TL;DR
MDF has become table stakes. 95% of vendors either offer it or are planning to,but only 13% can confidently measure its ROI.
The problem isn’t a lack of investment; it’s a lack of visibility into what actually drives partner-sourced pipeline.
As budgets face greater scrutiny, MDF programs that are difficult to access, manage, or measure will struggle to justify their existence.
The vendors seeing the best results are making MDF easier for partners, automating workflows, and holding activities accountable to outcomes.
If you can’t connect MDF spend to impact, you’re not funding growth, you’re funding guesswork.
Meet the Panel
Are you unlocking the full potential of your Market Development Funds (MDF)?
An MDF program is now a core requirement for supporting partners in creating awareness and generating demand for your brand in a competitive marketplace.
However, merely providing funds does not guarantee partners will be successful in creating impact. While millions of dollars are spent every year on MDF, only 13% of vendors are fully able to measure and report on its ROI.
Measuring marketing ROI is notoriously difficult, even more so when partners are involved. With much more scrutiny now on budget and spend, being able to show an ROI on MDF investment is becoming critical.
We recently hosted a webinar “Maximizing the ROI of your MDF program in 2024” exploring strategies to ensure a successful MDF program.
Our panelists discussed what makes an MDF program successful, how making it easy for partners will drive better ROI, and the critical importance of automation to manage your MDF program.
Specifically, the panelists discussed:
• The biggest challenges of running an MDF program
• Ways to make MDF programs more successful and show ROI
• Tactics to motivate partners
• Best practices in running MDF programs
By polling the 70 vendor participants in the audience, we captured some fascinating insights into MDF programs and strategies. We are excited to share these insights in this complimentary eBook.
Connecting the dots between MDF activity and impact
Offering an MDF program is now table stakes, with 95% of companies polled currently or planning to offer one to partners.
And 66% of them see it as integral to their partnering strategy.
This disparity shows how difficult it is for partner marketers to connect the dots between MDF activities and return on investment. Yet, in spite of the pervasiveness of these programs, only 13% are able to measure and manage the ROI.
Connecting the dots between the activity and its impact is complicated by factors such as:
- Being unable to track manual processes (e.g. post-event follow-ups)
- Lack of visibility of partner pipeline and lead progression
- Integrating multiple systems and sources of data to correctly attribute the source of opportunities
- The length of sales cycles and the time between activity and opportunity
But it’s crucial that everyone understands what activities are working in order to learn from that success – otherwise, you are just shooting in the dark.
It is often about timing. If you have an event, for example, knowing how many people attended is a great directional metric on the performance of the activity, but then you have to factor in the follow-up. What did that follow-up look like and how long did it take? And then, did it convert to pipeline? Did it convert to bookings? It is not a one and done, it is an ongoing process.
Jessica Kottcamp
Senior Director, Global Partner Marketing,
Zendesk
What are the Most Common Challenges of MDF Programs?
Unsurprisingly, the single biggest challenge is measuring ROI.
Vendors struggle to correlate the money spent on MDF with revenue impact. This causes a number of issues:
- You are potentially wasting MDF budget on activities that do not drive pipeline
- You are unable to prove the effectiveness of these activities and will struggle to gain further MDF budget
- Your partners do not know how to request and claim for MDF, resulting in unused MDF and risking that budget being lost
- You cannot replicate success if you don’t know what was successful
Other key challenges include the resource-intensive
nature of managing MDF programs and ensuring the selection of the right marketing activities to support them with funding.
Panelists also revealed that keeping partners motivated to continue to use your MDF program over a long period of time proved tricky.
They all agreed that overcoming these issues is easier if your MDF program is simple and intuitive to use.
How do you currently manage your MDF program?
In the previous section, we saw that the second biggest challenge with running MDF programs is how time- consuming and labor-intensive they can be. One reason for this is that more than a third of companies are trying to manually manage their programs via emails and spreadsheets, while less than 30% have an automated solution.
This is not only time-consuming, but it does not provide an optimal experience for partners. Automating these processes makes it easier for businesses, while also providing a much smoother partner experience. It also means you are able to track MDF requests, claims, and outcomes, making it easier to not only manage, but also to measure the impact.
The easier you make it for partners, the more likely they are to engage.
Finally, as the saying goes – “you can’t manage what you can’t measure”. Without automation, you will not be able to effectively track your MDF spend and impact. This will make attribution and ROI even harder to assess.
Through automation, you can implement mechanisms to track the utilization of MDF and measure the effectiveness of funded activities. We also advise making it a requirement for partners to report on the outcomes and impact of their campaigns.
