People like free stuff. Whether it’s registering for the luxury car giveaway at the mall, dropping a business card in a bowl at your local restaurant, or falling all over fellow sports fans to snag a shirt that just got blasted out of a t-shirt cannon, getting something for nothing always puts a smile on someone’s face. Who among us hasn’t returned from a conference or tradeshow with cheaply made bag full of tchotchkes that we proudly empty onto our kitchen table to be enthusiastically pilfered, played with and then broken by our kids?
Free swag can be addicting, and nowhere is the addiction worse than in channel sales and marketing. And what is enabling that addiction and gross misuse of precious marketing and sales support dollars? Marketing Development Funds, or MDF (its better known street name).
Ponder this: when it comes to the swag you’ve accumulated over the years, does any of it give you a sense of affinity or loyalty to the vendor where it originated? Probably not. But, the fact is that when it comes to MDF, suppliers enable their partners to spend hundreds or thousands of dollars annually on lanyards, notebooks and stress balls that develop more piles in a landfill than they do cash on the balance sheet.
Marketing development funds can be a very effective way of growing your channel business, but one that shouldn't be simply thrown away. Before signing off on fund disbursement, engage with your partners about the way they spend their MDF. Branded yo-yos are cute, but they don't deliver ROI.
The idea behind MDF is that it provides your partners with an incentive to promote your products. There can be a tendency to treat this as "free" money — hence the proliferation of branded swag. This kind of purchase is cheap and easy, and hey, since everyone else is doing, it must work, right?
Wrong. At the MarTech Conference held earlier this year, ShoreTel CMO Mark Roberts made some groundbreaking statements that bears repeating. Referring to MDFs, he insisted that: "There has to be a smarter, better way."
Without pushing too many buttons, pose the following question to your partners: Would you blow your own marketing budget this way?
Instead, focusing on educating the customer can lead to high-quality customer engagement, according to Christine Heckart, CMO at networking vendor Brocade Communications. With technology (and the marketplace) changing on a weekly basis, helping customers stay ahead of the curve keeps your products on their minds.
There are a number of ways in which you can help focus your partners on more strategic use of their MDF. The most effective way we’ve seen our Allbound customers use MDF is to create ‘pre-approved’ MDF campaign types that partners can leverage their MDF against. For example, guide your partners toward activities like hosting a trade event that supports education and development of target buyers in their region. You collaborate with the partner on the content, position your team (and theirs) as thought leaders, and focus the event on challenges and issues that inevitably lead prospects back to your solutions.
Each quarter you can refresh the types of campaigns that have ‘pre-approval’ based on the previous quarter’s successes. This approach also makes it easier to manage claims and funds distribution because you can further streamline the process through your partner sales acceleration software and your internal teams.
While the approach described above can seem limiting to some, it actually helps provide your partners with focus while still giving them plenty of room for creativity within the types of campaigns you urge them to choose from. According to SiriusDecisions, partners are more engaged when marketing plays are led by, you guessed it, themselves. Being in control gives your partners a powerful impetus to be successful, since their ideas are on the line and vindication could mean repeat success in the future.
Steering them in the right direction should be your top priority, and moving away from free swag takes you three quarters of the way there. You can close the final gap by collaborating with those partners to take your pre-approved campaigns and making them something where you both can demonstrate your vested interest in success.
Being in regular contact with your partners to come up with innovative marketing solutions will help deliver on your bottom line and prove to them that you're a supplier who cares about their success.
If you’re reading this and thinking, “But my partners are still asking for swag,” you’re not alone. As long as you continue to allow partners to spend MDF on shirts, hats and luxury boxes, they’ll continue to do so. If you want your partners to break their bad habits, you first need to break yours. And, we see a lot of companies who just can’t break the habit.
However, it is possible. The best example of this change I’ve seen came from one of our largest Bay-Area customers. For years, they would ship pallets of polo shirts and other swag to their large national partners. The only analytics they ever received on those investments came when FedEx notified them that the shipment was delivered.
It only took one thoughtful marketer to change the process and the focus. The company shifted MDF dollars toward the more strategic and collaborative approach outlined in this post. But that doesn’t mean that swag was taken off the table.
Partners and reps can still earn that swag through their engagement, consumption and interaction with the supplier’s training, sales and marketing content. They are using that still sought after swag as incentive for partners to invest their time and mindshare in the supplier and its solutions.
The result has been a more engaged partner-base, increased revenue performance for the supplier, and better-informed and educated customers who get called on by those empowered partners.
What changes will you initiate this quarter to make your MDF programs a win-win-win?