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If you sell through a complex sales channel or if your go-to-market strategy at all relies on reseller partners and their success, then chances are that you have a problem. Our recent webinar, 8 Essentials for a Successful MDF & Co-Op Marketing Program shared statistics that some found quite unsettling, not the least of which was that the number one complaint of partners is that vendors are too slow to reimburse for co-op and MDF marketing activities the partners engage in. Of course, there are two sides to this story – the survey data we shared also showed partners are only leveraging 44% of the discretionary marketing spend they are entitled to in a given year. So what can we all do to make this work better? How can we as incentive program managers increase channel satisfaction with our MDF and Co-Op marketing efforts? Diane Krakora, CEO of Partner Path and 360insights' VP of Alliances, Steven Kellam recently got together to shed light on this very topic. We had so many questions that the webinar went quite a bit over its allotted time window, but that's good – it shows that channel marketing professionals are engaged. They want to know more, and they want to do better work. You can watch the replay of the webinar in its entirety by clicking this link, and I highly recommend doing so, but here’s a super quick overview of what was presented. (Note: the slide deck from the webinar is also embedded at the bottom of this post, so read on!)
8 Essentials for a Successful MDF & Co-Op Marketing Program
The Robinson-Patman Guidelines for this point state that "competing partners must be offered similar programs on a proportionately equal basis." As Diane put it, "treat everyone fairly, but that doesn't necessarily mean treating them the same." The key here is that a successful program has unambiguous guidelines that are understandable and codified for all stakeholders. As one of our recent podcast guests simply stated, "Process precedes technology.” The key success drivers here are for your company to have clearly defined eligibility scorecarding, clearly communicated KPIs and then tiering of the program partners in such a way that is proportionately equal but acknowledges the high achievers.
Make sure your team is taking the time to map your program offerings against your organization's sales cycles, and think globally, act locally. Consider edge cases, such as those of HVAC companies and how seasonality informs which programs are offered in which regions and at which times, but then consider how this way of thinking affects your own planning for driving the goals of your business. You also need to think in terms of a more extended plan, but with shorter sell cycles involved. Consider the new, digital buyer's journey. Today's buyers of your are often as far as 70% through their buying cycle before they visibly engage with your brand or partners. Your programs need to stay exciting and fresh, and partners need to be able to move quickly to adopt, obtain and execute against the plans.
How Funds Are Earned
There is a massive trend shift happening in how many brands are making funds available to their partners and it's a great enabler for your most marketing-savvy associates. Traditional co-op marketing funds are often expressed as contractually obligated funds, meant to support the partner in more traditional advertising initiatives. MDF is more about growth; think of it as enabling your partners to lay the groundwork for sales vs. more retention-based initiatives. The move toward more proposal-based MDF spend is helping brands to get footholds or even growth in traditionally non-growth markets. Well-planned and communicated, proposal-based MDF programs are assisting brands in grabbing market share by leveraging the creativity, energy and networks of their partners.
This one sounds simple, but it needs to be explicitly stated, especially if you are funding proposal-based MDF initiatives. Think how quickly partners or even program managers can lose the plot without this vital program parameter in place. Being crystal clear on which products are being promoted by your program helps you to get the most out of your spend, be it training or promotional activities. A best practice for this is to encourage your partners to use MDF toward marketing bundled products. Across a vast swath of verticals, people are often shopping for integrated solutions and knowing how to express the value of these is going to drive success for your partners and buyers.
Eligible Marketing Activities
Another success pillar worth explicitly stating: don’t kill MDF in your organization, kill bad MDF. As much as you want partners to bring you their best creative initiatives, especially in proposal-based MDF funding models, there need to be boundaries expressed concerning what types of activities you are willing to fund. These can be broad-based, such as funding "activities that support delivery of ‘thought leadership' and help the buyer get smarter," but the boundaries still need to exist and be clearly stated. One trend to watch is funding activities that help your brand to increase its digital footprint. So much of the buyer’s journey is now happening via online or other digital resources, and there are many excellent points of leverage to be found using this guiding principle.
Looking for ways to push your partners to more significant levels of participation? Offering tiered reimbursement gives you a chance to build incentives within your incentive programs. Think of a traditional sales funnel and then think of activities that can be funded at each stage, all the way from outside the funnel to post-sale. Reimbursing partners to increasingly greater degrees as a way of rewarding them to execute through-funnel marketing initiatives is a win-win. You can even go so far as to pay them for renewals, referrals, and references, depending on your product and business model.
Let’s be clear; we’re not looking to fund people for planning great marketing initiatives. We want to subsidize people who are executing and doing so in a way where the success of the activity is clear and measurable. Not every partner organization is going to have the chops to deliver exceptional marketing, of course; this is understandable and must be taken into consideration. The key to success here is to follow the leaders; learn, triage, share, and then tier and customize programs based on partner capabilities.
Remember at the top of this article where I suggested you may have a problem? It’s not you, friend, it’s your payment timelines. Where Co-Op and MDF program fulfillment is concerned, over ninety-nine percent of all partner inquiries boil down to some version of “where’s my money”? Let’s face it; cash flows are tight, and we need to respect that. If partners are good enough to put resources into our brands and the marketing of our products, we need to do our best to give them access to pre-approvals and at least partial pre-payment where possible, but certainly repayment as quickly as possible upon proof of performance. The current best practice for payment is generally accepted at around 21 days or less, but the real leaders are finding ways to deliver in 14 days or less. Cash-starved partners are not happy partners, so look for ways to keep them fed.
As mentioned above, I highly recommend checking out the full replay of this webinar, including the rich Q&A session toward the end. If you're in a hurry and want to skim the slides, I've gone ahead and embedded the deck right here: