6 min read

Reasons Why Channel Partners Don't Utilize Market Development Funds

Posted By
Emily Buchan

Have you ever bought something in bulk—maybe a gigantic tub of cheese puffs—thinking, “I can eat all these no problem,” only to throw out half of them because they got stale? Channel vendors are finding the same problem with their market development funding programs: around 50% of these funds are not used. When roughly $50 billion are put into MDF and co-op programs each year, that’s billions of dollars channel partners aren’t tapping into.

Why Aren’t Partners Using MDF programs?

Market development funds (MDF) are resources allocated by a vendor for channel partners to launch local marketing campaigns in order to increase awareness at the local level of a larger brand. MarCommand reported that 88% of businesses believed launching local marketing campaigns increased brand awareness and gave them a competitive advantage. So what’s stopping channel partners from using these funds?

Complicated Application Process

Applying for MDF programs is no easy feat. While it’s fair vendors don’t want to just hand out large chunks of cash and they want proof the money will be spent on its intended purpose, these processes and policies make the process time-consuming for smaller channel partners. Often times, MDF that is spent is given to larger channel partners who have been through the process before or have a stronger relationship with the vendor—or both.

High Cost and Low Incentive

Some MDF programs require channel partners to invest their own money into campaigns first and seek reimbursement from the vendor—which can take 90+ days. This is especially challenging for smaller partners who need the marketing support of MDF programs, but they also need those finances for other operations. If they can’t go without the money, they won’t invest in MDF programs.

Additionally, there isn’t much incentive for a partner to market for another business. Without incentive programs, or incentive programs that partners find enticing, they won’t want to shell out the money to market for your business.

Lack of Vendor Resources

A lot of channel partners do not have the marketing staff or expertise to take a campaign and be successful with it. B2B marketing techniques relied on telemarketing and event running over the last few decades, and partners haven’t adjusted to digital marketing techniques. A campaign acquired through an MDF program might be designed to work well, but if vendors aren’t supplying the resources to partners to help run it, the design is lost. This would be like giving a sports car to a young child: it might be a great car, but its use is lost on someone without a license or knowledge to drive it.

Even if a partner has enrolled in an MDF program before, despite the lengthy application process and paying out-of-pocket at first for the materials, and they didn’t see the results they were supposed to—why would they enroll again?

Getting More Partners Enrolled

Channel partner engagement is typically pretty low. Smaller partners don’t have the resources to utilize MDF programs as they currently stand, so how can vendors alter programs to increase engagement?

Communicate Clear Expectations

No one likes to deal with policy and regulation and red tape, but we do need them. MDF are your fund as the channel manager after all; it’s important to protect against misuse of them. Set and communicate your expectations for what MDF are for and how they’re to be used with your channel partners. If they know where you’re coming from, your partners might understand the reason for the process.

Revamp Incentive Programs

If your current incentive programs don’t seem to be enough to entice partners into your MDF program (or if you don’t have one yet), consider changing them up. Since smaller channel partners might be short on funds to devote to a MDF program, discounting product in exchange for buying into the program (to be reimbursed later, of course) would help them free up their own funding to get started with an MDF campaign.

Provide Resources for Partners

MDF are your funds, that means when you spend them, you want to make sure it’s spent on something that works. Instead of just giving channel partners the marketing materials and hoping for the best, provide them with a source to learn how to use them. A marketing platform that is easy to use and allows partners to access and execute campaigns should help boost MDF morale. Remember, partners might not have the marketing resources in house to effectively execute a campaign on their own, and any educational material to help them succeed will help you succeed.

Channel Partners are like customers in that their success selling your products and services will reflect on your overall success. MDF sounds great in theory—funding to help partner marketing efforts on your behalf—but if the right program isn’t there to support your partners, then the funds go unspent.