Managing MDF Risk and Return

Five MDF Best Practices - Channel Mechanics

Sue Heintz, Channel Management Professional   |  

calednar Channel Mechanics26th Nov 2019

Five MDF Best Practices

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MDF (or Market Development Funds) provide a structured way for vendors to expand partners’ sales and marketing capabilities and efforts. So by adhering to a number of MDF Best Practices at time of implementation, vendors can easily manage both MDF risk and return.

 

Vendors have a great deal of flexibility when choosing which method of funding (ex. accrual vs. business plan driven) and which initiatives to fund. And yet…in my opinion, MDF Programs are second only to Deal Registration Programs in their potential for both a positive impact on partner performance along with partner and vendor frustration when it comes to program complexity and misuse. Thankfully, we now have some great tools that allow us to streamline MDF and view the program as it was truly meant to be – a powerful vehicle for mutual investment. But to be truly successful, MDF must follow some Best Practice guidelines.

 

As an investment tool, MDF requires us to manage risk and return. Opportunities to do this occur at three major times:

(1) during program design

(2) throughout program implementation and

(3) when there’s a problem.

 

In this first blog, MDF Best Practices, we’ll look at best practices for MDF implementation.  Following on from this, blog #2 will look at major MDF challenges/issues and how best to resolve them.  And the final blog in my MDF series, will focus on MDF Program Design.

 

MDF BEST PRACTICE = RELEVANT INFORMATION, EMBEDDED IN A STRAIGHTFORWARD PROCESS, POWERED BY AUTOMATION

 

Sound good?  That’s the current vision for MDF implementation.  But to achieve this, companies must adopt a culture adopting MDF Best Practices.

 

Five MDF Best Practices

 

1. Deliver Relevant Information to all Program Stakeholders

Any program is only as good as how well people understand it. After all, understanding drives participation and support from every stakeholder.

  • Channel Managers need training backed up by resources in order to understand:

– The focus of the program (markets, regions, portfolios, etc.)

– Strategic priorities

– Key activities the program will support – and those it will not support

– The Program design (accrual vs. business case driven, etc.)

– Program parameters

– Program processes

– ROI goals

  • Channel Partners need similar information, ideally packaged in a way that is uniquely relevant to them. Additionally, it’s important to reinforce the fact that you are making a mutual investment that will – at the end of the day – be measured on ROI.
  • Corporate Stakeholders need a heads-up on the impact of the MDF program on corporate financials:

– Where/how will the funds be recognized – contra revenue (“above the line“) or expense (“below the line”)

– The expected ROI for the 3-5% they are investing

 

2. Capture Relevant Information from your Partners

Before you invest, make sure you have enough information to make a good “yes/no” decision on the proposed initiative. What constitutes “enough” will vary with vendor maturity and degree of importance to the channel, as well as with channel maturity. For example, vendors working with new partners in a new market, may justifiably want to understand the demographics of a proposed event, or the reach of an ad placement before they approve.

 

Similarly, as the approved activity gets underway, some vendors may want reports at key “milestones”. This is especially relevant if the amount invested is substantial and/or the funds will be released in phases. But all vendors will want to see a final ROI projection before final approval and fund disbursement.

 

3. The Three Cs. “Lock in” the process to assure Clarity, Consistency and Compliance

In the broad investment world, “variance” is a risk factor that needs to be managed. In the MDF investment world, an automated program tool will do this for you. That is to say, automation eliminates the risk of unwanted variance in how the program is administered. With an automated MDF program:

  • Vendors:

– Get an automatic notification when a request is submitted

– Are assured that the schedule of approvals they have structured are followed each and every time

– See real-time performance metrics in one place

– Are assured that the program parameters are always maintained

  • Partners:

– See only the components of the program that are unique to them

– Know if/why a request is denied and are get an opportunity to revise/refine.

 

4. Link Program Results to Sales Performance Tools

It’s great to know that a partner’s campaign generated 100 qualified leads. It’s even better to know that those leads generated a substantial increase in revenue!  By automating channel management tools, you can do just that through seamless integration. Channel Mechanics’ MDF tool, for example, is integrated with Salesforce, so vendors are able to follow opportunities to revenue. As a result, the channel management team boosts its ability to demonstrate even more impactful MDF program metrics to senior management.

 

Make Ease of Doing Business a priority with automation. Discover how market leading vendors automate and manage their MDF programs. Contact Channel Mechanics today 

 

5. Learn and Share what’s Working

Once you are able to see your MDF program implemented in real time and have all the relevant information delivered to you in one place, you can begin to see important trends and key learnings that will help you improve program effectiveness in two key ways:

– Partner participation rates and profiles will allow you to see “who’s doing what” and can raise an early flag for channel managers to follow up on.

– Initiative ROI’s will help both you and your partner ecosystem learn from each other. High ROI initiatives are easily visible, allowing the channel team to dig deeper into the “why’s” and “how’s” that could evolve into broader partner training and support.

 

Having experienced the pain of inefficient MDF implementations, I’m personally thrilled at the progress the industry is making! Relevant information. Straightforward, dependable process. High performance automation. Follow these simple MDF Best Practices and it’s Bravo all round!!

 

Further Reading on MDF:

  1. MDF…Does It Need To Be This Complicated?
  2. How to Get the Most from Market Development Funds (MDF)
  3. Deliver and Track Market Development Funds (MDF) in Real Time

 

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