Market development funds: what they are and why you need them
Knowing how to properly market your business can be challenging, especially if you don’t have a fully resourced marketing department or the extensive budgets of large global corporations. However, marketing is an essential tool that can help you grow your organisation and reach new audiences of potential customers. For channel partners, it’s also an important way to demonstrate your value to the vendors that you work with.
For many companies that operate in the business-to-business (B2B) space, there are opportunities to work closely with vendors on marketing campaigns that can help benefit both organisations, without breaking the bank. One way that you can scale your company is by leveraging market development funds (MDF) from the vendors that you partner with.
You’ll likely already know that MDF is financing vendors offer their aligned channel partners to support marketing campaigns and lead generation efforts, and it can be worth tens of thousands of dollars per year to those partners who are willing to apply for it. Unfortunately, this can often be overlooked by channel partners that lack the understanding and awareness of how to use these valuable amounts. As such, many partners never apply for available support, despite the relatively low thresholds needed to qualify. This can result in channel partners leaving money on the table, and in vendors struggling to allocate their funds due to the low number of partner applications they receive. In some cases, this can also lead to more missed opportunities in future for both businesses.
MDF is generally considered a low-risk, fast-to-access, significant source of finance, as well as a sensible way to boost marketing and build a strong revenue pipeline. So, why is it that many channel partners are overlooking valuable opportunities while the vendors they work with, or the distributors who often manage MDF, seemingly can’t give their money away?
Breaking down the barriers for vendor marketing funds
MDF isn’t exactly free, no-strings-attached money that you can use as and when you please; it’s an investment. As with any investment, there are rules that govern MDF agreements and the use of such funding. Primarily, these rules ensure that you’re using the money wisely and to the benefit of both your business and the vendor footing the bill. Normally, there is a requirement for you to co-fund any supported marketing and lead generation programs at a ratio of 50:50 or similar, which ensures you are focused on concrete outcomes from the program as you have some of your own skin in the game.
Despite this, in nearly every case, the conditions of funding are far less onerous than a bank loan or other formal financial instrument that you may consider to support your IT B2B marketing efforts. Vendors also want their partners to apply for and use these funds for everyone’s benefit.
Some of the benefits of MDF programs include:
- lead generation and increased revenue and business opportunities for you
- targeted campaign opportunities that let you and vendors reach more potential buyers together
- stronger partnerships between you and vendors for mutual benefit.
Creating a marketing channel strategy that works
Some of the best channel partner programs work because vendors and partners are aligned on the benefits and requirements of how and when to use available MDF. To create a marketing channel strategy that works, you need to understand the barriers that you potentially face and how to overcome them.
Three of the biggest barriers that prevent partners from applying for MDF are:
1. Lack of awareness about available MDF
Awareness and education are crucial to the success of MDF programs. Often, you may not think to ask if there is MDF available, especially if you haven’t engaged in a similar program before. At the same time, your vendor account managers may not bring it up as they are often not marketers and, outside of pre-existing portal-driven programs, may not be sure what to suggest when it comes to partner marketing support. Vendor funds are a key component of marketing channel strategies, so ensure you ask if funds are available.
2. Services-led partners have a limited focus on vendor products
Understandably, many IT services firms don’t lead with product. Instead, they lead with a customer value proposition where a vendor product is only one part of the equation. Mistakenly, many channel partners can feel that vendor funding comes with an expectation that vendor logos will feature on every market-facing communication or that they will be required to run cookie-cutter, product-oriented campaigns that work against their service-led brand.
However, most vendors recognise that partners who lead with services need their brand to be the hero and are happy to find ways to support them that aren’t necessarily product or vendor-brand led. If this isn’t clear, you should check in with your vendors and engage with co-branded vendor marketing programs that will work best for your brand and your partnership.
3. Limited marketing capability or competency
Like many partners, particularly mid-tier firms, you may have grown your business successfully through word-of-mouth and direct sales efforts and haven’t needed to deploy more structured, continuous marketing programs to date. As a result, it’s possible you haven’t got the in-house expertise needed to commence marketing programs or to set a marketing strategy and focus on it as a key component of operations. That makes it hard to apply for vendor funds, because nearly every application asks for a marketing campaign or program outline, anticipated results, and a reasonably detailed execution plan.
Additionally, while the world moved quickly to embrace digital marketing as the primary way to secure new business, many partners still lack the technical expertise needed to create integrated digital marketing plans that encompass website optimisation, search engine optimisation (SEO), search engine marketing (SEM), LinkedIn organic and paid programs, email marketing, content creation including case studies, and other Google-based advertising programs. Unsurprisingly, mid-tier IT firms struggle to frame and deliver programs like these due to the technical expertise required and general B2B marketing experience needed. That can further stop partners from ever applying for funds, particularly if you’re already busy looking after existing clients.
How to deliver the best channel partner programs for your MDF success
Channel partners that work with a dedicated third-party provider that delivers marketing support services can significantly help streamline the MDF marketing process and boost marketing outcomes, particularly when MDF funds are involved.
Outsource has worked with IT vendors, distributors, and channel partners for many decades. Not only do we help partners secure vendor marketing funds, we also build and execute integrated campaigns on your behalf that meet vendor requirements. We also do the marketing heavy lifting for you, giving you access to our team of digital marketing experts, content writers, designers, and marketing consultants all as a managed service. This lets you build scale and velocity when it comes to bolstering brand awareness and new business pipelines without taking on the additional fixed costs in your business.
Outsource also builds curated programs for vendors who want to offer partners high-value, customised marketing solutions that meet their MDF requirements and support their partners in a way that partners want.
For more information on how Outsource can help you leverage vendor marketing funds to create the best channel partner program possible for your business, contact us today.