Choose the Right Type of MDF Program for Your Partners
The past decade has seen a big shift in how vendors make MDF available to partners, fuelled by a growing need from partners for a more personalized approach.
When asked what type of MDF Programs they offer, the majority of vendors opted for proposal-based.
Proposal-based MDF involves submitting a detailed marketing proposal with campaign tactics, timelines, and performance metrics. Once approved, it allocates funds for partner marketing activities, regardless of revenue performance. When well-planned and communicated, these programs empower vendors to capture market share by harnessing their partners’ creativity and networks, ultimately helping to close more deals and boost sales.
Because proposal-based MDF activities require a business case and, typically, a proof of performance, it is easier to connect the dots between the marketing activity and the result, therefore making ROI easier to track.
“Proposal-based planning works really well. Particularly if it ties back to initial business planning and adds marketing to understand partnership qualifications. This approach creates accountability and ensures funds are utilized, unlike accrual-based planning, which often leaves dollars unused.”
Julia Scully
Head of Global Channel Sales
ControlUp
Aligning your MDF Program to Partners’ Goals and Needs
Consistent messaging and alignment with partners are essential, along with a thorough examination of how easy it is for partners to engage. Having a straightforward solution is vital when partners work with multiple vendors. If you are easy to do business with, you will be the preferred vendor to work with.
Aligning your MDF program with your partners’ goals and needs is key to success. Understand what motivates them. Make the MDF process easy and as self-serviceable as possible for partners by providing visibility into fund balances, claim statuses, and by automating workflows.
However, it is important to hold partners accountable for results by being transparent about expectations and ROI targets. Adjust activities that underperform, test new activities, and be willing to modify or discontinue those that don’t deliver expected results. Consider implementing minimum spend requirements to make the MDF process worthwhile for both parties.
“It is often a struggle connecting manual and automated systems to track if marketing efforts led to new opportunities. It needs to be in our language, not the partner’s. This involves connected systems and time. High-volume businesses show results quickly, but consultative sales might take up to 90 days to convert. These are key points to keep in mind.”
Jessica Kottcamp
Senior Director, Global Partner Marketing,
Zendesk
How Can You Make it Easy for Partners to Understand and Use your MDF Programs?
All partners are different, so it’s crucial to understand and align supported marketing activities with their sales priorities and objectives. Knowing what motivates partners and what drives their business is key.
It is also important to clearly articulate what your MDF program aims to achieve. Whether it is to boost sales, increase brand awareness, or support specific product launches, setting these clear targets will help ensure you are heading in the right direction.
“You need to know what’s important at different levels. At the leadership level, it’s about defining what success looks like and creating common goals around that. Aligning to those goals and understanding what platforms they’re using to measure success is crucial. This way, when you review the results, you can celebrate the joint successes together.”
Julia Scully
Head of Global Channel Sales
ControlUp
Providing Clear Guidelines
Make sure partners know how to apply for and use MDF by giving them clear and detailed guidelines, including who can apply, how the funds are allocated, and what reporting is needed.
Offer training sessions, marketing materials, and tools to help them use MDF effectively and run successful campaigns. Also, streamline the application process to make it easy for partners to request and receive funding.
This helps partners understand and use MDF smoothly and efficiently.
Keeping Partners Engaged
MDF programs require active participation from partners. If partners become disengaged, they may miss opportunities and be less likely to invest in the future.
Jillian Curtis explains how Trellix tackles this by making MDF information easy to access, automating parts of the process, and centralizing information for self-service.
“We don’t want the workflow to kill the excitement of spending funds and generating demand.
First, we bring MDF to partners via our managers or partner portal, providing guidelines and user guides so they can access info on their own. This lets us focus conversations on execution. Our managers also use MDF as a talking point and sometimes submit requests on the partner’s behalf, automating the process to make it easier for everyone.
Second, we aim to respond quickly to partner engagement. Automation helps with this by streamlining forms, approvals, and payments, ensuring fast responses and reimbursements.
Lastly, having all the information in one place is crucial. Partners can self-service their data, see remaining funds, request details, approval status, and payout information. A dedicated tool provides a comprehensive view, making it easier for partners to engage and see the program’s benefits.”
Jillian Curtis
Program Manager
Trellix
Setting the Right Expectations
The way you onboard partners is also crucial. When a partner first joins, it is essential to make the process easy and show them how to use the tools available. It is about setting the stage for a smooth partnership early on. Understanding what “good” looks like from their perspective is important. Whether providing info directly or enabling self-service, aligning with.
