Proving Your Value: Measuring Sponsorship Return on Investment

I’ve written a lot about sponsorship valuations lately and, while this is not a post about valuation, sponsorship ROI is a close cousin.

Before we get started, make sure you check out these two posts, which will be referenced throughout this article:

• Case Study: Sponsorship Valuation Best Practices
• The Essential Guide to Sponsorship Valuation: Learn How to Price Sponsorships Like a Pro

The second article is stuffed with great resources, including my valuation checklist and infographic. The first article listed above has a fascinating comment from a sponsor all about the concept of sponsorship return on investment (ROI)…and that’s what we are going to focus on today.

Laying the Groundwork for Measuring Sponsorship ROI

Before you can measure ROI you have to know what your sponsorship inventory is worth and the only way to do that is by performing a valuation on all of your assets. Valuations are no longer a “nice to have”, they are an essential component to the sponsorship game. Performing a valuation will help you with budgeting, prospecting, understanding your audience and building custom activations that solve real problems for your audience and for your sponsors.

It used to be true that simply completing a valuation put you ahead of the pack (which is still true, for the most part) but things are more complicated now. A valuation is not enough but still required.

Sponsors want more than just logo placement at market value. They now want to connect to your audience in meaningful ways and they want a measurable return on investment. Not just “brand awareness” but if they’ve come to you as a sponsor in order to find new customers, get email signups or host a private event with their most valuable prospects, they need proof that their sponsorship investment was responsible for that outcome. In other words, sponsors are measuring return on investment in increasing more complex ways.

Key Metrics to Determine Sponsorship ROI

Without further ado, let’s dig deep into the numbers that reveal whether you brought home the bacon for your sponsor. 

Sales Conversion Metrics

Many sponsors have sales-driven goals, and rightfully so considering money makes the world go ‘round. The sponsorship sales made in the lead up of your event, during the event itself, and afterward are often a big determining factor into ROI. 

Keeping that in mind, start with the simple stuff. Review how sales improved before and after the sponsorship began. Digging deeper into sales data and comparing this year’s versus last year’s numbers can also solidly prove ROI. 

Another option is to assess sales reports for the products and services advertised during the sponsored event. For example, if your sponsor sells vacuum cleaners (just throwing something out there), and their vacuum sales increase threefold after your event, that’s attributable to your partnership. 

Measuring customer lifetime value or CLV can also be telling. To calculate the CLV, multiply the average customer lifespan by the customer value. CLV measures how much money a customer will spend over their lifetime with the company. 

Social Media Metrics

Another area you must measure when determining sponsorship ROI is social media KPIs, especially for brands with a sagging social media presence. 

If you primarily presented assets and activations related to social media, one way to ascertain whether the approach paid off is by tracking social media mentions. 

The more mentions a brand gets, the more traction it has gained on social media. That said, this should correlate with more followers. If it doesn’t, then it’s not as good of a metric to go by. 

There should also be more engagement for future social media posts, including likes, shares, and comments. This proves that new followers didn’t click the big blue “follow” button and then forgot all about it. 

You can also roll website traffic into this area, as the goal of getting people to follow you on social media is to engage with your website and eventually buy. Of course, many social media platforms now have built-in virtual storefronts, so website traffic isn’t an end-all, be-all measurement.

You can determine which is more profitable, the website or social media storefront, by comparing sales from both over the same time period. 

Lead Generation Metrics

Leads keep a company’s bottom line healthy, so a sponsor should have a strong flow of ‘em. The rate of lead capture forms filled out can indicate the lead join rate, as can measuring the growth of their email list, especially compared to before working with your business or organization. 

Website traffic is another valuable metric here, as it can clue you in on whether leads are landing in the desired location. Go more specific if possible and track landing page traffic to see if there’s a correlation between specific products and services advertised during your event, program, or opportunity and more traffic to those landing pages. 

Customer Retention Metrics 

Businesses also rely on long-term customers to pad their bottom lines, so you can’t skip the customer retention KPIs. 

For example, monthly recurring revenue is a good comparison point, as you can review the numbers before and after the sponsorship arrangement. Calculate MRR by multiplying the number of customers or accounts gained in a month by the average revenue per customer/account. 

CLV is valuable here, as is the repeat purchase rate. Calculate this by dividing the number of customers who bought a product/service more than once in the last year by the total number of new customers gained in that same year. 

Customer Satisfaction Metrics 

Getting a finger on the pulse of customers means tracking their satisfaction, which will go a long way toward promoting better retention. 

Here, rely on the customer satisfaction score or CSAT, as it will be very telling. The CSAT requires issuing a simple survey asking customers how they’d score their satisfaction with the company as a whole or specific products and services.

Give them a scale of 1 to 5, with 1 being very unsatisfied, 2 being unsatisfied, 3 being neutral, 4 being satisfied, and 5 representing high levels of satisfaction. 

