Like many professions, marketing has many acronyms that can make your head spin. RFP, ROI, KPI, YoY — the list goes on. (And let’s not forget MSP, VAR, and SPIFF!)
Among these acronyms, one that frequently surfaces is MDF.
In this post, we’ll unravel the mystery of MDF marketing and show you how it can fuel your revenue growth through effective channel partner collaboration.
Understanding Market Development Funds
Market development funds are funds allocated by companies that sell through intermediaries like agents, dealers, and distributors. These funds empower local partners to implement sales and marketing programs that drive both product sales and increase brand awareness at the local level.
Like co-op funds, MDF is crucial for empowering partners to achieve these goals. For example, when a company launches a new product, MDF enables channel partners to tap into their regional customer base and generate sales in that specific market. But let’s dive deeper into the intricacies.
Examples of MDF Marketing
In practice, MDF marketing encompasses a wide range of initiatives. Channel partners leverage MDF funds to develop marketing materials such as email campaigns, direct mailings, webinars, and radio spots. MDF covers expenses associated with planning client-facing events like lunch-and-learn sessions or participating in tradeshows and conferences. Whether it’s admission fees, travel expenses, or virtual event costs, MDF funds support these crucial marketing activities.
Companies often tie MDF allocation to performance to ensure measurable results, requiring partners to demonstrate how their initiatives will drive demand generation and sales. It’s important to note that MDF funds aren’t for subsidizing salaries or covering lunch expenses.
Expanding the Definition of MDF
MDF funds aren’t limited to monetary resources. Companies can also support their channel partners with knowledge-based MDF, which includes sales leads, direct mailers, and HTML marketing materials — offering financial incentives to partners who have demonstrated exceptional revenue performance and achieved a particular status within the channel partner program. The goal is to empower partners who contribute to the vendor’s business growth. Demonstrate your value, and corporate will be more than willing to invest in your success.
Contrasting Co-Op and Market Development Funds
While co-op funds and MDF are sometimes used interchangeably due to their similarities, it’s crucial to understand their critical differences.
- Allocation and timing: Co-op funds are provided to partners after sales as retroactive reimbursement. On the other hand, MDF funds are allocated to partners before their sales and marketing initiatives begin, allowing for proactive planning and execution.
- Ownership: Co-op funds belong to the channel partners once granted, as they are accrued based on prior sales. In contrast, MDF funds are allocated at the vendor’s discretion, depending on sales and demand generation.
- Duration: Co-op funds are typically for long-term marketing activities. MDF funds often support shorter-term initiatives like webinars or tradeshow attendance.
Finding the Right Fit: Co-Op, MDF, or Both?
Companies don’t necessarily have to choose between co-op and MDF funds. They can provide MDF to a select group of partners with high sales potential while offering co-op funds to a broader range of partners based on a percentage of their future sales. This comprehensive approach ensures both targeted investment and broader support for partners.
Overcoming MDF Underutilization
Interestingly, both MDF and co-op funds are often underutilized. Many companies struggle to educate their partners about their available MDF and co-op funds, while outdated fund management programs and complex navigation discourage usage. As a result, a significant portion of these funds remains unused. In fact, about 60% of MDF dollars go unspent.
The Power of MDF Program Management
Effective MDF program management is vital to achieving optimal results. These programs help vendors and partners increase sales, drive demand generation, and track spending while measuring the impact of marketing initiatives. By carefully allocating funds and monitoring results, companies can maximize the return on their MDF investments and gather valuable insights to shape future programs.
Discover the Right MDF Strategy for Your Brand
If you’re curious to explore whether MDF program marketing fits your brand, reach out to BrandMuscle. Our expertise in building successful MDF programs and leveraging our TCMA platform can help you activate your brand locally. Unleash the potential of MDF marketing, and let’s drive growth together.