MDF Insanity – Why Partners Aren’t Spending Your Money

By on 18th February 2016

In the United States, approximately $50 billion is spent on co-op programs each year. But, just over half of these funds are never used. So why don’t partners spend their Marketing Development Funds (MDF)?

For starters, every co-op program I’ve ever seen is different – different design, process, rules of engagement, tracking, partner and vendor expectations, and obviously, different results. And because MDF is typically allocated to larger partners, you’re not the only vendor vying for their attention. Therefore your dollars are spent on boondoggles and tchotchkes – or even worse, not at all.

Many suppliers use a portal to manage their MDF, which typically involves many steps depending on the scope of the activity. Let’s take an event as an example; the partner has to obtain approval, execute the invites, collect a list of attendees, upload the list, hold the event, qualify the leads, enter opportunities into a deal registration system and then close the deals. All while keeping you “in the loop”.

We all know incentives, rebates and financial spiffs have become staples as methods of incentivizing partners to meet or exceed goals. A recent Channel insight survey of 102 U.S. technology channel players rated the following incentives from most to least effective. As you can see, MDF is at the bottom of the list:

  1. Performance-based incentives
  2. Big-deal discounts
  3. Volume rebates
  4. Short-term price-based incentives
  5. Sales Promotional Incentive Fund (SPIF) programs
  6. Non-payment incentives
  7. MDF

SiriusDecisions believes MDF programs tend to have the greatest near-term impact because they can be aimed at driving business for a specific solution or a focused audience, and often involve sales from the start. But I personally think partners are jaded because most MDF programs are implemented without their goals and objectives in mind, yet it’s supposed to be their money.

I believe that by aligning and connecting with your partners (plan based vs. one off), MDF can be a powerful tool! And once you’re armed with the right knowledge, you can build successful plans and programs that motivate the right behavior, drive demand and generate results that can be tracked and measured, and demonstrate contribution and return on investment.

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