How Bad Sponsorship Hurts Good Business

[Tristan]

This article by Tom Demerly was linked by BRAIN earlier this week. Whether you're making frames or operating an LBS I think this is worth the read.

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Poorly administered sponsorships are like showing too much cleavage at a dinner party. They attract plenty of attention, but not the right kind of attention.

I've had some first-hand experiences with sponsorships which have worked extremely well but also a couple which ended up as the "sponsored consumers” Demerly talks about. I'd had the concious awareness that some of my sponsorships were not working but this article really highlighted why and gave me a lot to think about. Revoking such privileges once handed out is messy at best.

Waltworks had a very similar article a few years ago: Waltworks Bicycles: Sunday Rant: Sponsorships which struck a few chords with me as I'd always selected who I supported based on their personality rather than results.

I think what both Walt and Dermerly observe is that what works for Specialized and Trek doesn't/won't work for a small business with limited resources.

I've been planning on running and sponsoring some events so this article came at a good time. I do fear that event sponsorship is a flash in the pan and that once the event is over that it will be forgotten, and with a business as small as mine I can't afford to continually sponsor event after event. Is that a valid fear? At least with sponsoring an athlete they'll be around for the whole year.

(this is an attempt to spark some inter-industry discussion which I feel has been lacking of late. Plus an excuse to post a cleavage-shot)

[mjbabcock]

Sachs...chime in please!

[robin3mj]

I thought this line was fairly compelling, and I see a lot of it:

Worse yet, through unprofessional use of social media some amateur sponsored athletes have created the impression that if you are paying full price, you are somebody’s fool, and you’re not one of the cool kids.

[DOOFUS]

sponsoring a uscf racer is stupid

as soon as they get a paycheck for riding a bike, that's when they can get free shit.

[DOOFUS]

jayne was hot

over the top

sophia is just jealous

[the bottle ride]

...... I'd always selected who I supported based on their personality rather than results.....

This- Racers who are friendly and decent is what it is all about. Brand ambassador.
I could care less who wins in some ways- I just want to BS with the boys and girls after the race and it is always cool to hear what the race was like from the guys who were 150 some odd places in front of me....

[Zen Cyclery]

Quality post Tristan. We were thinking about doing some grassroots sponsorship stuff and I am definitely going to think twice about that after reading this article.

[Sola SL]

We have been struggling with this very issue for the last few seasons.

2013 needs to be a very different year. I like the idea of creating events that our customers can take part in.

[monadnocky]

To be honest - not that I know anything about the biz - I've always been a little confused about who is sponsored and why. As the article in the OP notes, I'd think that you'd want to sponsor a well-known community figure who people talk to (and listen to) as opposed to some guy or gal who shows up to a race, wins, and leaves. I was thinking about this at a cyclocross race I went to recently (to watch) - couple of well-known guys and gals around who may (or may not) have been racing, but they were talking to everyone and everyone knew them. Laughs and good times all around these folks.

These are the guys and gals I'd want my name associated with - I mean I understand visibility and having your brand associated with a winner, but there's so much more visibility - I would think - in being associated with these types. You know who they are.

[DOOFUS]

racers are inherently selfish and self-absorbed (if they're any good), and they'll just dump you for the next, sweeter, better deal (if they're any smart)

better to promote events, do things that support the local cycling culture.

the best shop I ever raced for had a simple policy: you get a jersey and a pair of shorts if you're on the "elite" team. after that, shut up and pay.

[coylifut]

that was worth the read. however, the concept that the folks who get 15% discount at their lbs sponsor would pay retail without it, atmo is not accurate. they'd simply kick tires at the lbs and then buy it online for 25% off.

[boxerboxer]

that was worth the read. however, the concept that the folks who get 15% discount at their lbs sponsor would pay retail without it, atmo is not accurate. they'd simply kick tires at the lbs and then buy it online for 25% off.

All the more reason to cut them loose and focus on bringing new people into the shop.

[caleb]

Sidenote: Interesting that even as Demerly dispenses business advice his bio says absolutely nothing about the Bikesport Michigan affair, which would seem to be his primary qualification for talking about the bike business.

