How To Get Sponsors Part 2: Return On Investment

Posted on September 21, 2016

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How to get Sponsors Part 2:

Return On Investment (ROI)

By: Rob Oakman

(courtesy of IvelinRadkov/iStock/Getty Images)

(courtesy of IvelinRadkov/iStock/Getty Images)

Understanding Return On Investment (ROI) is not a black art, or boring as all hell, it’s just a matter of understanding what is valuable to your sponsor, and what you can bring to the table. ROI is the value that a business gets in return for an investment. If a sponsor gives you $2000 and can’t show that it made that money back plus some more in new business, or what ever they feel is valuable to them, then you were a bad investment. But few businesses will give you money in the first place if you cant show that they have a really good chance at getting good value for their money. That’s why you have to prove you are a good investment opportunity by demonstrating what that sponsor is looking for. Part of this is what you do. That may sound like commercials, TV spots, appearances, and parties, but that’s not all of it. All of those things are organized and paid for by your sponsor, if they want to. What you need to bring to the table is far more important and has more to do with what they want to use the sponsorship for.

What you are is a way to project an image. You might be tough (Earnhardt), driven to succeed (de Silvestro), down to earth (Andretti), ground breaking ( Muldowney), technical (Lauda), funny (Hinchcliffe), or any number of things. Understand that, regardless of who the sponsor is, you become a face of the company for as long as they use you. Some larger dollar sponsors will make you part of their communications plan – their advertising and promotional budget. They will have a plan for commercials, public events, meet-ups and the like that you agree to and you will be seen as part of the business. Other sponsors offer less money and rarely have this kind of planning due to lack of resources or misunderstandings about marketing principles. You may never meet their clients, or workers, or families. This is a situation where you risk failing to provide ROI. Here’s what you need to do to demonstrate that you can bring a sponsor value for their money.

1. Research

Sending out requests to every business in town is wasteful, plus getting a bunch of “No’s” sucks. You need to look at what the potential sponsor is doing in their marketing efforts and find good matches to you and your racing series. Showing that you have at least some knowledge of the company goes a long way in getting any response, let alone a yes. You can hire companies that do this for a living, pay for membership in websites that offer research materials, some colleges and universities allow present and former students access to information on publicly traded companies for free, or you can make phone calls, watch TV, newspapers, and online media to see if a company and their existing marketing efforts could be a potential fit. Consider that a “Green” company is less likely to sponsor NASCAR over IMSA because of each series’ stance on developing environmentally friendly competition and technologies.

2. Personal Connections

Everyone you meet needs to see you look them in the eye, especially the sponsor themselves. No matter who they are, you need to make that person your biggest fan. This is especially important when a sponsor – or potential sponsor – brings someone to the track, or you are doing an appearance on site. You need to talk to people, be friendly to their friends, family and customers. Invite all of those people to come to the races and watch you perform. Answer questions from fans online as soon as possible. Aim for an hour or less. Be kind even if someone is mean online or in person; kill them with kindness. Take the “Robbie Gordon” approach to trolls and literally thank them for coming and ask if they want an autograph. Seriously, he does this.

Jason Reichert has the right idea with his facebook page. (courtesy of Jason Reichert Facebook page)

Jason Reichert has the right idea with his Facebook page. (courtesy of Jason Reichert Facebook page)

3. Have a Presence

Be online — YouTube, Facebook, twitter, Instagram; get them and use them. Make sure you’re in full gear, your helmet off so your face is visible but keep it is in the picture. Make sure your machine with your number and the sponsors name and logo are in your profile pictures. Too many people are putting up channels without these things and this means that anyone coming across them online has no idea what the racer or their machine looks like at the track, so potential fans can’t find them. If the sponsors name isn’t visible then what are they paying for? Talk about the sponsor everywhere you can and get yourself out there. Be visible.

4. Ask.

What each sponsor finds valuable is dependent on many variables. The research you did identifying the potential sponsor should already hold most those answers, but remember, it never hurts to ask what they need, and offer what you believe will be valuable to both of you. Large sponsors will probably have a plan, but that doesn’t mean they have thought of everything. Besides, you, as a racing fan as well as a racer, may have insight into what fans want that the sponsor hasn’t thought of and that is added value.

