• Study: Is MDF Your Most Powerful Channel Program?

    In the past, I have referenced a proprietary study that compared the attitudes between vendors and resellers against a variety of channel program offerings.  This studies offer clues to the power of MDF. 

    (For reference, this study is entitled: “Channel Incentive Usage Study” published by CCI earlier this year.)

    The programs evaluated within that study spanned those that are typically offered to the channel by vendors, including: MDF programs, SPIF programs, rebates, deal registration, marketing support, Leads, training, and more.  Interestingly, of all the programs offered, the largest disparity between vendors and partners in ranking “…the relative effectiveness of the program in helping you to attain your business objectives” was earned by MDF programs.  Specifically, while channel partners by and large perceive MDF programs as being a critical driver of their success, many vendors don’t perceive their MDF program as being effective in helping them to deliver key business objectives.  

    This is made even more interesting as MDF is ranked as the single most popular channel program by vendors.  That’s too bad that many don’t view it as effective, because to them I say: “You don’t get it”.  And I believe their perception is largely due to the fact that MDF is likely viewed as a cost of doing business (“because their competitor offers it”)—rather than what it really is: a “Channel Enablement Tool”.

    Once it is accepted that MDF is, in fact, an enablement tool for partners to provide financial assistance across a variety of pre-sales activities to better equip them to be more effective at every stage of a sale, a wide ranges of options open up.  What’s more, the activities you are funding should be jointly aligned with your own GTM initiatives, as that is the key to improved ROI. This not-so-subtle distinction that MDF is an enablement tool funding pre-sales activities is important because most other incentive programs provides financial assistance  (or rewards) to the partner after the sale has been made. As such, think of your MDF program as being an investment in the partner to make them more effective than they otherwise would have been without it. So, while many people still perceive of MDF as a “Marketing Fund”, this is really a limited view– limited even more so by the lack of resources most partners have to be effective at marketing (which are little to none).

    Despite their lack of consensus on the importance of MDF funds, partners and vendors alike seem to agree on that they perceive are the most effective use of MDF funds. The resulting list of “effective” activities named by both parties has little to no correlation with what most would consider traditional “lead generation” programs. That list of the “top 5” most effective reimburseable activities for an MDF program as expressed by BOTH vendors AND channel partners are (in no particular order): Training and Certification, Demo Equipment/Seed Units, Events, Trade Shows, and Incentive Programs (end-user purchase incentives as well as Reseller Rep sales incentives). 

    The first dedicated lead generation activity that shows up on either list is telemarketing—listed as #6 by both audiences.  To be clear, my point is that to limit MDF spending to traditional marketing is limiting the potential of the fund to help the partner be better equipped for the sales engagements they do get. [Some Vendors (like Microsoft) use Co-op programs to offset their partners marketing expenses, and MDF to fund the other aspects of go-to-market readiness.] 

    In this context, MDF can influence the entire spectrum of go-to-market actions that are required to optimize your partner’s success—and each dollar you spend can be measured, and attributed, to your own GTM initiatives. In contrast, while deal registration programs can influence a sale in advance of the transaction, that influence is limited to a single transaction—not an entire go to market approach.  This is where the strength of a good MDF program can really shine.

    With luck, your MDF program will become an evergreen resource for partner enablement that you can take to the bank.

    To download the report on the partner/vendor preferences stated above, click here. And for resources on how to improve the ROI of your MDF program, visit the resources section of our website at www.channelmanagment.com.

    Craig DeWolf is Vice President of Business Strategy for CCI: Channel Management Solutions.  Craig’s extensive experience spans over 20-years, across a variety of industries and distribution models. This background has given Craig an excellent perspective of the issues facing marketers and their distribution partners, and the solutions that will make them mutually successful.

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