Procuring Sponsorship

One of the traditional 'no go' areas for procurement is buying events and venue sponsorship - it ranges from a firm paying your organisation money to have their name associated with you or even provide something you may otherwise have had to pay for, for example, delegate bags for a conference. My experience suggests you only get access to this area of procurement after you've proved you can add value and be trusted with other areas of marketing spend. Procurement's role is to get the investment mix and formalise the terms and conditions. The journey to procuring sponsorship seems to be a progression from buying the 'feedbies' and 'give-aways', then the marketing and promotional literature and resources, then 'above the line' advertising', then the events, and then the holy grail of sponsorship procurement.

Sponsorship procurement is high-risk so you really must get the 'budget holder' on board, that can take some time. You need clarity of what's important strategically and also what is deemed strategically inappropriate - sign a sponsorship deal with the right partner and there's the benefit of the halo effect, conversely, the consequences of one of the partners falling from grace are high too. Just as precarious is trying to predict social trends and social disapprobation, for example a sponsor who is associated with tax avoidance may not be that helpful at the moment. So you really need to think very carefully about risks and exit strategies - the time to do that is before you enter the sponsorship.

You then need to think about scope and bundling. There are trade-offs between single and multiple sponsorship both for the buyer and the sponsors - plenty of small sponsors may bring in the money and be easier to get but compromise the big joint branding deals. Taking sponsorship from a group of sponsors and then discovering that the mix is incompatible and unacceptable to some of the sponsors will cause short and long term problems for all concerned. Think about that risk early and protect against it.

As opposed to assuming you will have a keen band of sponsors beating a path to your door, expect to have to market your organisation.

Of course some of your traditional evaluation techniques can be used so think ahead about evaluation criteria and weighting.

One final word of caution from expereince. At one time I wanted to go to the market for something that a strategic sponsor provided. The strategic sponsor contacted the CEO claiming that I was wasting money in not re-awarding the contract to them as the incumbent, claimed that their bid would prove to be the best deal, and that they would withdraw sponsorship if I went ahead with the procurement. My answer was comparatively simple, we shouldn't be held hostage to the sponsor, we should take a strategic view to the market and extend the contract scope to more sites, if the sponsor was so confident they would deliver the better deal that would be proved in the market, and regardless we had a contract for the existing sponsorship deal with no guarantee it would be extended anyway. Thankfully the CEO placed his trust in me, I delivered a 50% saving on the contract through an alternative provider and the sponsor did not withdraw their sponsorship! So be conscious that big sponsorship deals also open the door to the strategic leadership of your organisation, and the sponsor can be expected to use that access when they think your procurement strategy could be disadvantageous to them.

This was first published as a guest post on Procurement Insights EU Edition. 24 June 2013

You're Procurement, get me out of here

If only procurement professionals had the escapology skills of Harry Houdini. Day by day I see bad contracts entered into and hear the mantra "you're commercial, get me out of here".

Why does it all go so wrong with people entering into contracts they no longer can/want to live with.

To me, it starts to go wrong when procurement people are not engaged early enough in the market dialogue. Technical specialists are problem focussed and want to speak to techies who can talk their language and give them what they want.

Naivety and gullibility play a part. Firms which exist to make a profit and sellers incentivised to make a sale find it easy to smile, say yes, and shape the dialogue to reflect their unique selling proposition. The movement of negotiating power from the buyer to the seller is palpable.

Failure to consider alternative options doesn't help - but why on earth would a techie want to consider alternative options, there's is to get a problem solved. Not taking a wider perspective and seeing the transference of costs to elsewhere within the same system blinkers the cost/benefit analysis.

Pride and face saving make it hard to back track and say, "sorry, that's not a good deal for us".

A sense of urgency doesn't help. The requirement is urgent, so there is reduced time to take corrective action.

All this seem familiar? It certainly appears to be demonstrated through the negotiation of GP contracts in 2004, and the recognition that costs have only been transferred to A&E. It also looks as if we're going the same way with Clinical Commissioning Groups - yes, we think the GP contracts were wrong yet are we making the same mistakes? It also looks as if some high level 'staff exit' packages aren't immune.

Yes, maybe we should ask a procurement person to get us out of here - more often than not that cry is heard too late when what should have been heard, right at the start, was, "I'm going into the jungle, can a procurement person get in here with me, now?"