Picture this: You take your niece and nephew to the candy store and tell them to buy whatever they want. You’ll reimburse them up to $50 each.
One of them leaves the store with a couple lollipops and some gummy bears totaling $10.
The other doesn’t spend a dime and leaves empty-handed.
Why did they spend so little?
It doesn’t make sense… until you remember you told them they had to fill out paperwork, keep their receipts, and could only buy certain kinds of candy.
This is basically what’s happening with your affiliates.
You give them co-op funds to spend on their local marketing, yet they leave these dollars on the table. But why?
The harsh reality is that your co-op funds are useless unless your local partners actually invest them.
To understand why partners don’t spend and what you can do to turn the tide, we surveyed 3,192 local affiliates and analyzed 146,832 data points to bring you The 2023 State of Local Marketing.
Dive into The Co-Op Funds Report to get all the data, or read on to get a taste of the insights.
Affiliates Neglect Co-Op Funds
The data shows that 64% of affiliates leave co-op funds on the table.
That means only 36% of partners use these funds to their full advantage.
When your partners neglect their co-op funds, these dollars collect dust instead of driving marketing outcomes. As a result, you miss crucial opportunities to connect with your target audience and generate revenue at the local level.
You should strive to increase affiliate co-op spending to at least 90%. In other words, your partners should be going all in at the candy store. But to achieve this goal, you must first determine what’s holding your partners back.
Why Don’t Local Partners Spend Marketing Funds?
There are obstacles preventing your affiliates from using their co-op dollars. The first step to clearing these roadblocks to partner spending is learning what they are.
Here are the three main reasons affiliates don’t use their co-op funds.
They Find Fund Use Difficult
71% of partners experience difficulty using co-op funds.
The culprit? Your co-op program.
Namely, the rules, processes, and approval workflows associated with it.
If your program makes it too hard for affiliates to access their marketing dollars, they’ll disregard them. With all the responsibilities of running a local business on their plates, your partners don’t have time to troubleshoot complex co-op programs — so if things get complicated, they’ll bow out.
Common co-op hurdles include:
- Fund inaccessibility: If funds aren’t visible and easily accessible to your partners, they’ll struggle to find (and use) them.
- Complex processes: Claims submission processes with too many complicated rules, requirements, and layers of approval stand in the way of your partners’ co-op spending.
- Inconsistent guidelines: If your co-op rules vary across your channel partner ecosystem, your partners may become confused, wondering which ones apply to them.
When processes are complex or time-consuming, just like that second kid in the candy store, your affiliates will walk away from “free” money.
They Don’t Think It’s Worth Their Time
Your partners aren’t marketers, which is why many of them don’t understand the power of co-op funds. Affiliates who don’t think investing their marketing dollars is worth the time and effort aren’t going to try.
If your partners don’t think using co-op funds is worthwhile, the reason may be that the work isn’t worth the reward. For example, brands often go off the documentation deep end, requiring affiliates to provide excessive records, forms, and other paperwork to receive co-op reimbursement. If your partners have to jump through too many hoops to receive their marketing dollars, they’ll leave funds untouched.
Another reason partners don’t think marketing funds are worth their time is that their programs are underfunded. If you only offer your affiliates a few hundred dollars in co-op, they likely won’t be able to justify going through the motions of submitting a claim for such little payout.
If the juice isn’t worth the squeeze, your partners will just decide they aren’t thirsty.
Their Needs Aren’t Being Met
Even if your co-op program is user-friendly, it may not meet your partners’ unique needs.
Every affiliate is different, so offering them all the same program features isn’t the best move. For example, your high spenders are looking for features that will make their local marketing more efficient, while low spenders need marketing guidance.
The moral of the story: If you don’t offer tailored co-op programs, you’re not doing you or your affiliates any favors.
Want to Increase Partner Spending?
Now that you know why partners don’t spend their co-op funds, it’s time to do something about it. By removing friction, your affiliates will feel like kids in a candy store.
You can find all the insights in The 2023 State of Local Marketing. Read the full report to take the first step toward boosting partner spending and achieving greater marketing outcomes. You’ll also learn the secret to how partners can drive 46% more revenue.
And don’t forget to subscribe to The State of Local Marketing newsletter to be the first to get the latest data each month!
