Market Development Funds (or MDFs) are funds provided to channel partners designed to use for sales and marketing programs. When the goal is to sell more products, introduce new ones, or increase local awareness, MDF programs encourage partners to do just that.

In this post, we share the top-recommended guidelines and MDF program best practices that help ensure success and drive partner participation. 

Examples

These programs can take many forms. When allocated as a monetary value, partners can use funds for:

• Development Of Marketing Materials
• Conferences & Tradeshows
• Direct Mail Or Email Campaigns
• Webinars
• Digital Ads
• Lunch & Learns
• Purchasing Sales Leads

MDF programs may also be “knowledge-based” allocations, where vendors provide those resources or materials directly.

Benefits

In addition to providing resources or funds for marketing campaigns, MDF programs can benefit partners by:

• Decreasing costs
• Boosting margins and profits

Providing MDFs to partners can offer unique benefits to vendors, including:

• Creating a competitive advantage
• Leverage partner knowledge
• Build stronger relationships with partners
• Target funds based on growth
• Enhance marketing efforts
• Increase ROI

Knowing how much to budget for MDFs can be challenging, especially when considering how the funds are structured.

Structuring & Timing Of Funds

MDFs are generally structured based on vendor-partner relationships, Often providing more funds to top performers with greater sales potentials. There are many different ways that vendors pay out monetary MDFs. The most common methods are:

1. Fixed Funds – These are automatically given to partners at the beginning of the year for marketing programs.
2. Pre-Campaign Requests – This method allows partners to apply for MDFs as needed before campaigns start.
3. Rebates – MDFs can also be claimed by partners as rebates after campaigns are complete. This form of MDF is generally based on campaign performance and reaching specific goals. 

As stated previously, knowing how much to budget may not always be easy. Outside of fixed funds, vendors rely on partners to submit requests or claims. Partners rely on their own budgets to determine program participation. As a result, vendors may choose one for simplicity or may not even run MDFs at all, missing out on potential growth opportunities.

Regardless of which funding method, without proper planning and tracking, accurate budgeting is impossible. That is where these best practices come into play.

How To Successfully Manage MDF Programs

Before we dive into MDF program guidelines and best practices, there are a few things to consider:

• Are you important enough to your partners to offer an MDF program?
• Will your partners value your program?
• What partners do you want to include?
• What results do you hope to achieve?
• How many marketing or sales activities are you going to fund?
• Are you going to allow creative control of assets?
• What products are you trying to promote?
• Is there a need for your products in the current market?

After answering these questions, you can start planning the details of your program, including:

• Program Budgets
• Program Type (Monetary vs. Knowledge-based)
• Funding Method
• Strategies & Policies
• Program Management

7 Best Practices That Drive MDF Program Success

Now that you have an idea of how to plan for your MDF programs, here are a few tips that ensure they run as smoothly as possible.

1. Keep It Simple –

Overly complicated policies or too many qualifications can be a red flag for partners, often deterring them from participation. Partners also tend to deal with many companies, so the easier your programs are for them, the more likely they are willing to help you reach your goals. Keeping it simple not only makes it easier for your partners but is also easier for you and your staff to manage. When there are too many rules to keep track of, it is easy to make mistakes.

2. Choose The Right Partners –

For MDF programs, keep your partner list to a minimum to avoid budgeting issues. Select partners that want to grow with you and produce greater sales potentials. Partners you have better relationships with also tend to have brand loyalty, getting your products out to more people.

3. Select The Right Program –

When MDFs go unused year after year, likely, you are not using the right programs. All programs should align with your sales objectives while providing the necessary tools to complete those objectives to your partners. Asking your partners what tools they need to help achieve those goals is essential in understanding what programs to choose, and ultimately which ones not to choose. 

4. Pay Only For Performance –

While there are many benefits to providing monetary MDFs at the beginning of the year or before programs start, these often go unused. Making it harder for you to budget properly for the next year. By only paying for performance, you are essentially incentivizing your partners to reach desired results. This also tends to put your selected partners on an equal playing field, providing funds to those who work hard for them vs. providing funds because of status.

5. Track Progress –

With any program, it is necessary to track your progress. Tracking will help you understand which programs are working, which ones aren’t, and ways to better budget for future programs. Collecting data throughout the program allows you to become more targeted (partners, products, spending, etc.), which leads to a higher ROI.

6. Share What’s Working –

After collecting data and tracking your results, it is vital to share your successes. With your team and with your partners. Sharing trends and key findings help to improve program effectiveness while preparing scalability. When the goal is to grow and scale your programs, sharing your successes can help drive program adoption.

7. REPEAT –

Nothing works better than programs that already work. Vendors often get lost or carried away trying to implement too many programs at once. Missing out on growth opportunities by scaling programs that already work.

In Conclusion

To ensure success it is recommended to keep your programs simple, select partners who will help you grow, choose programs based on goals, pay for performance, track and share your progress, and continue to utilize successful programs.

And while there are many benefits, budgeting properly is not the only hurdle. Managing MDF programs manually has its own set of challenges. Oftentimes being daunting and stressful. Adding automation to your MDF program will lead to further success.

Amplify Your MDF Program With Computer Market Research

Remove stress from your programs by implementing CMR’s MDF Management Module. This automated tool provides distributors and resellers with information quickly and easily. Matches campaigns to opportunities, leads, and closed deals. Allows partners to access marketing dollars in a streamlined, easy-flow format. Vendors can easily communicate with their channel, actively engaging partners throughout the sales and marketing process. 

Additional Benefits include:

• Saves time
• Less paperwork
• Reduces admin processing
• Accelerates the process
• Increases partner satisfaction
• Real-time data
• Increases ROI visibility
• Improves tracking 
• Improves campaign planning

As well as, helping identify new opportunities.

Schedule a demo with our team to see what our MDF Management Module can do for you!

Or, contact a CMR Rep today with any questions you may have at (702) 247-1120 or info@computermarketresearch.com.