[e-RICHIE]

I support the sport because I was supported in my formative years as a racer. My sponsorship started in 1982 (or so) as a result. There never has been a commercial agenda, and it's only recently that folks used the words branding and framebuilding in the same conversation atmo. If your plan is to spend a dollar with the goal of getting more than a dollar back in value, Lord help you.

Also, I often have said that spending money on support, or marketing (or advertising etc etc blah blah...) has to be part of a long term and calculated plan. I say that because I have the hindsight of knowing how my efforts were made at every step. But none of it was ever mapped out, and there was never a there that I was trying to get to. But having the years to reflect back upon, it's clear that my lack of structure paid dividends regardless.

If someone wants to wait and see if mimicking a loosely strung together timeline of 30 years works for him, by all means try it. But if you want to know the best way to get a return on your investment, my free advice is to race on what you make or sell, and win on it often. Simply using it, or being a zealot or enthusiast for what you make (or sell) is not enough. And, while I'm at it, the leading group rides thing, or that Cat 4 on your license, or being an advocate for commuting - these won't cut it. Race, and race to win.

That's ^ the CliffsNotes.

PS I haven't read the link in the OP. No need to.

[Jonathan]

I've had one or two racers riding my frames over the last 3 years. These were pals, but the reason I agreed to the deals is that they know everyone, constantly friend people on Facebook, and they easily make friends and are helpful. I view it sort of like the joining a church or rotary club. If you join just for the business people will see right through you but if you join to be a part of the community and build long lasting relationships people will seek you out.

[coylifut]

I couldn't agree more.

[Scott]

I agree with e-Ritchie and Jonathan, but both you guys have recruited the best possible people to promote your brand- fast racers or great ambassadors respectively. What's tough is when you're dealing with what's basically an excuse to ditch your inventory, all while kidding yourself you're not shooting your own foot, with your own gun.

And like the author states, you usually can't (in my experience anyway after dealing with a few shops on this level) talk the owner into changing their ways. This will require cutting customers loose or possibly sitting on inventory, and that's scary. But they aren't your customers anyway. Parts and service need to be handled (sold, ordered) properly or you head down a path of diminishing returns, and with a crummy economy and stiff competition it's really easy to let your margins be the front line- but it's the wrong answer.

[e-RICHIE]

I agree with e-Ritchie and Jonathan, but both you guys have recruited the best possible people to promote your brand- fast racers or great ambassadors respectively.

Thanks, but...
I have never recruited a rider - ever.
That is poaching.
Here is another reply of mine from another thread about sponsorship -

You're doing this to help the sport, your pals, or your brand?
Regardless of the reply, don't do it at all unless you are prepared to put in place a multi-year plan.
I would suggest at least five years before expecting to see an effect on your business.
You can't make stuff happen.
Even if they win half the races they enter, the growth will always be organic rather than by formula.
No matter what happens, the racer/rider never (NEVER) gets to keep the equipment. It belongs to you.
Find other resources to offset the costs; don't use your own. It's rare that a FB can pull it off, especially at the front end.
PS I would never approach a rider. To me, that's a sin. It's poaching. And it harms the sport, its growth, and the community.
Only deal with a rider who comes to you first.

[Scott]

With all due respect, I was using the term pretty lightly, and from Webster's definition as:

1 a (1) : to fill up the number of (as an army) with new members

Not poaching, defined as:

1 : to encroach upon especially for the purpose of taking something

Anyway, the point was that I thought you guys were doing things correctly.

Cheers!

[ChrisAtVeloInk]

Thanks for posting this. This is my first post here at the Salon - I've never been much involved in a forum, but this is the kind of insightful stuff that caught my attention in the first place!

I run a small business where many, if not most, of my customers are amateur racers at all levels. I like to maintain a friendly relationship with my customers and support the sport, so it's often with a little regret that I turn down a sponsorship request. Still, I've lived through the disappointing returns of sponsorship in prior ventures, so it's now a bit easier for me to respond gracefully and move forward.

As the business is quickly growing out of infancy, I do look forward to the day that I can give a bit more back to the sport, but it will most likely be directed to the events. Without having tested the theory yet, my gut tells me it may yield the best ROI for me. That said, sponsorship is still something that I feel benefits my mind more than it does the bottom line, so I won't get carried away.