MDF and the Channel: What Happened to the Customer?

… a more widespread investment in customer-facing partners. He said the savviest vendors have realized ROI from investing directly in agents.

“I’m not saying the investment in distributors goes away. But I think it’s going to get split up a little more evenly. And I think there’s an appetite from the vendors even more than from us,” Dyson said.

A widespread version of agent investment does exist in the form of a president’s club. The president’s club rewards directly incentivize the partners to sell more from the supplier.

“If they’re having a contest, that’s not a bad use of MDF. And a president’s club is nothing more than a really big contest,” Radizeski said.

Strategic Alignment

Some partners encourage vendors to make MDF about more than just money. Dyson said partners in many cases need resources from the vendor as much as they need money. For example, a vendor once paid for him to host several CIOs to talk about security over dinner. But when Dyson asked if the vendor could offer the CIOs a complimentary security assessment, the vendor couldn’t comply.

“To me, if you have an event with eight decision makers, and you say, ‘Hey, we’re willing to come in and do a security assessment with you — it’s normally $5,000; we’re giving it away for free by virtue of your attendance at this event if you use it within the next 60 days.’ You’ve now fostered that next step in the conversation,” he said.

If the vendors want to sponsor customer-facing events with subagents, they can’t treat the subagent the same way they treat the TSB. The subagent pales in terms of resources. If recent agent rollups indicate anything, small agencies want to focus their energies on selling.

“It’s stressful for us when they come to us, because then I have to plan events and webinars and stuff. We don’t have the framework for those things the way a Telarus or an Avant does,” Dyson said. “These vendors want to invest in us to get to our customers, but I don’t have a marketing person sitting around to plan events.”

Dyson said vendors tend to not offer resources to the partners while happily offering money. But partners need more.

“I think it has to be deeper. I think it has to be a sort of thing where it has follow-up, a plan and cadence, and that requires work on both sides,” he said.

Jay McBain, who leads Forrester‘s research and advisory for global channels, alliances, and partnerships, said only 17% of the industry has adopted through-channel marketing platforms.

Forrester’s Jay McBain

“ Almost two-thirds of smaller partners are in the ‘do it for me’ or ‘do it on behalf of me’ category, and those vendors who have invested in concierge/creative/content services are having the most MDF ROI success,” McBain said.

The Future

Partners agree that the pandemic gave the channel pause to think about this topic. Ridge said COVID-19 disrupted a traditional MDF strategy that centers around in-person events.

Ridge said she sees a slightly different approach among the vendors as hybrid work envelopes the channel.

“I know that companies are coming back to the table approaching MDF a little differently,” Ridge said. “The technology distributors have had to change how they work with partners. They’ve had to, because all that got thrown out the window. No more lunch-and-learns. I think they’re trying.”

Other partners wonder if the same song and dance will return.

“Hopefully after this pandemic a more creative way to effectively spend MDF dollars will provide the partners, customers and vendors with a benefit,” Radizeski said.

The conversation around MDF reform contains many other topics, such as automation, visibility, measurement and strategic objectives. Stay tuned for the part two on this topic; we’ll home in on the technology solutions brokerage (TSB) model and its connection to MDF.