Rethinking Minimum Spend Limits In Sports Sponsorship

Since I started in the sponsorship industry…we’ve always had a minimum spend. I was always told “We need a brand to commit to our value.” or “the smaller deals take too much time.”

Both are valid points…but also dangerous ones. Whenever we have blanketed statements about an industry…it creates a situation where someone can undercut us for business.

Honestly, when I sold restaurant ads…I killed competitors by being an option without minimums.

Beating the competition with “no” minimums

When I sold restaurant ads for a travel publication I knew we had ad inventory that went for $495 for the whole year (That’s only $41.35 a month! 2 meals and the ad pays for itself!).

I also knew that our largest competitor had a minimum spend. You had to buy packages with multiple photo listings in multiple publications.

So I walked down to the travel center, grabbed all of their publications, and went down the list of restaurants that advertised there. The outreach message was simple “Hey I can get you in front of the same audience for a portion of the ad spend, we have no minimums!”.

In short, this strategy worked every time. I stole a ton of business from the competitor simply because I had no minimum spend.

The opportunity came with smaller clients that competitors couldn’t close

So I stole some clients. It happens in sales. That was great. But the bigger opportunity came with the sales that my competitor couldn’t close.

You see a $2,000 minimum is a breeze for bigger restaurant groups. They can drop that in a year…sometimes even a month.

But when you look at the larger customer base, most restaurants are cook-owned. What do I mean by this? It means when you call to chat about advertising the cook/owner says to call back at 10 PM when they are done cooking and sitting down with a glass of wine and looking over bills.

$2,000 to a cook-owner is the mortgage. It’s soccer cleats for their kids.

That ad spend is a HUGE risk for them as it is all on their shoulders. That is hard-earned income from waking up at 5 AM and making 500 doughnuts before dawn

This is where I thrived. I would actively find smaller businesses that competed with the bigger ones I couldn’t close and approach them with the $495 package. 

Now I know what you’re thinking “but Nick…you got less money than the competitor on that deal!” This is true.

$495 can work. It de-risks them. 

There are a larger number of smaller individual restaurants than bigger restaurant groups in the city I was selling in. I was swimming in interest. We had to literally add more pages to our guides to fit people in.

The big thing? Most of the time my competitors never called these restaurants. They knew they wouldn’t spend the minimum so they left them alone. I was one of the only people calling them.

It seems like a no-brainer…but in the 3 years that I sold these ads the competing travel guide never dropped their minimum. They stuck to their guns. I even had a customer say the sole reason they switched was that there was no minimum with us. 

That customer eventually spent the same amount as the competitor minimum with us.

Is that crazy? I would say yes. Money is money and if there is an opportunity…there is a solution to the answer “it is too hard to make a profitable process”. 

This worked because it played to our psychology of being risk-averse

You see humans are inherently risk-averse. It’s in our biological survival mechanism. Anything that is risky we struggle to pull the trigger on.

The reason why restaurants said yes was that there was very little buy-in risk ($495). 

If it worked, amazing the marketer looked like a rockstar. If it didn’t, it wasn’t a huge cost in the marketing budget. 

That cost-benefit analysis is done every time we approach a prospect. When we add minimums, it puts up a red flag in their head.

“This is a big investment, what if it doesn’t pay off?” Whether consciously or subconsciously, this will hinder any deal.

We can combat this by showing other sponsors that have had success…but still, there is a wall we are fighting as salespeople when we add minimums.

In sales, if we can remove this wall, we can win more deals. Our goal in sales should always be to remove walls that keep the prospect from buying our product.

In my opinion, minimums are an unnecessary wall.

Building targeted & efficient inventory is the key

The key to the small restaurant no minimum strategy success came with setting up specific inventory that was easy to set up and maintain and an onboarding system to add them.

The $495 item was a listing with a photo. The selling point was rather than the regular listing…you would get a photo to stand out as visitors browsed the page. The value add was worth the extra money.

But the implementation was easy. In asking for the regular info (Restaurant name, blurb, and address) we simply created a new form with an image upload. The editor then adjusted the page by adding images.

That’s it. This is what allowed us to grab multiple new customers and pull them in. Could our competitor have done this? I am sure they could….but they didn’t for whatever reason. This lost them money.

We see this all the time in small businesses. I once read that a landscaper took over a market with huge competitors by dropping his initial price by 10%. Why could he drop his price by 10%? He set up a self-schedule and pay website where customers could set up a mowing in seconds.

When people referred others to him, they simply sent the link. People signed up instantly.

The 10% came from not needing someone on the phone to call and schedule appointments. Less overhead, he passed (some) of that savings onto his customers.

