Sponsorship Negotiations: Overcoming a Weak Position

Negotiation with potential major sponsors tends to be a one-sided process. The sponsor invariably holds the upper hand because they know there are dozens of other sponsorship opportunities being offered in the marketplace at any given time. Therefore some sponsor negotiators ruthlessly use their bargaining power to force a stronger position. You can follow these guidelines below to help overcome a weak sponsorship negotiation position:

How to overcome a weak sponsorship negotiation position

1. Don’t reveal the full extent of your weak position. It is a common, costly mistake in negotiations to let slip the fact that you are desperate to complete the deal. Don’t give them the impression you are desperate because you have called them three times to check if they have received the proposal! Try not to let the potential sponsor know the full truth of your situation. A weak position is not so dire if the other party doesn’t know your real position. Don’t get drawn into any discussion that allows the potential sponsor to infer that you are desperate. Instead, continue highlighting your strengths, even if they are few, or turning the focus to the advantages they will gain from a deal with you.
2. Don’t let them intimidate you by trying to beat you down on price or conditions. If you have done your homework and know your proposal offers good value for money that stands up with other deals in the marketplace, point to the other similar deals and stand firm. If they want a lower price, tell them you can oblige, but only for a correspondingly lower combination of sponsor benefits. This will help you to overcome a weak sponsorship negotiation position.
3. Increase the other side’s dependence on you. When in a weak position, too many negotiators focus exclusively on themselves and fail to consider the other party’s position. Most negotiators have something valuable to offer the other side. The important thing is to identify the unique value you bring to the negotiating table. Try to understand all the potential sponsor’s needs, interests and priorities by communicating with them at multiple stages and through multiple people during the lead-in process. If your negotiations are proceeding to a crucial point, you are well advised to meet with or at least to telephone people from different business units within the sponsor company to get access to their point of view. Their comments may help you gain crucial insights that you didn’t have before and allow you to offer new benefits rather than being caught on the back foot and feeling obliged to lower your asking fee due to the other party’s tough line. This is especially helpful if you are seeking to renew an existing sponsorship deal.
4. Don’t promise a major sponsor everything up front. Keep some benefits in reserve to ‘sweeten the pot’ if the potential sponsor is pressing for a better deal. This is far better than reducing the amount of money you are asking. You could keep these extra benefits in hand as an unexpected bonus for the sponsor after the deal is signed. Also, some reserve benefits could be spread to other sponsors if the benefits haven’t been used in the deal with the major sponsor. Nevertheless, don’t be stingy when you first discuss what you can offer. Better to be generous while still keeping some benefits up your sleeve.
5. Pause to consider further creative benefits you could provide. Don’t just focus literally on the event or activity, but think about the emotional experience of supporters and fans whose support is continuous; it doesn’t just start and stop when the event starts and stops. Try to think laterally of creative things you could add for the fans.
6. Collaborate with other sponsors to put a proposal together to a potential major sponsor. If you already have smaller, happy sponsors in place, you could increase your negotiating power by teaming up with them to offer a greater number of joint benefits to the main sponsor. The new benefits could, for instance, provide access to a bigger target audience in a wider area or in a juicy niche market that otherwise would be difficult to access.

Meeting with a potential sponsor for the first time

You need to start your relationship with a potential sponsor on the right note. Read my article to gain further insights: “Meeting with a potential sponsor for the first time.” This article may also give you some useful sponsorship negotiation insights.

Use similarity and praise to form a positive relationship from the start

You can also use two psychological principles to help your cause when approaching potential sponsors: Two things reliably increase liking – (1) similarity and (2) praise:

Similarity

Similarity literally draws people together. Research in psychology showed that participants stood physically closer to one another after learning that they shared political beliefs and social values. And people are more willing to buy from those who are similar to them in various ways such as age, religion, politics or even cigarette-smoking habits.

See if you can quickly discover at least one common connection with someone you deal with. Don’t spend too much time on this in your first meeting with the prospect. They don’t want you to ramble; instead you should shortcut to find something in common. Do a Google or LinkedIn search to find out a bit more about what the other person and you have in common. When in their office, check quickly around to see if there are any company trophies or photos, or even family photos etc. The important thing is to create the bond early because it paves the way for goodwill and trust in every later encounter. It’s much easier to gain support when the people you are trying to persuade are already inclined in your favor.

Praise

We mostly prefer to say yes to the requests of someone we know and like. One way for people to like us is to praise them. Praise charms and disarms. Honest, positive remarks about another person’s attitude or performance reliably increase liking in return, as well as willing compliance with your wishes. This works even when flattery is used. Strangers such as sales people get us to comply with their requests as well by applying this rule – they first get us to like them. If you are meeting with sponsor companies, ensure you find ways to praise their role in the marketplace, and perhaps the person you are dealing with if you know their background.

Use these principles when approaching potential sponsors.

Plan carefully for meetings with potential sponsors

It is a very positive sign when a potential sponsor agrees to meet with you. In these meetings, you need to use the available time efficiently. Plan carefully for the meeting – do your homework first, and focus on key points.