Are You Undercharging Your Sponsors?
I was sitting in an association board meeting recently and a discussion on the topic of “how much should we be charging sponsors” was underway.
The discussion became quite robust and when I heard one person argue that they shouldn’t raise the sponsors fee because “we don’t have thousands of members” I had to step in.
The conversation went something like this …
- Me: How many you are currently using the services of your current investments partner?
- Board: Almost all of us.
- Me: Of those using his services, how much in total do you have invested with them?
- Board: [After a quick consultation around the table] Almost a billion dollars.
- Me: Wow, that’s a seriously large amount of money. How much would that be worth in fee income to that partner?
- Board: Not sure. At least a million per annum. Probably more.
- Me: And how much are you charging them per annum for the partnership?
- Board: Around $10,000 … and it’s exclusive.
- Me: Hmmm … Do you think you might want to edge up that partnership fee just a touch?
While the size of the investment was somewhat stunning in this instance, this situation is not uncommon in the association sector. Few organisations devote much time to measuring the return on investment the sponsor is gaining from the arrangement. This invariably leads to a situation where you either:
a) Lose the sponsor because they aren’t receiving value (and you haven’t cared enough about the partnership to make sure they are); or
b) Lose out on income because you are providing value to your sponsor that is way out of proportion to what they are investing.
Talk to your sponsors. You need to know how THEY define the success of the partnership. Once you know how they are measuring success, you can track and report against those variables. I guarantee you this information will be invaluable. It will become the focus of discussions when renewing or on-boarding sponsors. And, in our exceptionally competitive sponsorship industry, it will set you apart from the competition in a very positive way.