisation and to get commentsfrom various stakeholder groups, so they can understandthe different perspectives at either a geographic orcontact level (key contacts & decision-makers). KPIs need to be sponsor specific, with realistic and appropriate rating scales and descriptors that align withTwo-way reviews: Many organisations also ask their achievable expectations and agreed to by sponsors.right holders to provide feedback on their performance asa sponsor, particularly in relationship KPIs, separately KPIs generally focus on two key areas:from the 360° sponsor feedback review.  Product and Capability: ROI and ROO (Return on Objectives) KPIs around the brand and activation/This technique is used for high-touch, high-value support activities and the partner relationship.strategic partner relationships where the rights holder is  Business Contribution: KPIs that measure how theparticularly dependent on the timely performance of the sponsorship engages key stakeholders in theirsponsor, without which their performance will be business and how it adds value to the business.impacted. In many instances, these assessments arealso combined with a separate 360° feedback survey togain the perspective of all parties and stakeholders.Our approach:Key sponsor feedback programs should not be justsurveys, but part of a process of continuous improvementof formal and informal feedback, review of results andagreed improvement plans.Four criteria underpin our approach:  Performance improvement is a “Journey” to improve sponsor satisfaction and engagement, with the end game being sponsorship retention.  The process must ensure high sponsor participation through prior engagement, communication of results and evident change.  Our measurement criteria are based on Global best practice, using hard business drivers as well as traditional sponsorship and relationship KPIs. “If you want to have early warnings about possible problems in a  We are content agnostic in our assessment tools - relationship and a way to surface issues and address them we don’t insist on standard questions, just to collaboratively, you have to have a mechanism to take the temperature preserve benchmarking. Our on-line software is of the relationship, compare its effectiveness up against agreed metrics, simply a platform for clients to use their own design, and then talk about the results.” content, KPIs, rating scales and descriptors. (Source: Vantage Partners)
  • 6. On-line Appraisal and Feedback Tool Reports The Performware™ Key Sponsor Monitor encourages Feedback to sponsors on how they rated your a collaborative approach to continuous performance performance is critical and forms the basis of review improvement in what can be complex business partner meetings and action plans. The software provides on-line relationships, often with multiple touch-points in both generated reports for both the individual sponsor and to organisations. It facilitates a more strategic way to the account managers for comparison across their manage sponsor relationships, through metric-based portfolio of sponsors. ratings that provide a weighted assessment. Results are presented in a dashboard format along with matrices, Detailed, automated, on-line reports mean that analysis trend charts and verbatim comments, all on-line. and feedback can be timely, with a menu of reports in dashboard and graphics formats covering: It will assist rights holders to better engage with their key  Sponsor portfolio reports for account managers – By sponsors and tell them: category, by KPI, rankings, ratings, trends;  How your key sponsors rate your performance;  Individual sponsor reports – Ratings and comments,  What differences in opinion, if any, exist between with analysis by contact level. your senior, middle and junior level contacts;  Other feedback, both positive and negative; Example Sponsor Reports:  Overall comments –the strengths they see in you Overall score: Shows overall performance summary at and the areas you need to develop. KPI group level and ratings broken down by stakeholder  How your key sponsors’ ratings compare groups. The “Traffic light” dashboard style report allows easy identification of areas of high performance (green),The Performware™ 360° Feedback platform is a with the yellow shading being average and the red zonesleading edge, web-based system that is non- areas where the detailed analysis reports will identifyprescriptive, fully configurable, scalable and flexible to which specific questions require attention.suit individual requirements. Key benefits are:  It will accommodate your own assessment philosophy and measures, including KPIs and questions, your own rating scale and definitions;  A unique, optional, algorithm based weighting process can be applied to ensure a focus on priorities. Alternately, you can ask sponsors to weight the importance, to them, of each KPI. Ratings distribution: This report shows stakeholder group “sentiment”, i.e. the percentage that score positive, neutral or negative. Reports are provided for overall performance at KPI group level, and individual question, and can be converted to and compared with a NPS (Net Appraisal - Being web based, with full security and Promoter Score). confidentiality, it enables continuous access to appraisals and for them to be undertaken at any frequency and time, anywhere. The user-friendly features engender confidence in the survey and encourage engagement. Reviews: o The online tool functionality, includes automated email notification, and allows us to track survey completion and send reminder emails. o The assessment process enables participants to assess performance individually, with their results aggregated into assessor groups by function/role or level, e.g. “C” suite, Senior Executives, Managers, functional/operations people etc. o Free-text comments boxes can be provided for each KPI and there is provision for up to six general comments question in the last section of the assessment tool. The optional “self-assessment” dimension will provide a comparison of their perception of the relationship with that of the sponsor.
  • 7. Trend: Shows “sentiment” over time for each KPI. Summary Today, sponsors want their rights holders to become a “Strategic Partner” and “business builder”, helping to optimise their revenue through an understanding of their specific business needs and delivery on their Return on Investment and Return on Objectives needs. The journey to that of a strategic partner is not easy, but is worth the effort. It requires paradigm shifts by both parties, particularly in attitudes, requiring openness, trust and information sharing. Sponsors expect their rights holders to communicate and engage with them at all levels and to be proactive in suggesting ways to further leverage and support the sponsorship. Regular informal and formal feedback from both parties is critical in the “Strategic Partner” journey. A Key Sponsor feedback program is a vital tool to help rights holders to improve their performance and reach their full potential and cement their sponsorship and relationship position. A well designed Key Sponsor Feedback program, based on regular performance reviews and constructive feedback will assist rights holders and their sponsors to objectively assess performance andPortfolio report: Overall performance summary at KPI drive improvement. Thus ensuring the continuity of thegroup level, ranked by sponsor, compares sponsor ratings. association, for mutual benefit. Proactive strategies need to be developed to maximise the “touch and tangibility” benefits of the sponsorship within sponsor organisations. Four possible engagement strategies to consider are:  Work with the sponsor’s brand marketing, sponsorship and advertising and promotional teams to undertake innovative, low cost or FOC, added-value activation initiatives that focus on expansion of the sponsorship.  Make building the relationship with sponsors a priority to drive support and buy-in for the sponsorship. Encourage the entire rights holder’s team to increase engagement and have more communication with the sponsor organisation. In particular, focus on key decision makers and influencers in the “C” suite, marketing and sponsorship teams and in the sales, business development and customer-facing areas of their organisation, where it will have most impact and influence the continuity of the sponsorship.How we work with you  As part of this engagement and relationship building,When we work directly with you, we provide: ensure that all points of contact are “on-side” with the  Website (your branding), KPIs, survey set-up sponsorship and appreciate the benefits and return to  Survey administration, progress reports their organisation. Ensure they can “touch” the  Full reports (Sponsor and Rights holders) and sponsorship and are involved in some way, either at personal presentation of results. the venue or other promotional and support activities.  Implement a Key Sponsor feedback program with the Should you wish to use your sponsorship consultancy, 20% that give you 80% of your revenue and undertakewith us as an invisible support service, then we provide: one or two reviews a year, Ensure your KPIs reflect  Website (your branding), KPIs, survey set-up sponsors ROI and ROO objectives and use a 360°  Survey administration, progress reports assessment tool to gather feedback from all levels of  Administrator training for your report production contacts within sponsor organisations. Share andYour consultant works directly with you on presentation of discuss the results with sponsors and ensureresults and individual sponsor improvement strategies. performance improvement plans are carried through. To access an example assessment, or to have your sponsor feedback survey converted to the Performware on-line assessment tool, contact Ron.Latham@performware.com.au ph +61 2 9959 3815