Using Market Development Funds to Improve Partner Performance

By John Panaccione Posted on 6/15/15 7:30 AM

Using Market Development Funds to Improve Partner PerformanceAny company with sales partners should probably also have Market Development Funds (MDFs) at work. MDF is money set aside in the budget for the sole purpose of helping to improve the results you get from those partners. MDF programs come in several forms - cash subsidies to partners to subsidize their specific marketing efforts; rebates; discounts to push certain products over others; free products to help prime the sales pump; and other mechanisms to promote sales.  

In many industries with indirect sales partners there is an expectation that some MDF support is available to me as sales partner if I’m going to sell your products.  However, so long as you are smart about which form of MDF funding is right for you, you should enjoy a healthy return on your investment in the program. Regardless of which type of MDF program you put in place, here are some essential ways to manage the program.

Incentivize Your Partners

Another fairly obvious use of your MDF is to make sure your program is part of a broader program to support and incentivize your partners.

Most of us would like to believe that sales partners will simply go out there and try to create as much revenue as possible - for us and only us.  In reality, though, this isn’t always the case. In many industries, sales partners sell competing brands - take the IT hardware industry as an example. These sales partners only have so much sales bandwidth.  What do you expect will happen when another competitive vendor they sell for offers them more attractive benefits through their MDF program over yours?

Spend some time thinking about what makes sense as an incentive program and then use some of your MDF to ensure your business partners wake up thinking of ways they can sell for you.  Remember to that MDF programs need to evolve and change over time - they’re never a once-and-done program.  The only way you can know how and when to make adjustments is to measure the results of what you’re doing.  

READ MORE: The Best Way to Use Your Market Development Funds

Talk to Your Business Partners!

Every industry is going to be different. There are countless ways you could spend your MDF and although the options above are solid, you’ll be missing out on some pretty good ideas if you don’t think specifically about your industry.

Fortunately, you won’t lack insights if you involve your business partners in on the conversation. SImply ask them what would work best in terms of MDF support for their business.  A rebate program may work better for Partner A, while a discount approach may work better for Partner B.  A one-size-fits-all approach may be easier to design but in practice, may not be equally impactful across your sales partners.  

As you can imagine, if you ask them, sales partners won’t lack great ideas on how to spend your money. Regardless, listen to their ideas but then attach measurable Key Performance Indicators (KPIs) to any of their ideas to ensure you’ll actually get a return on them too and so you can hold them accountable for applying your MDF funds to their idea and then seeing better results. Market development programs that work always  start with strong input from channel partners on what will work best for them.  

Invest in Software

If you’re serious enough about your business partners to actively participate in an MDF program, today you should be leveraging software specifically for tieing the investment to the impact on sales partner performance.  It used to be a black hole investment. Today, software makes working with business partners easier, and one aspect of specialized partner relationship management software is to correlate investments in MDF to impact and results - by partner.

READ MORE: MDF Funds: Are You Getting the Most Bang for Your Buck?

Market development programs are a vital way of getting more from your business partners. Just be sure you take time considering which form of MDF will work best and then make sure you can monitor and measure the impact.

Download CMO 2015 Guide to Managing Sales Channels Partners mdf_funds_partner

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