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As 2017 gains steam, the market development funds continue to adapt to digital. Vendors argue programs which feature MDF are in a world of flux, and partners–with limited digital marketing experience–struggle to execute these incentives
The trickle effect of market development funds is affecting all parties, and vendors must recognize their value to partners not only as a strategic business partner but also as someone they can seamlessly transition with as the digital ecosystem continues to influence customer decision-making.
Market development fund (MDF) incentive programs have to take better consideration into digital. So, how can vendors more closely tailor market development funds to fit an evolving consumer landscape? The following information explores this very topic, and reimagines MDF to more appropriately align with how buyers consume information and dictate their purchasing.
The Trends of Partner (MDF) Frustration
1.) Too much red tape
Too many hoops and hurdles for partner to access MDF funds
2.) Reimbursement turnaround
Cash flow issues continue to plague partner; receiving a check from vendors under 3 weeks uncommon
3.) Timing relevancy
Poor timing of program release and rolling out dollars at the last minute. Ex. MDFs incentives 2 weeks before end of quarter
4.) Constant modifications
Vendors continually change their minds and make last-minute modification to the program; confuses partner as to where they start
5.) Unclear performance guidelines
Painful audits on MDF program reconciliation are often vague, subjective and not clearly communicated
6.) Inexperienced digital marketing skills
Partners’ inability to leverage digital marketing frustrates all parties; partners not built for its complexity in the modern buyer’s journey
The End-Customer Evolution
In 2011, Google introduced the ZMOT (Zero Moment of Truth), which describes…
A revolution in the way consumers search for information online and make decisions about brands. Years later, search and ZMOT have continued to grow in importance and scale, and as consumers’ behavior evolves, so must the way in which brands engage those consumers. – Jim Lecinski, Google, Vice President, Americas Customers Solutions.
As a vendor, you want to ensure that your partner’s customers are finding and acquiring the information they seek via a multitude of digital verticals. When assessing the new buyer’s journey, it is important vendors ask themselves two basic questions:
1.) Are partners where end-customers want them to be?
2.) What does a partner friendly market development funds experience look like to you?
Successful execution of these two basic principles will bring you and your channel partners plenty of opportunity, higher program adoption, faster results and a solid ROI.
The Digital Buyer’s Journey of Today
Constructing your MDF Program in the Digital World – 5 Key Elements for Success
Given the complexity of how end-customers absorb information and determine their decision-making, MDF must be tailored accordingly and accommodate today’s digital transformation. The following key elements for structuring MDF in the digital world will help bring clarity to a complex environment, while create unforeseen opportunities in the process.
1.)Implement the right Channel Partners
It has never been more important than now to pick the right channel partners. First, the question boils down to ‘who you are looking to engage.’ Are you looking to motivate gross partners, star performers, high-volume PO partners, etc.?
Competing channel partner must be offered similar programs on a proportionately equal basis – Robinson-Patman Atc
A great tool to determine which partners to pursue is to use some sort of KPI assessment or channel partner scorecard (see example).
Once you accept your goal, you can define and profile who in your partner ecosystem fits into the group you want to engage. Ultimately, partners need to demonstrate business development and marketing capabilities. From there you will need to quickly sort out who needs what, build paths to success for different groups, and get sales in the loop early.
Questions to think about:
- What competencies does partner have that support target end-customer?
- What is the market opportunity in which partner has access?
- What are the market trends that could affect end-customer sales?
2.) Program Period In-tune with the Digital World
Historically, program periods follow a generic sequence: Vendors either run market development funds on quarters or look to seasonality to execute programs. However, given the dramatic influence digital has on end-customers, vendors need to be looking past quarter campaigns in replace of long-terms programs.
Successful digital marketing does not happen overnight. It is a process that takes patience, trial and error and, of course, time. Building a digital brand isn’t a black and white process; it’s a vague, complex progression relative to a partner’s abilities and experience. Partners need to be able to adopt, obtain and execute, and limiting those philosophies to a quarter forgoes that model.
Remember, once a digital brand is established the selling will happen fast. Your end-customers are always there, it just takes time for partners to be seen. In the digital world, think less about MDF as an activity and more about it as a long-term operation.
3.) Product Promotion – Partners will follow the Dollars
You don’t have to have all of your products eligible for MDF or Co-op if you are doing an accrual based program; promoting specific products you want to gain traction for is more viable via digital marketing campaigns. Perhaps it’s your line of cloud products, and you want to give partners more of an incentive to create demand for that vertical.
One of the biggest trends in market development funds has to do with bundling, where several vendors work together with the partner to accomplish a common goal.
Instead of a vendor providing exclusive funds to a given partner, bundling focuses on combining solutions and funds into a singular package and allocating them to a common business partner. The digital ecosystem makes joint-marketing campaigns far more feasible to execute, particularly because the creative element of content creation as well as leveraging multiple audiences into an ‘I scratch your back – you scratch mine’ model.
Why is bundling a trending component of market development funds?
– Partners really need help. Their limited marketing experience makes a vendor’s job difficult and time-consuming. Combining vendors’ marketing resources and funds alleviates stress for both partner and vendor
– Cash flow challenge. Vendors realize partners are struggling with top-line revenue. Bundling means more money will be available for your partner
– Partners need things to grow their business. Joint-marketing efforts and solutions offer end-customers unique offerings and value propositions
4.) Eligible Activities in a Digital “Consumerized” Environment
How your activity aligns with your go-to-market strategy is your biggest question. This issue can be solved by understanding the impact on B2B marketing tactics, and knowing that the customer looks to the marketer to get smarter. This realization is your greatest weapon for implementing successful MDF activities.
So, which activities help customers get smarter?
Activities that focus on building thought-leadership and industry influence are your partner’s key vehicles for success.
One of the hardest aspects of digital is that sales people have less control in the customer’s decision-making.
The focus is so much further up the funnel, which means sales and marketing must communicate, collaborate and correlate initiatives together more than ever before. The traditional segmentation of sales and marketing is not applicable in the digital world, and this may be a new philosophy for your partners to grasp.
5.) The ‘Carrots and Sticks’ of Reimbursement
After you have the activities you want to drive, it’s important to think about the ‘carrots and sticks’ for partner reimbursement. Giving partners the tools on how to be successful—and what positive output looks like—is essential to reconciling your reimbursement. Clear, objective parameters, and showing partners exactly what you are looking (before hand) is key to settling disputes while encouraging enablement and productivity.