Where he thrived was the upsell. Now people were scheduling appointments for bigger ticket items like tree removal.

Could the competitors have done that to keep up? Yes. Did they before he took a large amount of market share?

Nope.

Look we are all problem solvers (hopefully) in sales. If there is a revenue opportunity…there is a way to tweak a process to make it easy.

As we look at this through the lens of sponsorship, there are always ways we can make the process to implement easy so it makes money sense. If the landscaper can do it…we can too.

So how does this link to sponsorship? You can steal deals by dropping minimums

As I stated, there has always been a sticking to minimums mindset. My beef with this is technology has changed since this idea was put into place. We have evolved to make processes easier. You can shave time off almost any process with a technology solution.

For the vast majority, we haven’t challenged it. We have assumed that the work it would take to fulfill a $695 sponsorship would not be worth it.

Let’s start to challenge it. Here is an example.

Let’s say you wanted to take my experience and go get restaurants. Perfect. Let’s set up a landing page called the “Your Team” Menu. It’s where fans go when they struggle with what to order.

The first thing you do, send an email to every restaurant in the city to be a part of it FOR FREE.

I know you think this is crazy, but this is the honey. It will pull in initial interest. 

Say there are 500 restaurants in your city. 250 say yes. You now have relationships with 250 restaurants.

Once the 250 say yes, you have an automated email that sends to them letting them know that for the entire year they can add a photo to their listing to make it pop. All for the low price of $695 for the year.

Let’s say the first year, 60 say yes. We are looking at $41,700 in additional revenue you wouldn’t have gotten.

The time it will take to update the page for the season with 250 restaurants info….probably a full day’s work if formatted correctly. Let’s take another day to add the photos. 

2 days worth of work, $41,700 in revenue you didn’t plan on getting.

But that is just the introduction. If they buy a photo, they are prime customers to buy other assets. You can now upsell all 60.

If you are a smaller team, this can be your silver bullet

Look if you go head to head with big teams and play their game…most times you will lose. Fighting for scraps of a big deal against a big team is a lot of sales work with a high likelihood of failure.

But if you change the way you think about minimums you can create programs & systems that are easy to implement and manage to pull in big returns for years to come.

As with the landscaper, digital platforms have made the world easier. We can automate processes to shave off hours of work (which usually lead to thousands of $ in savings).

It may take a bit of initial time investment (I am sure the landscaper’s setup of the scheduling and payment system took a whole week) but the payoff from there is worth the work to maintain (update prices, etc.). But this extra work set up a foundation for HUGE growth in the future.

If you build a list of restaurants described above….and each year grow the number of images bought for listings… You are sitting on a gold mine of revenue. When restaurants talk to each other, they will mention the project.

The best part, the other team you compete with will be asked if they can spend just $695 on inventory. Their answer most likely will be NO for a long time.

Start small, one program at a time, and then build from there

I am not saying take any business at any price. That would create chaos (the last thing we need in sports).

Here is the process I would follow:

  • Find an underserved customer base that has scale (restaurants are probably the easiest).
  • Build an asset that is easy to service and brings value (Restaurant list, restaurant of the week post on social, etc.)
  • Go sell, set up an automated” email that reaches out to all restaurants at scale (you have to nail this email with value, but that is for another article)

Test it in the first run. Will it be the most efficient. Absolutely not.

Will you be able to make tweaks to make it efficient? Yes.

If you do 3 programs per season, you could easily add 6 figures to your revenue. Even better, that is 6 figures that your competitors can’t get.

I hope this got you all thinking about where you’ll start. But overall…we as an industry need to challenge the mindset that brands have to have a minimum spend with our team.

spot_imgspot_img

Latest

The end of seasonality in sports sponsorship

I’ve always been intrigued with seasonal businesses. Summer beach restaurants, pumpkin patches, Christmas stores…they have a 3-month window to sell 90% of their inventory. If...

The Importance Of Community Impact Assets In Sponsorship Packages

Today brands aren’t all about profit. Mainly because today customers demand that a brand make positive impacts on the world and our communities. This means...

Sponsorship post-pandemic is all about re-building habits, old and new.

Humans are creatures of habits. It is extremely hard once we’ve entered a habit to change it. In reverse, it takes a lot for us...

Insights from chatting with a 17 y/o sports fan on media, ticketing, & sponsorship

Whoever is closest to the customer wins in business. Or as Rich Franklin puts it: “If you want to see how a lion hunts, you...

The Age Of Agile Sponsorship

As with all things, we must adapt to survive in business. Whether it is the natural progression in an industry, a change in consumer behavior,...
%d bloggers like this: