Marketing development funds, or MDF, are deployed by product and platform vendors through indirect sales channels to contribute to demand generation for Channel Partners, including systems integrators, VARs and MSPs.
While these funds are for supporting general marketing activities which contribute to lead gen, we're seeing an increasing trend toward digital marketing efforts.
As business leaders across the industry will attest to, the structure looks very different for each vendor and there are varying degrees of complexity, information and levels of support with each.
The reality is that large sums of MDF globally go unspent every year and can amount to 52% of available funds going unspent. ( Source)
Why aren’t Channel Partners using more MDF?
For Channel Partners, including systems integrators, VARs and MSPs, the challenges which could prevent them accessing more MDF can include:
- Lack of capacity just trying to keep up with the day to day
- Shortage of marketing expertise, particularly when it comes to digital marketing
- A focus on 'top of funnel' activities may deliver more prospects into the database, but without sales nurturing it's too hard to define how many, if any, qualified leads are generated
- Not knowing where to start and the feeling of being overwhelmed prevents the first step of getting started
- Feeling cynical about marketing if previously invested too heavily in a single activity which didn't net an identifiable ROI, eg a large investment into AdWords generated lots of traffic but few leads
The product or platform vendor might be inhibiting the process as well:
- Unspent MDF is identified late in the quarter and not enough time is given to the Partner to react or implement in a meaningful way. Due to the urgency of utilising the funds, short-term, quick actions are prioritised.
- The structure of the MDF program might cumbersome and the claims process might be lengthy or may discourage the application process.
- Overly-restrictive MDF guidelines or excessive control exterted by the vendor also tends to discourage the process. The best MDF programs tend have flexibility built into them and aren’t an administrative burden.
- If the MDF is a reimbursement rather than an upfront support, smaller companies may struggle to drum up enough cash until they are reimbursed months later. Splitting the costs by each party covering different activities in the same plan is better.
- When the demands of an MDF program become overbearing on the vendor's channel marketing team, it can inhibit the program. Getting too involved and wearing too many hats on behalf of an under-resourced Channel Partner (coming up with the campaign strategy, juggling digital agencies or telemarketing agencies, and potentially even implementing the campaign) means that the team gets stretched very quickly. Servicing too many Channel Partners in this way leads to burn out and staff turnover, which has a domino effect on the distribution of MDF as new starters get their feet under the desk.
There are many reasons that may inhibit Channel Partners from unlocking MDF, but many of reasons have workaround solutions.
15 strategies to unlock more meaningful MDF
For those Channel Partners looking to benefit from increased MDF support from vendor partners, here are 15 strategies to consider implementing.
1. Be strategic
Having clear, meaningful and realistic marketing objectives and budgeting for those activities will send a signal to your vendor partner that any supporting funds will be put to good use. The ideal scenario is when marketing objectives are discussed with your vendor partner in the context of how they fit in with company goals.
The more you can show how the services or products which leverage or are built on the vendor's platform, the deeper the partnership will be. There are many free strategy tools and templates online that can be leveraged to help communicate this. Otherwise, a few simple PPT slides are a good start to display your strategic intent.
2. Build relationships
There is a human being on the other end approving the MDF, who faces their own challenges, role demands, and KPIs.
The easier you can make their life, while making them look good or delivering them results, all the better the relationship will be. Ultimately, they’ll be much more amenable to try out pilot programs with you, or to invest in your business with MDF.
If there is turn over within the vendor channel team, your account manager can help facilitate a transition to a new account manager to ensure seamless continuity of the relationship at corporate level. If a key contact moves on and the relationship didn’t produce a transition, it can significantly slow momentum. The worst scenario is to have to panic because key relationships move on.
3. Take a mutual value approach
For the most part, all stakeholders have the same goal: to sell more. This looks differently for different stakeholders, and where they fit into the process will vary, but ultimately increasing qualified leads in order to convert sales is where it’s at.
This means all stakeholders should be working together. Where a vendor is motivated to sell more product, the Channel Partner may be more motivated to sell more of their long-term services in the context of trusted adviser. By taking a mutual value approach, the service provider should try to map how product sales fit into service sales to ensure all stakeholders are pursuing their objectives.
4. Get your database & data in order
MSPs and Channel Partners are quick to lean on a vendor for access to new prospects. They want the vendor to distribute content to their database or a list of their prospects, despite the vendor being conflicted out by servicing numerous Channel Partners.
The reality is that there are many solutions that don't require any investment other than some time allocation by an internal coordinator. Sift through a list of existing clients to identify any cross-sell or up-sell opportunities. Compile a list of all former clients and lost opportunities. Discuss with the sales team which of their contacts, prospects or leads which they're currently not in dire discussion with can be amalgamated into a company list. This is just the start of getting a database in order and starts the process of treating it as a priority in your sales funnel and lead gen.
5. Learn & follow the process
Each vendor has a unique process for applying for and/or acquitting MDF. Some have training available to guide you or a staff member through the process. Take the training. This sends the right message to your Account Manager that you're serious about ticking off all of their boxes.
