The fact that the channel-focused digital publication CRN continues to ask in its annual partner program survey what percentage of MDF/co-op goes unspent on a quarterly basis is a good indication that many partners continue to leave money on the table.
A spot check of responses to the 2020 Partner Program Guide revealed that a number of respondents said the question was not applicable, which may reflect different MDF budgeting and allocation strategies. Still, other responses included ranges of 1 to 10% and higher. At least one respondent said that 50% of its MDF allocation remained unspent each quarter.
The reasons why many partners don’t take advantage of the MDF offered them are many. Channel experts site overly restrictive guidelines as a major problem. Programs that require partners to invest matching funds or are slow to approve and then reimburse expenditures are important challenges.
In many cases, the available funds may be considered too small to support an effective activity. At many partner organizations, especially smaller companies, there are no staff in place to use MDF efficiently or effectively.
Just how much money individual partners are not utilizing is difficult to determine. Claudio Ayub, SVP – Technology, Media, Telecom Practice, at 360Insights, told CMR that it’s likely that 30% to 40% of MDF overall is typically left on the table. He ballparked that smaller partners often leave as much as $2,000 unspent. Partners at the SMB level will fail to utilize as much as $5,000.
While these funds may be insufficient to cover the costs of average partner-conducted efforts, they could be invested in no- or low-effort activities that represent a reasonable return on investment.
Vendors that have ongoing relationships with digital marketing agencies may be well positioned to ensure optimal use of their MDF allocations. Heather K. Margolis, Founder and Chairperson of Channel Maven Consulting, a channel consulting firm, recommended several affordable activities that can be supported with limited MDF.
“One of the things we feel very strongly about is that before a partner does any demand gen activity, they really need to connect with their prospects on LinkedIn first. So that whatever that demand gen activity, it’s not only going out via email or to the people that they’re already connected with. It’s also going out to a broader audience.”
Channel Maven recommends prioritizing the LinkedIn profiles of partner executives. “Do they have the right picture? Do they have the right tagline? Are they saying the right things in their summary?” Channel Maven then help executives connect with prospects, customizing messages for short lists of prioritized customers.
Margolis suggested that vendors could permit partners to use MDF to cover the cost of a social media training session for a partner’s sales and marketing staff. “When you use MDF to show a partner that it’s worthwhile to be on LinkedIn, then they spend more time on LinkedIn. Then they get more deals. Then they get more opportunities then they close more revenue. It’s a very positive cycle,” she said.
Small increments of MDF can also be invested to support inbound efforts, such as search engine optimization. While there not be sufficient funds for an agency to actually manage a partner’s SEO program, it may be able to perform an assessment and make recommendations on improvements. Margolis suggested that an agency could perform an assessment and deliver a checklist to partners on improving their search results.
A more ambitious effort on the part of the vendors – but one that would benefit multiple partners – would be to aggregate the funds of like-minded partners to support a larger campaign. “If you have five partners who don’t actually compete with each other, who may be in different regions but serve the same vertical, a vendor could combine MDF for an activity such as an online seminar or webinar,” said Margolis.
To promote wider use of MDF overall, Ayub suggested that channel leaders need to reset programs to be better aligned with more digital activities. As the pandemic shut down in-person events – the preferred marketing tactic for more partners – digitally-savvy brands that were ready to fully-fund modern marketing activities were advantaged.
“Disruptive vendors came up with very different offers,” said Ayub, “and they weren’t just the big guys.” They recognized that partners were no longer going to spend MDF to hold in-person events. “So now let’s do this, they said,” Ayub continued, offering digital packages supported by supported by multiple agencies, “supported by an infrastructure that empowers that vendor to deliver on behalf of the partner digital demand generation. A lot of the gates were opened to let partners consume MDF in other ways.”
Overall, MDF allocations may not have changes “but the budget that was there was consumed,” said Ayub.