Once the results come in, you will have a Composite Customer Satisfaction Score. You can also measure CSAT as a percentage. 

From Informal to Formal: The Sponsorship ROI Evolution

What is new(er) and gaining traction fast among sponsors is that they want all of their assets and outcomes for cheaper than market rate and, what’s more, sponsors have developed their own internal ROI calculators to guide their buying decisions. Some sponsors are open about the ROI they are looking for, others are not, and so ROI strategies range. Some sponsors want a 2:1, 3:1 or even a 4:1 ROI ratio.

Here’s what this means in practical terms:

If you, the sponsorship sales person, have valued your opportunity at $30,000 and you sit down with your prospect to negotiate, they are going to want to pay you less…a lot less! A 2:1 ROI calculator means that they are not going to pay you more than $15,000 for your opportunity or you have to create a package worth $60,000 to justify the $30,000 spend.

Obviously, going in to a sponsorship sales meeting without having done a valuation puts you at a distinct disadvantage and without proving your value, you may never get a seat at the table to talk ROI. Not having done a valuation could mean that a sponsor, who knows the value of your assets, takes advantage and negotiates you (unknowingly to you) into a 4:1 ROI.

There are ways to protect yourself, but first I want to share a story with you, directly from a sponsor. You can see the comment in its entirety at the end of my post Sponsorship Valuation Best Practices but for the purpose of this post, I am going to pull out some quotes to from the sponsor specific to ROI.

From the mouth of sponsors:

“I’ve worked in sponsorship sales and now I work with a brand.

As a brand, I’m not going to pay $50,000 for a sign valued at $50,000! The ROI is $0.

Our brand strategy calls for a 3 to 1 ROI ratio to justify the buy. But that’s not the end of the story.

It’s my job to get the highest ROI possible, so spending $16K on a $50K sign is average job performance, the standard. I don’t want to be average, so I’m going to value that sign lower.”

In other words, this sponsor, and many others like him, have done their homework and are motivated to get the best deal possible.

How to Sell Sponsorship in an ROI Focused Industry

Based on the report above, sponsors start by reviewing your valuation and then, if they accept it, they move on to their own internal ROI practices. Clearly, the sponsor mentioned above (and virtually every other sponsor I’ve talked to) wants to do better than their basic ROI ratios.

So, what do you do with this information? First, make sure you know the market value of your assets as well as the value of your brand. Know your audience well and be able to articulate their needs and interests.

This will put you in a position to charge above average market rates since you are offering a better quality sponsorship opportunity and can deliver on your promises. The next step is to include an ROI ratio on the front end, as part of your valuation, giving you a range within which to negotiate with sponsors.

Once you’ve made the sale and delivered on your sponsorship opportunity, you absolutely must deliver a fulfillment report. In this fulfillment report you should include proof that you delivered but you should also include a new calculator, this one based on your valuation numbers and your actual deliverables.

In other words, if you promised an event with 500 people worth $X but you had 600 people show up, you recast your valuation based on actual numbers. If you promised one e-blast with a coupon attached at $X but you actually did four e-blasts, show your sponsor the actual value of what you delivered. The same is true for every on of the assets you sold to your sponsor.

After your event or campaign has wrapped up, you can report back to your sponsor proving that you delivered what you said you would. This puts you in a position to show them the true ROI of their investment. If you over delivered in terms of ROI then you most definitely have earned the right to ask for their continued sponsorship and you are now in the perfect position to ask them for a multi-year agreement.

FAQs

What Is a Good ROI for Sponsorship?

Sponsors appreciate an ROI ratio of 2:1 per activation, so providing at least that level of value will go a long way toward ensuring your business or organization can secure more sponsors for your next event, program, or opportunity. 

Are Surveys Helpful in Determining Sponsorship ROI?

Yes, absolutely. Besides the CSAT survey explained above, you can send other surveys to gauge brand behavior, attitudes, perceptions, and plans. Phone or email surveys are fine. 

How Do I Know My Sponsor’s Goals?

The only way to be sure is to schedule a discovery session, ideally before you two sign a contract. Discovery sessions are mutually beneficial. You can learn about the sponsor’s needs to tailor your sponsorship opportunity, and you can also determine if you’re a good fit for achieving those needs. If you aren’t, you can exit the arrangement with time to spare to find another sponsor. 

Do Most Sponsors Want Brand Awareness?

At the most basic level, yes, but their sights are usually set higher, such as more leads, website traffic, conversions, and customer retention. Brand awareness only takes you so far, which is why logos are not a good asset. 

Wrapping Up 

The only way to prove that you drove ROI for a sponsor is by digging deep into the metrics. Tracking areas like lead volume, customer retention rate, sales, social media engagement, and customer satisfaction will undoubtedly showcase your prowess as a good partner. 

If a sponsor determines that working with you elevated their brand and was worth the investment, they will be a lot more willing to continue the partnership.