Channel Mechanics

Market Development Fund Benefits

Channel Mechanics

A Market Development Fund Program is designed to help a vendor’s channel partners to drive demand generation and go-to-market activities. Over the past three blog posts, we’ve explored many aspects of Market Development Funds – MDF Best Practices, MDF Design Considerations, along with some MDF Principal Challenges and how to address them. All of which were focused primarily on identifying and managing the risks inherent in implementing an MDF Program. After all, MDF is a significant investment in your partner network. But if you do take our advice in the previous posts when implementing an MDF Program, what Market Development Fund Program Benefits should you expect?


8 Top Market Development Fund Benefits


You may have wondered: “Why spend so much time talking about the risk associated with MDF? Are the rewards and benefits of MDF all that substantial?” Certainly, the unequivocal answer is: “Yes!” And in this final blog in my MDF series, we’ll discuss the benefits that accrue both to vendor organizations, and the partners they invest with. These benefits are very real and can have a long-term impact on a vendor’s market position.


1. Create a Competitive Advantage

A high percentage of vendors in tech deploy some form of MDF program. So having one is often considered competitive “table stakes”. However, if a vendor thinks through and implements some of the suggestions we’ve discussed throughout this series on MDF, there’s a very good chance that particular vendor’s MDF program will actually create a competitive advantage based on factors such as clarity, consistency, and ease of doing business.


2. Generate a Quantifiable Return

Exactly HOW you measure that return can vary – number of potential new customers reached, number of leads generated or lead conversions to closed deals are all viable options.


3. Target Your Investment Funds Based on What, and Who, is Important to Your Strategy

With an MDF program, you have both substantial flexibility and ultimate control over:

– What activities you will invest in and,

– What partners you will invest in

If you want to tilt your funds to small, growable partners who have built compelling business cases for use of funds, you can do that. Similarly, if your market position requires hefty levels of joint investment with a few strategic partners, you can create a way to achieve that objective. The whole point, and therefore the primary benefit of a Market Development Fund Program, is to help you target more accurately.


4. Leverage Partner Market Knowledge and Market Power

No one knows their markets and their account bases better than your channel partners. Market Development Funds provide a structured vehicle for vendors and partners to co-invest in activities meant to optimize partner strengths and produce the highest possible returns for everyone.


5. Identify Partners Who Want to Grow With You

Program participation rates are always good indicators of a vendor’s position in the channel. Because partners typically invest WITH the vendor in an MDF program, their participation levels are even more revealing about their loyalty and long-term commitment to mutual growth. If you use an accrual method, you can easily see who’s spending 80%+ of funds accrued and generating consistently high returns. On the other hand, if your MDF is driven by business case, you can identify who is taking the time to build a professional, quality case that they work solidly all the way through to a return that equals or exceeds projections. Certainly, these are the partners worthy of your attention and channel manager support.


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6. Enhance Channel Partner Marketing Capabilities

Many channel partner principals come from a technical world in which marketing plays a very small role. Above all, they know they need marketing expertise to succeed as a business. But the realities of margin pressure and cash flow requirements often stifle the best intentions. Vendors can play a big role here by providing marketing templates and other forms of assistance up-front so that partner initiatives funded by MDF have a higher probable return.


7. Reinforce What’s Working and Refine What’s Not

Through MDF program tracking, vendors can identify trends by region, segment, partner tier, etc. and then either publish “success stories” to the broader partner community or initiate corrective action close to real-time.


8. Increase Channel Manager Value to Partners

MDF tracking applies both to groups of partners and individual partners. Channel management teams can review such metrics as program participation rates, initiative completion rates, actual vs. expected ROI etc. and work with individual partners to improve performance in a way that is measurable over the long term.


The above MDF Benefits are the real purpose of spending so much time on the MDF topic. MDF is powerful. It’s complex. But we have the experience and we have the tools available to help you create those points of differentiation, while delivering real benefits to your organization and your channel partner community. Therefore, there’s every reason in the world to move forward with confidence!

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