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Marketing Development Funds (MDF) are the dollars companies put towards their channel partners to help them produce meaningful results. Channel-centric companies usually use MDFs for:
- Conferences and tradeshows
- Advertising and increased web presence
- Direct mail or email campaigns
- Other white-glove support services
While MDFs are valuable, knowing how much to allocate is challenging for many companies. Not only must you identify which partners most deserve MDFs, but you must also pinpoint which activities result in the highest ROI. This post will share best practices for managing program funds more effectively and avoiding common pitfalls.
Best practices for creating a successful MDF management program
So you’ve decided to provide partners with MDFs, but how do you put them into action? Keep these two principles in mind when creating an MDF program: You must properly plan and budget your MDFs, and you must track and analyze your results. Consider the following:
What are your MDF goals?
What results do you hope to achieve with your MDF program? You can’t expect partners to reach goals that you haven’t set. Be strategic and develop benchmarks, so partners better understand whether they meet your expectations.
As you begin building a budget for your MDFs, make it a point to get feedback and buy-in from your partners. You want to ensure you and your partners are on the same page regarding marketing priorities. Plus, your partners may offer valuable insight into competitors’ strategies or additional ideas to reach new audiences.
Which partners will receive funds?
Investing in your most profitable partners ensures ROI on your MDFs. The partner selection process is critical. Gather and analyze existing partner performance data and metrics. Partner relationship management (PRM) software automatically gathers and analyzes MDF information.
Using the report generated by your PRM, you can rank your partners by performance and opportunity for growth. The most common methods for measuring partner performance are revenue and activity metrics. You have the highest likelihood of success when you base MDF allocation on hard numbers.
Ranking partners will help you determine where to spend your MDFs. For example, let’s say you have a partner with high activity metrics, but you want your MDFs to increase revenue. As a secondary goal, you want to strengthen the relationship. In this example, a tradeshow would be the best investment because it allows partner companies to bond.
What are the qualifications to receive MDFs?
Once you’ve determined which partners to award MDFs, create qualifying criteria. After all, you can’t approve every one of your partner’s requests for MDFs. Doing so would be inefficient, and you’d lose control over your aim for the highest ROI activities.
Create an approval process for MDF requests and filter them with criteria. For example, if your partner wants MDFs for a tradeshow, you may require exclusivity in the booth or on their sponsorship banners/materials. Your goal is to ensure that partners use MDFs to benefit your organization directly and produce desired results.
Examples of MDF application template fields for partners include:
- Which marketing activities will you fund with MDFs? (Trade Shows, email campaigns, etc.)
- What is the expected outcome? (Number of leads, appointments, or revenue)
- Current revenue or certification requirements
Templatize the MDF application process and manage communications within the designated software. The formalization of this process will improve approval turn-around time, overall organization, and ambiguities in communication.
How will you track results?
Past results are one of the most critical pieces for effective budgeting. Go back and look at past MDF metrics. If you haven’t tracked the KPIs of your MDFs, it may be time to implement PRM software to automate this process. You can create a well-informed, fact-based budget plan for your MDF program by analyzing past results.
Collecting data after each initiative allows your program to become more targeted. Targeted MDF programs yield the most ROI. Your data should show which marketing activities were most effective so you can double down on these activities. Analyzing the data allows you to narrow down your approval process and create MDF application templates within the managing software.
Does your current PRM enable comprehensive MDF assessment?
We already discussed how PRM software like Allbound could streamline your MDF program management processes through templates and deployment to set partner groups. However, its most crucial role is tying MDF usage directly to deal registrations to better understand the effectiveness automatically.
This functionality makes PRM technology indispensable to any competently managed MDF program. While you can draw such conclusions manually when working with a limited number of partners, this will become impossible as the number of program participants balloons. You will inevitably miss essential data and waste an excessive amount of time in the process.
Best practices for further advancing your MDF program’s results
Assuming you execute the above, your MDF program should have a solid foundation to finesse digital interactions and improve ROI. Continually seek improvement with the following MDF management best practices:
- Leverage gathered MDF data to test theories and fine-tune strategies. Pre-established partner types, the questions they answer within the MDF submission forms, and the resulting deal registrations all provide information you can use to break down and compare different data sets. For example, does PPC have a more significant ROI for American audiences than Brazilian audiences? Do conferences generate fewer leads than digital marketing but result in higher value per customer? These are all insights your MDF program managed through a PRM can illuminate.
These insights should dictate how you distribute marketing dollars and be shared with partners to understand better how to promote you most effectively.
- Embrace and partially-fund partners’ new marketing ideas, knowing that you lessen your company’s exposure to risk. Partners are more than your footmen; they can become true collaborators with fresh eyes and perspectives. Demonstrate trust in partners who have earned it by putting some of their marketing ideas into action. By distributing MDFs to cover some (but not all) of the associated expenses, you can experiment with greater unknowns with the assurance that your company has less to lose than if you didn’t share the cost.
- Share MDF success rates with partners so they can improve. Your MDF reporting is beneficial not only to you but also to your partners. Let them know the results of their various campaigns (if they don’t know already) and how they compare to peers. If they have a low ROI or fail to use their MDFs in the first place, have a two-way conversation about why.
- Consider how MDF allocation can be funneled to achieve company-wide marketing initiatives. Not all MDF decisions should be based on historical data. When your company tries to break new ground, it’s also a tool in your toolbox. Perhaps there is a new service the company wants to promote or a new audience with which they want to connect. By strategically allocating funds towards these actions specifically, your partners’ promotional efforts can lead to greater overall brand awareness (which helps Direct Sales, too).
The key takeaway is that the true value of MDF doesn’t have to be the generated partner sales alone. Think of these funds as part of the bigger marketing picture.
- Compare MDF ROI to the ROI of other types of investments. If the dollars partners spend ultimately lead to more outstanding results than different marketing spend, you can make an excellent case for increasing your partners’ marketing budget. On the other hand, if your program greatly under-performs, you know you must reassess your messaging and strategies for allocation.
Bottom Line: MDF best practices require data and strong management
Achieving results from MDFs lies in a well-managed program with a plan and KPIs. A strategic MDF program can empower your partners and increase sales. By hand-selecting partners and analyzing their results, you’ll see tangible ROI. Use your partner’s performance metrics to choose who can participate and how. By carefully determining qualifying criteria, you can ensure your MDFs are used only for beneficial activities. Lastly, proper tracking and analysis will provide the data you need to execute successful MDF initiatives.