Loyalty Programs, Feedback Loops Gaining Popularity To Increase Partner Participation

The average utilization rate of marketing development funds (MDF) within the BtoB sector has dropped below 20%, according to research from SiriusDecisions.

As a result, OEMs also are striving to implement more creative ways to increase MDF usage, according to Laz Gonzalez, Service Director of Channel Management Strategies for SiriusDecisions.

“Currently, approximately one-in-five partners are utilizing a supplier’s MDF programs,” Gonzalez told Channel Marketer Report. “This is now causing a lot of suppliers to rethink their MDF processes and systems. To that end, we’re seeing a lot more going towards point-based systems, rather than strictly cash payment systems. Some MDF optimization initiatives are even extending into loyalty programs, rewards programs, and people really trying to get creative with the types of MDF programs they’re rolling out for the channel.”

Gonzalez adds that some OEMs are addressing this issue by rolling out short-term, online marketing campaigns as a test for partners and offering MDF “points” that are redeemable for a list of predetermined marketing services. These emerging channel trends were examined in the new SiriusDecisions brief, titled “Channel Management: Planning Assumptions 2012.”

SiriusDecisions research also pointed to a decreasing focus on incorporating partner customization into marketing materials. In turn, OEMs are creating a more comprehensive guideline for marketing and sales initiatives. Because partners lack the marketing skills and resources to drive demand efficiently, OEMs can great menu-like guides to create a more seamless rollout process. This tactic also helps ensure that expectations of marketing campaigns are delivered on, while partners receive better guidance throughout the demand creation process.

To encourage partner feedback, some OEMs are rolling out customized polls, meetings and surveys to determine optimal marketing items that will drive participation and boost channel ROI. In light of low utilization, SiriusDecisions research points to a severe decrease in revenue. In fact, partner programs that have less than 50% utilization for MDF produce 70% less revenue than programs that have a higher MDF utilization, according to SiriusDecisions research.

Lackluster participation numbers can be attributed to several factors, according to Gonzalez. “Too many suppliers are approaching partners with different MDF programs and are following processes that are too complicated to obtain MDFs,” he said. “These are the generally the factors as to why partners aren’t paying attention.

These effects are particularly being seen within two-tier partner marketing, or “marketing through partners,” according to Gonzalez. “About 75% of ‘marketing through partner’ programs are fueled through MDF,” he said. “That’s where it’s having a severe impact. There are several ways you can market to partners.  You can market to them to raise awareness and mindshare, and you can market through them to generate leads. That means, vendors can offer MDF to a distributor to participate in two-partner marketing, so they can roll out awareness campaigns. Half of these programs are generally funded by MDF, and that is where the biggest impact as being in two-partner marketing.”

To enable MDF redemption that is fair and balanced among active partners, best-in-class OEMs have implemented a PRM or CRM platform with an MDF portal, according to Gonzalez. In turn, OEMs can obtain real-time reporting and dashboard control to manage programs, requests and funding, and also review analytics to measure partner performance. When dealers tap into the module, they can easily see what programs are available, apply for MDF funds and campaigns, and develop campaigns.