Squeezing The Juice Out

Get More From Your Market Development Funds in the Digital Domain

Market Development Funds (MDF) are a frustrating part of any channel marketer’s arsenal. Sometimes it feels like squeezing blood from a stone. The channel always complains about needing more funds, yet according to a recent SiriusDecisions survey, 78% of respondents say there are still funds available at the end of every quarter.

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What’s worse is as we move from the physical world to the digital world, the situation is even more problematic. Most resellers don’t understand digital marketing, nor do they know how to best utilize the funds made available to them.

What can be done about it?

There is a way to squeeze a lot more value out of the MDF dollars you set aside for the channel each year. We suggest three important steps:

  1. Think nationally, not individually. Sometimes, it is hard to deal with a specific, stubborn, individual reseller that doesn’t want to implement an MDF program – especially when that program has been proven effective elsewhere. Perhaps that dealer lacks the marketing sophistication. Perhaps the reseller is lazy or worse. Each reseller’s motivation is different. However, it is easy to lose sight of the goals of the MDF program – to increase your brand presence with target shoppers. Ultimately, the MDF budget is your budget designed to accomplish your goals. Therefore, it is important to think big picture – the national brand footprint you need your channel program to achieve. Always remember that underutilized MDF is a complete waste of opportunity. Make sure the funds are always utilized as much as possible and as soon as possible
  2. Try the carrot. One effective way for manufacturers to get resellers onto a program is to give the services away. We have successful clients who pay us on their dealer’s behalf to both deliver the program and even install the software on the reseller’s sites. This eliminates the complaints and friction in rolling out a new program. As a result, you can end up with high adoption rates for your program and achieve the national benefits you hope to achieve.
  3. Don’t forget the stick. The other approach is to withhold MDF for non-complying resellers. We have seen this work, too. Done in combination with the carrot, it is highly effective. You are offering a value to the reseller, but they have to participate as well and they get punished with fewer MDF dollars if they don’t comply.

There’s another clever approach to the MDF utilization problem. You can put into your MDF contract that any unutilized funds will flow into a fund that will pay for the national program. This will guarantee that the new technology gets funded – while maintaining choice for the resellers. Plus, it will lower the liability by reducing MDF obligations.

Remember, they’re your funds. Use them wisely. Spend them all. Win more business. It’s that simple. Time to get your juices flowing.

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