My previous article “Help! I Need to Build a Channel Partner Rewards Program”, was based on discussions held with the many vendors, distributors and resellers at The Channel Meetup UK 2019. One of the channel incentives continuously referenced by attendees was Market Development Funds (MDFs).
So in this week’s article, I thought I’d present key findings on what is happening in the industry regarding MDF right now. It might also be beneficial to share a few memorable quotes we heard on the day. Some might be a wake-up call for all players in the channel ecosystem that collectively we can do more to automate MDF program processes and auto-calculate successful outcomes.
“We have BUDGET, but we have no time to run MDF programs”.
“We take disciplined risk when offering MDFs for our ecosystem partners”
This was the most frequently mentioned usage for MDF dollars. The type of events predominantly falling into two categories: (1) Niche Event designed by the channel partner in conjunction with the vendor or (2) Public Event attended by the channel partner to promote the vendor offering(s).
In the case of niche events, a distribution channel partner typically designs something innovative and creates an exclusive gathering that entices resellers to attend and become go-to-market partners for the vendor’s offering. If the MDF were allocated to a reseller partner, they would typically design an event to entice prospects and customers to attend and showcase the vendor offering(s). Alternatively, Distributors and Resellers may also choose to use approved MDF dollars to attend well-known public events and use these to promote the vendor offering. For example, if you offer solutions in the cyber-security space, your channel partners may look for MDF budget to attend the leading events in their geographic region(s).
This was cited by vendors as the second highest request for MDF allocation. Distributors use the funds to reach out to existing and potential resellers, to build up the vendor reseller network. Here resellers use their allocation of MDFs to build a customer outreach campaign. This could include a call-out campaign to their existing database of contacts and could be extended to include purchasing “marketing lists” to extend the reach of the call-out program.
This is another extremely common spend area for MDF allocation. The distributor or reseller may use the funds in a variety of ways which includes:
Spending MDF allocations on Webinars and/or Podcasts is becoming increasingly popular – generally in line with the continuing trend for content marketing. However, to differentiate themselves, distribution and reseller partners are designing and running Webinars and Podcasts with industry thought leaders to bring an expert or knowledge perspective to “soften” the otherwise hard sell. Using MDF money to pay for the “thought leader” guest speaker is usually the biggest drain on fund allocation.
Generally, most vendors we spoke with had no measurable targets set for MDF program outcomes. As the old saying goes “if you can’t measure it, you can’t manage it; if you can’t manage it, you can’t control it”.
One of the most commonly agreed themes articulated by attendees at The Channel Meetup is that measuring the return on investment of MDF programs is virtually impossible for most vendors. However, for any MDF program, a jointly agreed set of metrics for success between vendor and partner should be defined and documented. With continuous reviews to assess performance.
Activity metrics primarily focus on measuring what channel partners have done to drive some enhanced business performance for the vendor’s offering(s). For example, let’s assume a vendor agrees to provide MDF dollars to a newly appointed reseller for a telemarketing campaign. The activity metrics could include measures like:
Outcome metrics should ultimately be the measure of how successful the MDF spend was. For example, if we refer to the telemarketing campaign, the following would be good metrics to agree upfront:
A good starting point is to consider this century old wisdom from Rudyard Kipling:
“I keep 6 honest serving men, they taught me all they knew;
their names are What and Why and When and How and Where and Who.”
To learn more on how market leading vendors automate and manage their MDF programs, check out the Channel Mechanics capabilities page
Market Development Funds are an important component of any channel ecosystem. From the many discussions on this topic we had at the recent Channel Meetup UK, vendors believe they are not maximising the return on investment they should be getting from their MDF programs. On the other side, channel partners believe most vendor MDF programs are too complicated. Both sides agree that the process to administer, manage and measure MDF programs is too manual and very time consuming.
Is your organisation willing to embrace automation for your MDF programs? Automation will give you back the most precious commodity of TIME; Time to allow you design better and more innovative MDF programs that offer a major differentiating factor that entices your channel ecosystem partners to sell more of your solutions, rather than those of your competitors.