Coming up with the amount you are going to ask a sponsor to invest in you can be tricky.
Don’t underestimate how valuable direct access to your membership is to the right potential partner.
The ideal scenario when trying to work out the value of your association to a potential partner is that you already have a strong and established relationship and can come straight out and ask them how they might value the exposure you can offer them. It’s not always that easy though is it?
Another way to estimate the value of your membership to a potential partner is to calculate it. Let’s use an association that has members who own high rise accommodation buildings and a paint company as the potential partner as an example. In order to work out the value of this partnership the association would need to gather the following information:
- Approximate cost of getting one high rise building painted
- How many members within the organisation
- How often a high rise building might need to be repainted.
Once this information has been gathered, crunching the numbers might look something like this:
| Cost of painting the building | Approximately $100,000 |
| Number of members that you have | 1,000 |
| Average lifespan of paint job | Every ten years |
| Value of your association to a paint partner each year (100 per cent market share) | $10,000,000
($100,000 x 1,000 / 10) |
| Value of your association to a paint partner each year (conservative 10 per cent market share) | $1,000,000
($10,000,000 / 10) |
If this partner was able to get 100 per cent of its members to use the paint company’s services and products, they could potentially make $10 million each year as a result of the partnership. However, as we all know, 100 per cent market penetration isn’t attainable and a good, conservative figure to work on over the first 1-3 years of a partnership is 10 per cent market penetration.
If a potential paint partner was considering an exclusive partnership with the association, then the organisation would know that it might be possible to deliver them 10 per cent market share on top of what they might already have and this amount would be approximately $1 million per year. Knowing that the association has the potential to deliver $1 million per year to a corporate partner, would it still value its proposal at $5,000–$10,000 per annum as many not-for-profit associations do?
Sponsorship can be a very cost effective way for companies to promote their products and services to a group of people they are not yet doing business with. However, it’s important to remember that, for some companies, your association’s membership might only represent a portion of their target market so do your research and value the partnership accordingly.