The training also de-risks potentially getting knocked back for MDF, even after the Account Manager may have notionally approved it directly. If the application wasn't submitted correctly, it may get rejected purely for administrative reasons, especially if the 'Approver' is not your Account Manager and is on a different team, potentially far removed from the vendor's country team.
If the process is too arduous or seems excessive, discuss with your Account Manager if parts of the application can be skipped without affecting the approval process.
6. Think beyond ‘quick win’ tactics
When the direction of MDF spend is motivated by how quickly the Channel Partner wants sales to convert (i.e. immediately), the tactics are usually to get a 'quick win' in the short term. Popular short-term tactics include investing heavily in an Adwords campaign, buying a list of prospects and paying a telemarketing company to call down the list, or hosting a small Lunch 'n Learn.
While these lead gen activities can deliver some leads, they're much more effective when part of a larger more comprehensive campaign strategy. When deployed on their own, the results are limited.
7. Find the right campaign budget balance
It's tempting to want to request as much funding support as possible, especially when some business leaders see MDF as "free money". Of course this isn't the case.
MDF needs to deliver mutual value and deliver meaningful return against agreed objectives. All MDF requests should make sense, fit into the budget of all stakeholders, and not seem excessive. Finding the right balance also ensures that sensible campaign budget planning will reduce the risk of approved MDF going unspent or under-utilised.
8. Find the right balance between campaigns
If you've received MDF amounts from different vendors and for different purposes, ensure the right balance is kept across different campaigns or activities.
It's important to not only only commit to what can be deployed in a sustainable way, it's also important to exude to each vendor that their MDF investment is making a meaningful difference. Vendor account managers feeling like their investment is not getting enough attention or is being over-shadowed by another vendor's campaign may hesitate to approve future funds.
9. Consider pilot programs for your lead gen
If your business is entering into new marketing territory and hasn't had the chance to trial various activities, be upfront with your vendor partner. Discuss how some activities can be trialed in a limited capacity to assess viability and effectiveness over a period, such as a 90-day quarter.
Pilot activities are also fantastic pathways for starting to work together with a vendor or Account Manager.
10. Be realistic with expectations
The objectives need to be realistic and need to go much further than "we just want more sales".
Factor in where the context of where you are at with your marketing. If there hasn't been much activity, don't expect to send one EDM and be flooded with qualified lead opportunities. If regular communications have been underway for some time, use existing metrics to inform the expectations on efforts.
Setting good benchmarks for how may net new leads you're targeting, or how many opportunities you're looking to identify within an existing client base, will also help guide which activities to take on within a campaign and how to budget against those activities. Remember, there are no 'silver bullets'.
11. Leverage any additional support available
Many vendors will have a range of support options available that are non-financial. These can include client case study development, webinar support, making technical experts available for lunch 'n learns, and many others.
Discuss the opportunities with your Account Manager. Depending on the vendor, some activities might be back-logged due to a lot of requests coming in from the channel and may not be quick in delivery. Prioritise the activities that are more efficient.
12. Measure outcomes
Measurement and metrics are vital for a range of reasons, including understanding how the campaign performed, determining the effectiveness of the MDF, and enabling a review of what to continue to invest versus less what to dial down.
Metrics should go way beyond the usual digital marketing metrics, e.g. click-throughs, landing page visits, content offer downloads, etc. When you're able to demonstrate changes in lead sales cycle, this will significantly change the discussion with your vendor. Aim to measure prospects (brand new to your database), marketing qualified leads (the lead meets various marketing criteria), sales qualified leads (the qualified lead meets various sale criteria and can be nurtured), and opportunities (both net new and within existing client base).
13. Don’t rely on funding
The best scenario to start in is to have allocated a one-off amount for a campaign or monthly amount for ongoing lead gen. Having internal funds allocated for lead gen and showing how vendor MDF will substantially contribute to efforts send the right message.
Building in the self-funded amount (however small) into budgets also means that if any existing MDF is suddenly reduced or cut due to budget restrictions, lead gen activities can continue on a smaller scale. In this scenario, and with the measurement mentioned above, you could focus on just highest performing activities or only nurture leads already generated.
14. Get help
Leveraging agency or consultant support will go a long way, particularly if their time is funded or co-funded by the MDF. By working with an experienced provider who is able to talk the language of the service provider, as well as that of the product or platform vendor, many of the above strategies are quickly sorted.
If the provider is experienced in working with the specific vendor you're seeking MDF from, then even better as there's already a level of trust built into the process from the vendor side and you save yourself the time and effort of educating your provider in your services, products and the general IT industry.
15. Communicate. Communicate. Communicate.
Regular communication is fundamental. Book in quarterly conference calls with your Account Manager. During set up of a campaign, the frequency might need to increase until every stakeholder is comfortable with direction.
Regular communication will ensure that expectations are continuously managed. Dialogue also ensures that if activities need to be adjusted for better results, there aren't any surprises.
Close alignment with your vendor partner delivers ROI
Investing in your lead gen in partnership with your vendor platforms and product providers will put you on the path of increasing your marketing and lead gen investment and give you the distinct competitive advantage of creating a consistent repeatable methodology for a results-driven lead generation practice.
Want to discover the most common lead gen challenges MSPs, Channel Partners and resellers face?
Download our free whitepaper below.