Channel Mechanics

How to Set MDF Budgets and Partner Allocation More Effectively

There are many aspects to building a successful Marketing Development Fund (MDF) program. However, one ongoing challenge for any vendor is how to set MDF budgets and partner allocation more effectively. This was one of the topics under discussion during our webinar “Building an MDF Program for Today’s Channel Ecosystem”, featuring Channel Mechanics VP of Sales John McArdle speaking with Ryan Griffis, Global Channel Programs Manager at Extreme Networks, Mimish Lesperance, Director Field Channel Marketing Americas at Barracuda and Kenneth Fox, CEO at Channel Mechanics. From their discussion on MDF, three key themes emerged: Transparency, Balance and Consistency.

 

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Ryan Griffis said there are three elements to Extreme Networks’ successful proposal-based MDF program. This ensures balance between extracting the value from its regional teams that know how to get the best out of their partners with a level of centralised oversight and compliance.

 

 Three elements to a successful proposal-based MDF program

 

1. Consistency and Consensus

When it comes to MDF budget, keeping the numbers consistent and not springing surprises on anyone in terms of project swings or changes is important, said Griffis. “We found over the last couple of years that’s one of the simplest things we can do. So those local teams can plan ahead in plenty of time and not necessarily need to wait for 100% confirmation of budget before they can get started with planning.”

 

2. Communication

Ongoing conversation bridges any gaps between pre-planned budgeting and ad hoc partner requirements. So in addition to a quarterly planning cadence, there is ongoing communication whereby regional teams can make central teams aware of any upcoming MDF requirements. This allows them to then be earmarked into the budget.

Said Griffis: “We’ve made a lot of progress over the last three years. At first we used to run an MDF program based on surprises. Now I think it’s very, very rare that we get any surprises, because everybody knows who does what. And everybody knows who to talk to, and how to make them aware. And that works better for everybody.”

 

 

3. Demonstrate Returns

This is an essential aspect for allocation of MDF: how to you demonstrate it is delivering a return to the business (ROI)? How can you respond when the C-suite asks, ‘Okay, what are we getting for our money?’ There are different ways to look at it. For example, Extreme Networks doesn’t use one single method or metric, said Griffis.

“We’re looking at it from a few angles. One of those is top line, where we’re very simply looking at what business is being generated by a partner? And what are we investing in them with MDF? So that’s not necessarily a direct correlation, but it gives us a very high level indicator.”

In addition at Extreme, “There is a mid-level, which we call the go-to-market motion measurement. This is where we’re tagging MDF activities and saying, ‘Okay, so this one is trying to drive net new cloud,’ for example. ‘Let’s measure the uptake in that new cloud three months, six months, and nine months later.’

“And then the final piece that we’re using, which is the attribution. Which is where we’re taking contact data that partners submit to us from their activities. We’re feeding that into an attribution model. So we’re able to roll that up or break that down, however we wan. This then gives us some kind of insight into the level of influence that these activities are having.”

 

No surprises

Lesperance reiterated that ‘no surprises’ is essential when allocating MDF Budgets to partners. Working with Channel Mechanics, Barracuda has been able to evolve its previous MDF model to what it is today.

Now, she explained, the proposal-based program is “very transparent and clear with both our sales organization and our field marketing managers who work with our channel partners, and our partners in terms of; ‘here’s the new process, here’s what your budget could look like and being very transparent on understanding our strategy as a company, and how that could align with our investments through the MDF funds.’

 

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