Maximizing ROI for MDF Begins with Winning Proposal

Don't leave market development funds on the vendor's table.

March 21, 2019

5 Min Read
Market Development Funds

By Paul Yantus


Paul Yantus

In 2019, vendors will pump billions of dollars into market development fund (MDF) programs for their channel partners — but a surprising chunk of that money will just sit on the table.

Market development funds (MDF) help leverage vendor’s investments. Affiliates, channel partners, VARs and distributors use the money to sell the vendor’s product and create local awareness about the national brand.

According to one global study, as much as 60 percent of market development funds accrued by partners aren’t used on a quarterly basis. In the tech industry alone, that amounts to $25 billion in unused funds each year.

That means partners are passing on the chance to use what are essentially free marketing dollars. Why are they passing up a chance to use them? Some common reasons include:

  •  Partners simply aren’t aware of the available funds.

  •  Partners don’t have strong internal marketing resources and don’t feel confident they can put dollars to work effectively.

  •  Brands don’t provide preconfigured marketing programs for channel partners to opt-in, making marketing execution and reporting difficult for the channel.

  •  Complex fund requests, approvals, and preconfigured program enrollment slow down the whole process.

Whatever the reason, channel partners are missing out on funds that have the potential to increase their revenue. While some resellers and distributors may be apprehensive about rolling out marketing initiatives with MDF, the right approach can result in a win-win for channel partners and vendors.

Here’s how to access and leverage the MDF dollars you deserve to fuel sustainable growth for your business.

Consider the MDF Opportunity

A key benefit of most channel programs, MDF funds are typically earmarked for enablement, training, tools, resources and assets that can help your business close more leads and grow sales. Remember, vendors want you to use these dollars – when you succeed, they succeed, too.

MDF programs can take many forms, including performance-based programs, where funding is based on predetermined sales goals; and fixed-cost programs, where each partner is allocated a specific amount regardless of performance. Some vendors offer turnkey MDF marketing programs and tools, while others provide the funding for you to build your own campaigns. Depending on the vendor, MDF funding can cover everything from enablement and training to support in digital transformation of partner marketing efforts.

For resellers and distributors, MDF can be an essential lifeline to help:

  • Fill the pipeline. If your sales team is having trouble tracking down enough quality leads, MDF can allow you to invest in lead-generation activities that widen the net.

  • Close more sales. Marketing and nurturing activities, from custom email campaigns to vendor-approved events, can help move more prospects into the deal stage.

  • Become a recognized expert. In some cases, you can use MDF funds to research and develop content that establishes you as a leader in your field, such as white papers and e-books.

Perfecting Your Proposal

Many MDF programs are proposal-based, which can deter some businesses from pursuing them. Taking the time to …

… craft a solid proposal not only means you’re more likely to get a “yes” from your vendor, but also sets you up for success with a clear road map. Remember – the vendor is investing in your success, so why not engage them at the outset and get some help with your proposal? Whichever path you choose, at minimum your proposal should include:

  • A detailed plan that shows your campaign tactics and timeline. If your vendor has specific program rules, outline how the proposed plan fits in with vendor-approved activities.

  • Who will handle the execution, whether it’s your own team or the vendor’s team. Since many resellers have limited in-house marketing resources, take advantage of any pre-packaged programs your vendor offers or source an outside agency to do the heavy lifting.

  • Your requested budget, which should cover your team’s time, incentive payments and any payments to third-party vendors.

  • Anticipated results — the most important part of any proposal. Explain how you plan to drive performance and which metrics you’ll use to measure success, including number of leads, pipeline volume and closed leads.

Vendors are more likely to award funds to channel partners they know and trust, so taking the time to build rapport can pay dividends. That can include getting certified in your vendor’s products and being open with key contacts about how you can work together to meet mutual sales goals.

Measuring MDF Success

While some vendors may have no reporting requirement in their MDF programs, it’s only natural that there are going to be programs where the vendor wants to measure outcomes. The rise of sales technology has made it easier for partners to manage the MDF proposal submission, approval and fund allocation process. When launching your program, be clear with your vendor about expected milestones. By staying on top of reporting in the vendor’s platform, you can collect the funds you need faster to continue driving momentum.

In the fast-paced world of channel sales, resellers must stay ahead and think of new ways to evolve and uncover growth opportunities where they exist. Don’t be daunted by MDF programs — unlocking their potential can deliver measurable benefits for your business while making you a partner of choice for your vendors.

Paul Yantus is vice president of marketing at 360insights, where he orchestrates marketing and thought leadership. He is a serial entrepreneur and pioneer in channel marketing software with over 20 years of technology and channel experience. Paul’s first start-up launched an early version of Through-Channel Marketing Automation over 25 years ago. Paul has built channels from the ground up and led large global businesses with mature channels of over 10,000 partners. Follow him on @360insights or LinkedIn.

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