MDF programs have always been an integral part of many channel programs
For our first Channel Expert Q&A blog post, we reached out to Patricia Rush, Channel Consultant and President of RushToChannel. The focus of the interview was MDF programs. Like Computer Market Research, Rush has been involved in channel management for over 30 years.
In regards to Co-op versus MDF programs, where are you still seeing a prominence of Co-op funds?
Distributors and large mass merchants still see Co-op funds. Many channel partners continue to ask for Co-op money, but not everyone is getting it. Co-op is typically a problem for vendors because they need to hold that money on their books, even if it expires. There have also been legal issues in the past that have contributed to its lack of disbursement.
With MDF, vendors retain more financial flexibility. Once a plan or proposal is submitted, a partner agrees to do an activity. If they don’t do it, they don’t get the money.
With discretionary MDF, is there a ceiling for partner requests?
It’s really all over the map. Some vendors will set tiers within their programs, where each tier may have a guaranteed amount of available MDF per quarter.
In the absence of tiered programs, MDF requests typically reflect the amount of revenue that will be generated by an activity. Requests are larger for activities that are expected to bring in more leads.
What are vendors’ biggest concerns when issuing MDF to partners?
Actual leads and return on investment (ROI). If one thing has been consistent in recent years, it’s that MDF budgets have shrunk considerably. Therefore, every dime that channel managers have to spend with their partners needs to show some type of return. This makes having measurable results a top priority.
MDF used to be very difficult to track once money was the issue. Now, with automated systems like CMR’s, tracking revenue correlation and ROI have become much easier.
What are channel partners having a tough time with?
Paperwork and other administrative burdens. Even though processes are becoming more automated, there is still much room for improvement.
Any predictions on where MDF programs are headed in the near future?
There will be more pressure put on partners to close business. In reality, it needs to be a joint effort – vendors need to work side by side with their partners. Nonetheless, I see vendors placing more accountability on partners to follow-up on leads themselves.
I also envision that partners will continue to see less available funds from vendors.
How is your consultancy helping vendors in the Co-op and MDF arena?
At RushToChannel, we focus on the infrastructure, processes, and policies behind managing partners.
For example, most vendors still have no follow-through when it comes to MDF. They leave it up to the partner and have no idea if the activity actually closed any real business. With my clients, I implement a full tracking system and put policies in place that ensure leads are closed.
More about RushToChannel
RushToChannel works with vendors to develop and execute the programs that best fit their resources and culture. We then work in tandem with the organization to implement and build the infrastructure and processes required to support those programs.
Full-service solutions provider Computer Market Research offers everything you need to manage, measure and optimize your MDF programs
Computer Market Research (CMR) has helped vendors manage their channel programs for over 30 years. One of CMR’s core products is Co-op/MDF Management, a web-based application designed to help vendors manage and track funds.