Maximizing the Utilization of MDF Dollars

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How do you manage a successful MDF program? It’s all about visibility and accountability.


During my career, I’ve had the unique opportunity to manage Marketing Development & Co-op funds from the eyes of a global distributor, value-added reseller and OEM.   There have been limited options for leaders to gain real-time visibility of their investments — regardless of what side of the partnering equation they reside.


To understand why, let’s begin with the typical evolution of funding.  Initially, a meeting between an OEM and a channel partner is arranged to share important information regarding the use and expectations of those funds.  These meetings are usually very positive and a high-level understanding occurs between the two parties as to the purpose and timing of the investment.


The process begins to break down when both parties are attempting to track the results associated with the outlay of the resources.  The channel partner's Product Manager and/or leadership team is generally so busy and consumed with managing multiple OEMs that preparation for the review meeting is done just prior to the meeting.  Due to the lack of tools and time, the meeting prep is executed many times in a hasty and cumbersome manner.  The Product Manager will spend much of the prep time trying to gather information from many disparate sources instead of having the data at their fingertips and utilizing their time for analysis. When the OEM inquires about the ongoing results, the partner is sometimes left to respond with little empirical data and substantive analysis


Unfortunately, on many occasions, I have witnessed something very similar to the abbreviated exchange below.


OEM: “What were the results from the $100,000 we provided you in MDF dollars?”


Partner: “As you requested we utilized the MDF to drive storage sales, I am excited to share that we are experiencing 8% growth in your product line compared to the 6.2.% growth in the previous quarter. That is nearly a 25% improvement. We should do something similar next quarter!


The problem is that the OEM leaves feeling partially satisfied, because there’s a nagging realization that there were many different reasons why that growth may have occurred. One possibility that is common is a single large order from a Fortune 100 client closed in that quarter even though the MDF investment played no part in the sales as it was already in its 9th month of the sales cycle.


Other business disciplines such as advertising and branding face some of the same challenges in determining direct and indirect impact. While it is not a perfect science, the right tools and methods can improve the entire investment analysis process. Team members ranging from the entry level associates to executives are wasting more time finding the information instead of analyzing the data to drive actions that correct or accelerate.


It so tough to find pertinent information because most of it is in unrelated locations: handwritten notes, emails, unwritten communal knowledge, systems such as ERP, CRM, PRM, etc. Let's just face the facts...gathering the right information at the right time in the right place is a daunting task and the lack of information in those collective forms is detrimental to running an effective program.


OEMs must be extremely specific about what ROI means to them and precisely what are the measurements that will used to determine mutual success. Conversely, channel partners need to have clarity and consistency with OEM and the respective investment, so they aren’t trying to hit a moving target. Unfortunately, the industry has grown to accept activity logs, anecdotal information, connected rates versus true attach rates and high level growth numbers as the determining factors of success.


Having information in real-time, based on predetermined criteria, is crucial to an organization’s success. The ability for a partner to state, “You provided me "X" number of dollars, and here is exactly what we did with it and here are our sales and profits after that MDF investment,” will allow that company to stand out from the pack. Sharing data on areas such as future pipeline, new customers acquired, the product breadth expansion of existing account will ensure an OEMs future investment. That’s a competitive advantage that can be used even if the OEM isn’t asking for that level of detail (though they should be). And OEM's that are specific in their expectations can rest assured their MDF funds are being effectively used by the channel.


 

Learn how you can track MDF funds and see exactly how it affects sales growth. Schedule a Q2E demo today.

 

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