When losing co-op money works for you, why change?
You know the deal: Managing a channel marketing program is a hard, thankless job. Numerous forces work against you. Big programs with small budgets and few resources are met with disdain. Participants complain about program stagnation, lack of transparency, slow reimbursements, confusing rules, and the fact that you’re managing these complex processes with — gasp — excel spreadsheets. Or worse: yellow stickies! But channel programs generate up to 80% of total revenue for some companies. Ignoring channel marketing programs’ ability to generate that kind of revenue is an expensive decision, because it means missing lucrative opportunities and leaving money on the table.
Companies like BrandMuscle can help you. But you’ve already talked yourself out of spending money on the proven software and services that manage funding programs and local marketing execution to help channel partners sell more products, and you’ve postponed scheduling a demo.
Maybe you prefer to wait until the last minute to put gas in your car, too, because you enjoy the rush of not knowing when you’ll stall on the side of the road? It’s the run-out-of-gas game, and it’s exciting to barely manage to coast into the gas station on empty. Maybe you also put off fixing the little crack in your windshield for so long that the crack now covers the entire windshield and you can barely drive 5mph over a speedbump without fear of the glass shattering? You told yourself you’d fix it eventually. Avoiding small upfront costs has only incurred larger costs in the long run, but here you are again.
All the successful national businesses whose local marketing drives revenue know that you have to spend money to make money. But hey, don’t let us tell you how to spend your money. Maybe you like the sound of raindrops dripping into buckets beneath the hole in your kitchen ceiling? And you’d rather keep scraping by with nearly 50% of your channel funds going to waste every year. Don’t let us stop you!
At BrandMuscle, our mission is to help brands execute optimized channel programs that drive incremental revenue and improve partner advocacy. When we work with clients, we take a holistic approach to their channel program, to assess how all the pieces work together to help local partners sell more products.
As you avoid looking for a co-op or marketing fund platform from a proven company like BrandMuscle, why don’t we help you keep talking yourself out of it by giving you five reasons NOT to call us for a demo? Since you’re trying to avoid spending money, consider this a gift, free of charge.
1. Your Co-op Funds or MDF Program Is Managed in Spreadsheets — And That’s Good Enough
Unless your small program only has a few dealers, using spreadsheets to manage your funding programs means you’re a glutton for punishment. Annual accruals and few eligibility rules make for fewer claims and little auditing. Excel formulas can help automate some of the accounting and, with fewer partners or smaller funds, quick reimbursement may not be as important.
Programs with larger funds, many partners, and more eligibility requirements can benefit from a fund management platform. Creating resource efficiencies and accurate accounting may offset the cost of the platform. In the best scenarios, improved fund experiences actually increase usage and drive incremental revenue for the partner and the brand, improving the overall program ROI. But despite those clear benefits, maybe companies have gotten so used to using spreadsheets that the prospect of changing feels daunting, and it’s easier to keep doing what you’re doing than to revitalize the process. Change is hard. Losing money is easy.
2. The Revenue From the Channel Marketing Program Is Less Than 10% of Company Revenue
For many companies, budget allocation is tied directly to the impact on revenue. Co-op and MDF programs are no different. They can be perceived as very expensive, especially if they are not generating significant revenue for the company. The available marketing funds are marketing expenses, and any additional budget may be hard to obtain above and beyond the actual funds. The return on the program may not appear positive or enough to support additional tools or resources.
Historically, co-op programs have been managed by finance or procurement teams. They were viewed as operational expenses and budgets did not extend beyond the funds available. As channel programs moved into the marketing department as an additional marketing channel, the view on the programs did not necessarily change. They continue to be treated as a big black hole in the marketing budget.
One way that programs can be successful is by changing the view of the channel program and funds. When we work with clients, we talk about funds as working media budgets in local markets. The more efficiently you use those dollars, and the better you convert shoppers to customers, the better the ROI on the program, and the more revenue your company generates. Marketing contributes to revenue. Channel programs should be viewed as a contributor to revenue with a strong ROI. Changing entrenched views takes great effort, though, and you’ve already got enough to do. Reframing program value is a lot of work, no matter how lucrative a different perspective will be, and you just can’t muster the energy to work against that kind of history. So you keep doing what you’ve always done, and you accept lower ROI as part of the process. We’re sorry to hear that. You do you.
3. You Value Partners’ Opinions Over Results
“We are on our third generation of owners for many of our dealers.”
“Our dealers are not tech savvy and just want to do what they’ve always done.”
“Our dealers like to work with their buddy down the street. We won’t be able to get them to do anything new.”
Sound familiar? Is this the group you work with every day through the channel program? Your company has been around for a while and has a history with dealers and communities, and rocking the boat is not an option. Complaining partners tend to make a lot of noise. We are all guilty of getting comfortable in our ways and change can be hard. Many channel managers don’t want to deal with the ramifications of change for their partners. Maintaining the status quo means getting by without much trouble.
That said, consumer behaviors have changed and your company still needs to make money. Channel marketing programs and funds, in particular, are investments in local marketing. Supporting the customer journey through to purchase and helping navigate that last mile into a partner’s location and up to the register is what those dollars are meant to support. Reimbursing dollars spent inefficiently at the same rate as those that are spent effectively does not make financial sense and will impact your ability to convert shoppers to customers.
4. Your Fund Utilization and Partner Participation Are High
Want to come work for us? Willing to share your secrets? What are you doing reading this article? You already have it figured out.
Unless your technology is being sunset or you’re about to lose your entire channel marketing team, you are probably already meeting all your channel goals. Nice work.
Fund utilization is one of the biggest challenges for channel programs. An estimated $70 billion in funds are left unused every year. We see an average of 50% fund usage for clients starting out with us. Those are marketing dollars that are not driving awareness or traffic in-store to buy your product. Leveraging technology to manage fund programs, automate claims, and proactively recommend usage are all ways we help clients improve utilization in their programs.
Maybe your fund utilization and partner participation aren’t really that high, they’re just high enough, so you’d rather leave it at adequate than excellent.
5. You Like to Give Money Away
Can we come work for you?
In reality, this is how some programs work. Channel partners get a monthly, quarterly, or annual check for just selling some products. No rules. No eligibility requirements. No real oversight. Slap a logo on the building, sell some stuff, and collect the money. If this is driving revenue for your company, why stop? I’m sure your partners love it.
The problem is that when we do an analysis on these types of programs, the performance and partner sentiments are not good. Clients have no idea how funds are getting spent. They could be paying for media, or office suppliers, or kid’s braces. There is no insight into what is or is not driving sales for partners. And partners are frustrated because they feel the program is not offering solutions or services to help them drive more business. That monthly check is lost in the bank bag, and the brand does not get any type of goodwill for those fund checks.
When people say “it’s raining money,” they don’t tell you that not all of the bills get captured. Too much of that ends up evaporating or seeping into the ground. Maybe your business is happy to keep these inefficiencies so you can avoid changing your old habits. That’s unfortunate, but that’s fine.
Give Us a Call. Or Don’t?
Losing money is easy. Small businesses stay small for a reason, and inefficiencies hold them back every year. If we could collect half the money that risk-averse companies leave on the proverbial table, you would double your ROI. That’s our job. We do that every day for Fortune 500 companies and small businesses alike. If you change your mind, call us to set up a demo. If not, we trust you have your five reasons.