How Tech Companies Can Get More MDF Money
Always bear in mind that the endgame for MDF (market development funds) is at least lead generation and, depending on the channel partner, maybe sales. In other words, think like the MDF provider. They want you to be successful.
First of all, many people use the terms “MDF” and “Co-Op Funds” interchangeably, but this is incorrect. The primary difference between the two is when they are requested and disbursed.
Co-op Marketing Funds Defined: Co-op funds are given after sales have taken place—they are a sales incentive and are accrued as a percentage of prior sales. Vendors who provide co-op marketing funds usually make them available to most, if not all channel partners. But the vendor often earmarks how the funds can be used. Once the channel partner receives them, they are then owned by the partner and cannot be taken away.
Market Development Funds (MDF): A vendor will offer MDF funds to channel partners before any sale has taken place. Consider them a marketing incentive. They are offered to select partners based on the specific needs of the vendor and the proven and potential for success of the partner. For example, the vendor may be looking to increase sales for a specific solution or a specific vertical where the channel partner successfully plays. Expectations are discussed and campaign plans are submitted for approval beforehand. Detailed reporting of resulting leads and sales are also required prior to fund disbursement by most vendors.
Why Do MDF Funds Go Unused?
Major vendors often have generous MDF budgets. However research shows that it’s not unusual for much of the funds to go unused. The actual amount of MDF and co-op marketing funds that go unused each year varies from study to study, but may be up to 50%. That translates to billions of dollars each year that channel partners are not taking advantage of. Here are a few reasons why:
Lack of Awareness: They do not know that there are funds available for their use.
Lack of Resources: Smaller partners often do not have an employee who is responsible for marketing and knows how to create and implement a marketing campaign.
Lack of Time: Completing MDF requests and following through until the funds are received is extremely time-consuming.
Complexity: The process can be a tough obstacle course. Partners must manage multiple vendor relationships and can easily become overwhelmed with requirements. There is often an excessive amount of paperwork to complete tin order to receive reimbursement.
Continuous and/or Major Modifications: Vendors who make continual or major changes to their partner program or specific requirements make life difficult for their channel partners.
How Partners Can Make the MDF Process Easier.
Showing commitment to the vendor helps in the quest for marketing money. Partners need to demonstrate proficiency in the vendor's product or service and possess the relevant technical certifications. They also need to demonstrate that they can sell the vendor's offering. Beyond that it’s really about organization and mastering the process.
Show good faith. This means making things as easy as possible for the vendor rep. Document everything as you go along, especially lead and sales information. Consider sending a weekly/monthly status update. Attend the vendor’s annual conference.
Steps for Applying for MDF Money
Get organized: Assemble all program materials into one folder.
Master the MDF portal: Assuming there is one, note usability issues and questions.
Get clear direction from the vendor rep: Take notes during conversations and save emails.
Ask for a sample: Ask for one or more samples of a successful MDF request—this is a huge time and frustration saver.
Create a list of application steps: Run this by the rep for feedback.
Create an initial request: Expect that there are going to be multiple modifications before it is accepted. The goal is to avoid making the same mistake twice.
As long as you can show results -- and show what you are using the money for – many vendors are willing to invest. Find a creative way to use every dime of MDF that is available. Vendors confirm that at the end of every year, there is a ton of unused MDF money. It is there because, unlike you, most people don’t have the patience, experience and determination to tap into it.
