The Challenges Of Market Development Funds

Nehul Goradia,  Co-Founder & Principal Enabler at Enabler ONE talks about the various challenges the technology industry faces today with the successful execution of Market Development Funds (MDF)-based channel marketing programs

Vendors often take resort to Marketing Development Funds (MDF) to help their channel partners in their marketing efforts.

MDF-based channel marketing programs provide funding, resources, and support to channel partners including resellers, VARs or distributors, enabling them to effectively market and sell/co-sell their products and services.

The engagements with the several global technology vendors over the years have helped us in gaining an insight into the most common challenges in managing an MDF-based channel marketing program.

Over the years, I had the prevelige of engaging with several technology vendors and enable them roll out their MDF based channel marketing initiatives. These engagements have provided quite an insight into the several challenges vendors face in managing their MDF-based channel marketing program. Some of the most the most common challenges are:

Lack of Awareness: It is imperative for the vendors to invest in communication and education efforts to ensure that their channel partners are aware of the MDF program. This is so because some channel partners may not be aware of the MDF program or how to access it limiting its effectiveness.

Limited Funds: Since channel partners have to contend with limited funds that generally characterize MDF programs, they may not be able to access the level of support they need to be successful.  Hence it is incumbent on the Vendors to assess their MDF budget and allocate funds effectively to ensure that their channel partners have the resources they need to succeed.

Planning: Deciding what not to do becomes extremely critical when comes to planning on how to use the provided MDF fund. Customer or partner events constitute a huge aspect of most marketing strategies in the Middle East. Further with the advance in Martech, #DigitalMarketing, is also becoming huge. However, in our opinion Events or Digital campaigns may not be the right activities at all times or for all partners or even all products/solutions.

It is extremely critical to allocate MDF funds to the right initiatives and ensure that the right channel partners are receiving support. It becomes necessary for the vendors to develop a strategic approach that helps in identifying what activity will help achieve the desired goal and also helping drive growth and success to their channel partners.

Complicated Processes: One of the most common refrains of most channel partners is that the MDF processes of most vendors is highly complicated making it difficult for them to avail themselves of such a significant benefit. It is in the essential fitness of things that vendors simplify their MDF processes to enable partners to take advantage of such a significant benefit.

Partner Compliance: Partner Compliance is necessary for the success of any MDF program. In order to ensure compliance it becomes necessary for the vendors to ensure that channel partners are following the guidelines and rules of the MDF program. Clear guidelines and policies around the use of MDF funds should be established by the vendors.

Lack of Right Skills: Allocating MDF funds to partners is a great motivational measure, but not all partners have the right skill sets internally to execute marketing campaigns.Most small & medium partners may not even have a marketing resource available internally. Just sharing funds and pre-packaged co-brandable assets is nice, but if the partners are unable to exploit the value being provided then attaining any desirable result will be highly difficult. Therefore, it is important for vendors to see if additional support or guidance can be provided to such partners to help them capitalize on these benefits.

Measuring ROI: One of the challenges of MDF-based channel marketing is measuring the return on investment (ROI) of the program. Vendors need to see that their channel partners are getting tangible results from their marketing efforts and the MDF funds are being used effectively. Tools like metrics and analytics should be used to track the performance of MDF-funded initiatives and assess their effectiveness.

While MDF-based channel marketing is an intelligent approach to gain significant benefits, developing a strategic approach to MDF management should stand high in vendors’ scheme of things. There is a need to invest in communication and education efforts. Processes should be simplified coupled with the allocation of additional support and guidance alongwith the funds. Tools like metrics and analytics to track the performance of MDF-funded initiatives should be used. By effectively addressing these challenges, vendors are in position of optimizing the impact of their MDF-based channel marketing efforts and expedite market penetration and growth for their business.