Early on in your discussions with a potential sponsor, you need to make it clear that you’re willing to look at their key performance indicators to measure the activity you’re doing.
Now, you might not necessarily know these key performance indicators (KPIs) yet but from your research, you should know a bit about the goals of the business.
In this article we’ll look at:
- How to measure sponsorship ROI
- How to secure more sponsorship by asking the right questions
- The different types of sponsorship KPIs
- How being aware of sponsorship ROI can help you close a deal
What is a key performance indicator?
This is a measure of performance against an activity. In this case, it’s a measure of the success of a company’s sponsorship activity, and how you work with them.
For example, if they’re trying to get leads at events, a key performance indicator might be a specific number of leads. It’s up to you to discuss with them how many.
Generally, if they attend a trade show how many leads might they get per day? Let’s say 100. You know that with a gorgeous race car on the stand, you can help to draw over more people so you help set a new goal for leads at 200 per day. This is how that business can measure your value to them.
That number can also be attributed to sales too. If their conversion rate is 5%, they’ll go from converting five sales to 10 sales with your help. Their conversion rate may even go up!
If you know the average customer value, you can even put a monetary figure on your value. If their average customer value is £1000, you’ve just helped them make an extra £5k from one event.
With the right information and forward planning, it’s definitely possible to measure the benefit you can bring to a sponsor.
What other key performance indicators are there?
A KPI can come in a number of formats but the key is that it’s a measurable figure. Here are some examples:
- Leads secured at a trade show
- Actual sales made at an event
- Actual sales made using your referral code/link
- Increased order values from customers you’ve interacted with
- Increased average customer value
- Increased conversion rate (from lead to a sale)
- Increased followers on social media
- Increased press coverage
The business will already know how it measures success. You need to find out how they do this and work out how you can contribute.
Show you understand value
There are a number of ways that you can show that you understand return on investment and how a business measures success. You can talk about the different KPIs you work on with other sponsors. You can talk about what KPIs you might want to discuss based on the goals you uncovered from your research. Or you might just say that as part of the process, you’d want to discuss with them exactly how you can measure the success of the whole campaign.
They’ll want to see that you’re looking to bring actual results, not just get some money to go racing.
It might be that if they’re new to working with you, or have maybe been burned by a racing driver in the past, they might want some kind of performance-based remuneration, meaning you’ll get a bonus if you hit those KPIs.
It’s worth remembering that if you do add something like that into your sponsorship deal, you need to have a contract. So, as soon as you hit that KPI, the business is contractually obliged to pay you. A contract might seem like an unnecessary expense but it’s worth it for the peace of mind.
Discussing KPIs with a potential sponsor
When you get to know a potential sponsor a little better and you’re in that negotiation stage, you need to talk in a bit more detail about how they’re going to be measuring the success of your campaign. There are a couple of ways that you can go about this, but the best way is often in a meeting, because it can be quite a nice discussion point to show you’re eager and business-minded. But it’s also important for you going forward, as you need to know what you’re measuring your success against.
It is worth noting that to get large amounts of sponsorship money, the workload for these sponsors could easily become a full-time job. One of my clients totalled a six-figure sum of sponsorship this year. He says he spends roughly 30 to 40 hours a month on keeping those sponsors happy and helping them hit their goals.
If you do have a full-time job and you are trying to become a professional racing driver, you do need to think about time management on a serious level. It’s possible to juggle both a racing career and a job but you need to be focussed and dedicated.
When you’re in a meeting with these potential sponsors, and they’re intrigued by your idea, you need to show how you can help them.
Start by asking this one really important question: ‘How do you measure success?’
Now, there are a lot of answers to this. It might be sales value or sales growth. If you’re speaking to a social media team, it might be follower growth, engagement, and reach. If the PR team is part of the meeting they might say they measure on pieces published or equivilent advertising value.
Once you’ve outlined how you’d like to work with them, you then need to ask the question: ‘What will success look like?’
What will success look like if you do your job, or if you can provide everything that you’re talking about? Will it be happier customers? Will it be a higher customer retention rate? Higher customer value? It doesn’t necessarily just have to be sales.
Remember, the best way to measure sponsorship ROI is based on the parameters that the business sets, rather than you saying: “Hey, I helped you increase your follower count, therefore it’s a success and I should be sponsored more next year.” It doesn’t necessarily work like that.
You must have these conversations early on because if you don’t, it’s going to be very hard for you to justify why the business should continue sponsoring you next season.