Many vendors utilize market development funds (MDF) to give their partners the leg up they need to sell their products. But are vendors getting their money’s worth? We hear from clients all the time that they think MDF is necessary but they’re not really sure of the ROI. Maybe that’s because they’re not using MDF the right way.
I’ve talked a lot recently about “the new buyer’s journey” – and that’s because it has significantly changed (yes, past tense) the way the channel does business. According to Google, 90% of tech B2B buyers these days conduct independent digital research as the primary means of creating a short list of companies or products they’re interested in. So when a customer rings up a partner sales rep, their decision is practically already made up. Unless the rep totally screws up that conversation, the sale is made. Done deal, right? Well…not exactly. First you have to get the consumer to the partner and there lies the rub.
Consumers are doing digital research, so your partners need to be doing digital marketing Click To Tweet
The consumer is doing digital research, so your partners need to be doing digital marketing. They have to get themselves (and your products) in front of the customer so that they’re on the buyer’s “short list.” However, most great sales reps are mediocre marketers. That’s where MDF can, and should, come into play.
There are some key factors to take into consideration when utilizing MDF funds in this new digital buying world. Vendors need to make some critical decisions before implementation, otherwise the program, like the sales reps, will have mediocre results. Here a quick rundown:
- Decide which partners should receive MDF dollars – scorecarding to determine which partners will benefit from MDF funding has never been more important.
- Determine the program period – look at your organization to see what lines up with your seasonality and product cycles.
- Decide how MDF funds are earned – true MDF is discretionary, however we’ve seen a combination of accrual-based and discretionary; the key is non contractual commitment.
- Choose which products to promote – there may be a need to weight products differently based on new promotions or products that are at the end of their lifecycle.
- Drive the right activities – Invest in partners that understand the need for digital marketing and can respond to the new buyer’s journey. This is where we’re seeing a lot of change – the new buyer’s journey has completely changed what partners need to do to reach their potential customers.
- Leverage reimbursement – this is all about teaching your partners what works by prioritizing certain activities over others. Encourage partners to maximize their efforts.
- Facilitate successful marketing execution – carefully examine how partners manage marketing programs. Help partners transform their pipeline build from old school sales to marketing-led sales, help them get on the “short list.”
- Pay quickly – the faster you get payments into your partners hands, the more sticking power you have in reinforcing the behaviors you just achieved. Global best practices is less than 21 days for an MDF check to be in hand, less than 14 for industry leaders.
So, back to ROI. To do MDF right, you need to have a solid system in place, and then rinse and repeat. But it can’t exist in a vacuum. The key to driving a successful MDF program is to be constantly looking at your scorecarding and benchmarking, evaluate what your joint marketing planning was like and how you teed up your MDF program for success. Only then you can start to measure the value of what you’ve done and evaluate where your MDF program sits in the bigger picture.
ABOUT THE AUTHOR
Steven Kellam, President at CCI
As a growth specialist, Steven is responsible for driving CCI’s evolution to expand its offerings and grow across its product suite, utilizing marketing to position the organization for continued, long-term success. He is also responsible for developing the strategic alliances necessary for CCI to achieve its revenue and profit goals, including technical alliances, service partnerships and sales relationships. Steven has experience in both the VAR space, having run a successful managed services IT business, and a background in manufacturing where he built a channel of over 2,000 partners.