5. Offer Your Services

Make it your business to encourage the sponsor to use you. Offer to show up on site with your machine. Encourage them to invite some clients to a race and give them exclusive access to you in the pits. Look into local TV, radio stations and YouTube channels for collaborations. Look into local car shows and bring your machine with your sponsor’s name proudly on display. Get stickers printed and hand them out – not just to fans, but to the sponsors clients, friends, and family. Stickers are useless if you don’t give them out. The sponsor may pay for it all, or some, or none, but getting seen, and your sponsor seen, means other potential sponsors will see you too, and will recognize the value you offer.

6. Contracts

Get it, read it, negotiate it, sign it. (stock image)

Get it, read it, negotiate it, sign it. (stock image)

Have one. Contracts provide the sponsor with the confidence that your relationship is professional and clear, while allowing you to put a specific dollar amount on certain things — like decal location, number of races the sponsorship is for, and what you offer in terms of appearances, etc. Regardless of the size of the dollar amount, both you and the sponsor need to know what you are agreeing to. Both of you need to agree on what race(s), in what series, where and for how long the sponsor name is to be displayed, as well as how much money they give you, when and how you get the money, and what obligations you have for promotion. Promotional obligations could be how many tweets must have the sponsors name, how may YouTube videos they appear in, how many appearances you need to make in person, by Skype, etc.

When it is in the contract, you have to do it. This is the exchange – money for promotion – and you are part of the promotion. Because everything in the contract is legally binding, make sure you have a lawyer look it over if possible, but also understand what is expected in the industry. This may include things like the sponsor’s control over your social media, or at least the right to delete, modify, and post in your name. Sound creepy, but think about it from their point of view. If you say something offensive, or insulting to their target market, they look bad right along with you. A moment of douche-baggery can cost them serious money. If this isn’t something you are willing to do then it is important to negotiate. They can dig in their heels, but so can you.

Small, local business sponsors will need fairly simple contracts. You can piece them together from templates online. If you go this route remember that a contract needs these basic parts:

a. A names and definitions section. This just lists the names of the people/business making the agreement together, when, and where, and clarifies any short form you are using. Short forms are like using the word “racer” instead of your full name or racing team, and “sponsor” instead of their full name to save time. By defining who “racer” and “sponsor” are at the beginning, you save time and confusion for anyone reading it.

b. The intention to create an agreement. This is usually just a statement saying that the two (or more) parties involved are forming a contract. Technically, you don’t need this, but it helps having it in writing if there is ever a legal dispute in the future.

The Mayor connecting with his audience. (courtesy of Vince Talotta and The Star)

The Mayor believes in you! (courtesy of Vince Talotta and The Star)

c. Terms. This is the exchange. These are specific and clear points of agreement — the amount of money changing hands, the promotional materials being created, time frames for payment and sponsorship, what you are required to do, etc. Don’t forget to put in a specific schedule for payment(s).

d. Consequences. This is what makes a contract a contract. If you put in a line that says “the sponsor shall complete full payment on or before May 1st 2017”. That’s great, but what happens if they don’t? You forgot to add a consequence. A line like “Failure to pay shall result in a penalty of 2% of “(how much the amount was)”, compounded daily, until full payment, including any and all penalty amounts, are received by racer” will put an incentive for the sponsor to pay on time. Just remember that your end of the agreement will have consequences too, so read them carefully.

Though it’s true that a verbal agreement is all you need to have a contract considered binding, written contracts are much harder to deny, and easier to defend in court. Especially when they have clear terms, schedules, amounts and consequences for everyone involved.

Getting a sponsor can be a long and difficult process, but the payoffs are more than worth it, so get out there and find them.

Remember to have fun out there and thanks for reading.

Subscribe for new articles and follow on twitter at @oakmanonracing. If you have any questions or comments about this topic, or anything else, feel free to ask.

 

 

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