It is also vital to genuinely evaluate how easy the process is for partners. Sometimes, we think it is simple, but partners might find it challenging. Trying to see things from their perspective, even logging in as a partner to test the process, can reveal areas for improvement. Ensuring the onboarding and tools are truly user-friendly helps partners stay engaged and satisfied.
Remember, partners have many options, so if you claim to offer the easiest solution, you must ensure it truly is. Regularly checking and improving the process to make it genuinely easy and efficient is essential for maintaining a strong partnership.
Aligning your MDF Program to Partners’ Goals and Needs
Visibility into what funding has been used and what is still available is important in order to prevent unused budgets at the end of a quarter or year.
During the webinar, the audience revealed what percentage of their MDF budgets went unused in the previous year. 30% of the audience said less than 10%; 22% said between 41%-70%, 18% said 11%-40%, and 30%.
Not understanding what percentage of your MDF budget is being used means it is being wasted and you could lose it entirely. If it is a “use it or lose it” situation, then you want to make sure you are using every penny!
At Trellix, Jillian Curtis explained how they maximize fund utilization by breaking down the annual budget into quarterly goals to ensure they stay on track with spending and help partners do the same.
“We base our MDF budgets on a mix of past spending and sales goals. Once we have a foundation, we use actual spend from the previous year. If partners don’t maximize their MDF budget, they won’t get the same amount next year. To start, we align it with our sales goals, looking at last year’s revenue for specific products and setting a budget that supports growth for the next year.”
Jillian Curtis
Program Manager
Trellix
What are the best practices for successfully executing an MDF program?
There is not a single formula for achieving a great ROI from your MDF programs; it is about finding what works best for partners at their current stage of maturity.
Firstly, you need a solid operational foundation – processes should run smoothly and align with sales goals. Ensuring alignment throughout the entire partnership is imperative, so everyone is driving towards.
Accountability is also vital. If an activity does not meet expectations, it is important to understand why and not to repeat it. Being creative and constantly testing new ideas is key too, as what works in one market or year might not translate to others. It is about staying dynamic and finding unique ways to stand out in a competitive.
Experimenting and embracing fast failure can provide valuable insights to guide future decisions and prioritize activities that consistently deliver strong ROI to sales teams.
When analyzing these outcomes, you should define the specific results you aim to achieve and include tailored KPIs in the proof of performance for each activity type. This may require extra effort to analyze separately on the backend, but it is the only way to gauge what works and accurately make informed adjustments moving forward. Automation can significantly aid this kind of analysis and reporting.
Partners have different marketing resources and sales approaches (some are more consultative, while others are focused on volume. So, make sure you are tailoring your MDF strategies to their specific needs.
Finally, do not forget to share success stories to help partners learn from each other!
What key things make an MDF program successful?
- Discover what is motivating your partners, where they see themselves going, and make sure that you are aligned with their goals.
- Make your MDF process easy and as self-serviceable as possible for partners. Provide visibility into fund balances, claims status, etc. Automating all parts of the workflow is advisable.
- Hold partners accountable for results. Be transparent about expectations and ROI targets. Adjust activities that under perform.
- Start small and fail fast. Test new activities and be willing to modify or discontinue those that do not deliver expected results.
- Consider minimum spend requirements to make the MDF process worthwhile for both parties.
- Communication is key throughout the entire MDF process. Explain the program, follow up regularly, and provide timely feedback on activity performance.
- Measure ROI to the extent possible to determine which activities are most effective. Use results to optimize future MDF investments.
Final Words of Advice
Julia Scully
Global Channel Sales
ControlUp
“I believe the key is aligning company goals with activities that complement our partners’. By strategizing and developing MDF guidelines around this synergy, we can effectively plan and adjust our investments based on results. Ultimately, our aim with MDF is to enhance brand visibility and drive new business, requiring a strategic allocation of resources.”
Jessica Kottcamp
Director Marketing
Zendesk
“Planning is crucial. It starts with onboarding the partner, setting objectives, and building a business plan together. Regardless of the partner’s size, we need to define key activities, propose plans, and hold each other accountable, adapting as needed. In our company, we plan for the current and next quarter, ensuring we stay aligned with our goals.”
Jillian Curtis
Program Manager
Trellix
“Just do it! Start with maybe the most important three or four KPIs. And you can always add to that later, because remember, that’s a significantly better experience for your partners than you have today on your spreadsheets.”
