Is unspent Partner Marketing Development Funds really a problem?

I hear this phrase over many years that millions of dollars of MDF are left on the table each Quarter due to Partners not spending it.  That really is not the problem.

The problem is, has been, and continues to be the poor ‘conversion of MDF $$ to Revenue’. This is one of areas I am focusing on in my roles coming back into the Channel.

Understanding the Channel Ecosystem

There is generally a good understanding of the players in the channel; The Vendor, The Distributor, The Partner, the Customer, and a wide host of consultancies and agencies helping all of the forementioned.

Whether centralized MDF is used to create Leads that are passed ‘To the Partner’ or ‘With the Partner’, there remains a consistent gap of high expectations and low revenue impact outcomes

The issue with current MDF Decision-making

The desire from the vendor to help drive revenue with their Partners is generally not in doubt.  What I am saying is in doubt is the decision-making model in which Vendors use.

There is an old adage ‘what gets measured gets managed’.  Measuring how much of the MDF is utilized each Quarter will continue to deliver the same poor results as before.

Imagine if the key metric for the Vendor MDF owner was ‘conversion of MDF $$ to Revenue’, this being the principal driver of awarding MDF funds over a 12-month period.

This would drive a lazer focus to working with the right partners, and most importantly maintaining engagement & commitment with those partners on a rolling 12-month cycle. Removing Partners that were not engaged & committed, promoting those who had the potential to be.

The role of data in MDF allocation

Market insight partner data, Vendor proprietary data, lead activity data would be integrated, this ‘active’ data is then layered by scoring driven by statistical evidence on the Partner’s engagement & commitment to the Vendor.   This scoring becomes the effective decision maker for MDF allocation each quarter.

Whilst AI can provide huge advances in the scoring of the active data in the above it does not provide the full picture.  It will show which Partners the Vendor needs to be investing in, where many of their gaps are, and the type of leads they should be developing for their funnel.  What it will not address is the challenges and immediate pressures the Partner has on their day-to-day to be able to embrace the desires of the Vendor.  To increase the ‘conversion of MDF $$ to Revenue’ the Data needs a Support Service to harvest this insight.

Building an active Partner data model

An active Partner data model with ‘leading’ indicators (rather than a passive data model with ‘lagging’ indicators, which are the indicators on most PRM and CRMs when analyzing Partner profiles) needs to be integrated with the Vendor Account Manager and 3rd party Concierge teams to be able to collect Partner insights on; challenges, pressures, limitations, skills, and deal progress.  This valuable data is quantified and feeds into the scoring for future MDF allocation to those Partners that are actively engaged & committed to the Vendor products.

The path to higher MDF conversion

In summary, to grow revenues in the channel, start the transition to measure ‘conversion of MDF $$ to Revenue’ by enabling a closed loop engagement & commitment stage into the MDF funding decision cycle, by doing this a vendor begins the process of addressing a few keys areas:

1.        The propensity to convert to revenue increases

2.        The value or the relationship between Vendor and Partner increases

3.        The gaps in Partner needs and abilities can be quantifiably scored and addressed

It is a journey to get to the key KPI of measuring ‘conversion of MDF $$ to Revenue’ but the benefit of expending the energy with the right partnership will provide significant benefits beyond just revenues.

Final thoughts

In the interest of transparency, my business is focused on helping businesses scale. ‘Conversion of MDF $$ to Revenue’ from the Market mapping I have completed is an area for scaling and I am now helping a number of businesses who work in the channel to maximize this opportunity.  One such business who are on an advanced path to solving the Data with an integrated Support Service is Sherpa they have the closed loop for Engagement & Commitment.