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Use Your MDF to Boost Opportunities--Please

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Market development funds are a key benefit of most channel programs. However, one report estimated the IT channel leaves about $25 billion on the table in unused MDF every year. That’s not exactly change in your ash tray.

One of the things I try to convey in this blog on a regular basis is that, no matter the topic, you have to approach it with many different solutions. Our world moves too fast and there is too much noise for a singular approach to be successful.

I always say this about how to use Marketing Development Funds (MDF). And I also say these funds are one of the most underutilized tools available.

Market development funds are a key benefit of most channel programs. They are used in an indirect sales channel where funds are made available by the manufacturer or brand to help channel partners (resellers, VARs, distributors, and so on) sell products and create awareness about the vendors' products. In other words, MDF is FREE MARKETING MONEY!

One report in Channel Marketer estimated the IT channel leaves about $25 billion on the table in unused MDF every year. $25 billion! That’s not exactly change in your ash tray. (Unless you have a really big ash tray.)

So let’s visit this. Why is this happening?

Any vendor worth partnering with provides MDF to partners so those partners can invest in vendor-approved activities to build pipeline and drive awareness with potential and current customers. Most programs enable partners to accrue MDF based on their program level and/or as a percentage of sales.

The problems with many vendor programs is two-fold:

1. The reimbursement processes can be time-consuming and therefore a deterrent to using funds.

2. The activities for which partners can spend their MDF can sometimes be too narrow.

Over the years, many vendors have improved, and have done a better job in helping their partners successfully use MDF by providing expanded offerings. These include things like marketing training, tools, resources, turn-key marketing campaigns, events, and assets to appeal to a partner ecosystem whose marketing abilities vary across the spectrum--typically not a core strength of a channel partner.

To help in boosting marketing power, some vendors now allow partners to use their MDF for:

  • Hiring social media experts to expand social selling skills
  • Website upgrades
  • Search engine optimization
  • Content marketing development

While the items listed above are good, they are not all that partners need. Some vendors need to be more flexible in the activities that they allow their channel partners to leverage with their accrued MDF. I am not advocating that we go back to the days of using MDF for giveaways and boondoggles, but we need to make it easier and more effective.

I know of some vendors that are encouraging their partners to use their MDF so that they can fund specific trainings offered by third-party companies to boost their social selling skills, fine-tune presentation skills, create polished value propositions, and more.

At SAP, our MDF program provides partner-friendly guidelines, policies, automated tools and turn-key campaigns to help partners make the most of their MDF. Our MDF offering is supported by a no-cost, on-demand marketing training for partners at all levels of the marketing spectrum. By training partners on marketing they can more easily and effectively leverage whatever MDF they earn.

SAP has made it even easier for partners to use their MDF by serving up a variety of packaged marketing services through the SAP Partner Benefits Catalog. This catalog is an online destination that allows partners to access proven services using not only MDF but also BDF (Business Development Funds).

To further encourage partners to use MDF we have recently released a new functionality called MDF Direct Pay that allows partners to order a service through the catalog and “check out” with a single click that automatically deducts their MDF funds. This automation completely avoids the hassles of requesting and getting approval, proof of performance, and reimbursement.

In short, vendors must make MDF easy, effective and appealing to partners. If they don’t, the unspent MDF will cost the vendor more in lost opportunities than any savings they may reap from keeping unspent money.

You can learn more about partnering at sap.com/partner.

Ira Simon (follow me on Twitter - @IraASimon) is global vice president, Partner & SME Marketing, at SAP. Learn more about partnership opportunities at: http://go.sap.com/partner.html.

Guest blogs such as this one are published monthly and are part of The VAR Guy's annual platinum sponsorship.

 

 

 

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