Channel Mechanics

How to Maintain Market Development Fund Budgets Amid Uncertainty

Channel Mechanics

Channel Mechanics recently had the pleasure of hosting a webinar with Janelle Mertens, Global Director, Channel Operations at Informatica, Dave Jordan, Global Partner Programs and Strategy at Thales, and our CEO, Kenneth Fox entitled Forget Surviving, How to Ensure your MDF Program Thrives in 2023″. It was a fresh insight into how vendors utilize Market Development Fund Budgets and get the best out of those dollars. All whilst considering that the wallet strings are laser-focused on growth and ROI.

While partners clearly do a tremendous job helping take a vendor’s brand to market, it can be tricky to measure the ROI of Market Development Fund Budgets. Especially when we all know that direct sales are measured in months, while channel sales are measured in quarters.


Top Tips for Maintaining Market Development Fund Budgets in 2023


1. The Key to Success is Flexibility

How do you make sure that you secure Market Development Budgets? Selling MDF internally is difficult to justify. But we see a twofold approach.

‘Make sure you keep it high level when asking for MDF budget, make sure you’re delivering something that’s flexible for the partners, so the right people are taking advantage of it and you’ll get a better ROI,’ cited Dave Jordan.


2. Keep it High Level

Selling MDF internally is more around highlighting the partner chain and demonstrating the overall value to the business. Least of which, partners can provide the opportunity for expansion, revenue growth, and brand marketing. To continue to invest in the channel, vendors need to illustrate: What percentage of business will be transacted through partners? What percentage will be new business? Number of deal registrations? Number of new logos?

Consider that partners invest their own time, money, and resources to become certified to sell, deliver, and support your brand. It’s affordable distribution, an extension of your sales and marketing team, and growth without the expense of hiring, training, and compensation. By tapping into your partners regional customer bases, you are able to kick-start sales in that specific market. Something unachievable alone. But with partner investment comes greater channel expectations. All of which requires clear vision, a flexible program approach and precise execution.


3. Keep it Simple

Remember, partners have their own businesses to run, often working with multiple vendors. With a greater choice, they will choose vendors that make the partnering process simpler. Therefore, vendors must work harder to optimize the partner experience. It may be as simple as speeding up the MDF review and approval process. But this one little step will make doing business with you easier. This, in turn, will lead to increased MDF take-up to seed the market with your brand.


4. A Flexible Approach to Distributing MDF

Due to variations in how different companies operate, there can never be a universal solution that fits all. What might be effective for one vendor may not yield the same results for another. The methods of utilizing MDF can include traditional accruals, proposal based approaches, or a combination of both. It’s important to consider whether you have an adaptable strategy in place for allocating MDF and whether you’re maximizing the impact of your marketing budget. It’s also worth assessing whether your MDF resources are being underutilized.

The trend of using a proposal based approach for MDF programs is on the rise, as indicated by 66% of our webinar participants reporting to have implemented such a program. In contrast, only 9% reported using an accrual-based approach, and 17% reported using a hybrid approach. The panel agreed without reservation that the proposal based approach is leading the way, with partners generating innovative and engaging activity ideas. This approach does not prioritize revenue, meaning that smaller or newer partners can also benefit from the MDF if their activity plans are the most successful in creating new opportunities to drive growth. With a rigorous Proof of Performance (POP) claim process, you can evaluate what’s effective. Thereby really moving the sales and ROI needle. “Proposal based MDF has revolutionized MDF by getting new ideas in from up-and-coming partners and smaller partners, with fresh ideas”, stated Fox.


To Conclude

A key takeaway from our panel was that although MDF challenges may come in many forms, a good channel automation platform will help resolve many of these issues. If you stay organized and on top of what your partners need, partners will be able to tap into and make the most of that MDF investment. By building a stronger channel partner ecosystem, you’ll be on the road to ROI success.


Are you a vendor struggling with MDF complexity? Or looking to maximize your MDF ROI?



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