Bedeutung und effizientes Verwaltung des immer knappen Budgets
Market Development Funds (MDFs)
What are Market Development Funds?
Market Development Funds (MDFs) are a resource that a vendor grants to its indirect sales channel partners to help the channel with sales and marketing programs. This resource has been proven to increase sales through the channel but must be deployed intelligently. What is key here is having a way of easily measuring the ROI of your MDF program.
What exactly are they used for?
- Increase Local Awareness of their Brands – this can be used for purchasing radio spots, direct mail campaigns, funding webinars, purchasing booth space at a trade show, launching a marketing event and/or extraordinary investments (i.e. development of specialized support tools)
- Defray Costs – this can be costs of sales lead list rentals or even to support telemarketing campaigns
Because the brand manufacturer/vendor benefits when its partners sell more of its products, it is clearly in the manufacturer’s best interest to support its partners’/clients’ marketing efforts.
Steps to developing a strategic Market Development Fund
1. Think clearly about strategic partners – Before beginning, clearly define the specific partner type your program and sales model are targeting. While you may be focused on smaller businesses, for example, realize that various partners within that market will be at different levels of maturity in terms of digital marketing capabilities, training capabilities and sales strategies.
2. Evaluate financial decisions – It is clear that when your partners succeed, you succeed, and you want them to have effective digital marketing campaigns, advanced training and sales enablement tools that help them close the deal. But the entire financial burden is not yours alone to bear. The goal isn’t to become your partners’ marketing department, but rather to give them an assist in their own marketing efforts. Most vendors offer MDF funding of about 25-50% of the actual cost of a given marketing or sales activity, depending on the activity’s estimated ROI.
3. Make a plan of action – Once you’ve identified your internal goals, templates and expected budget, turn to your partners. Along with revenue goals, sales metrics and marketing strategies, as well as desired results, identify not only realistic sales targets but also the gaps the partner needs to bridge in order to reach those targets. Together with your partner, set sales goals and ensure a smooth delivery of MDF elements through your CRM to facilitate the agreed-upon strategy. They will also define the expected sales funnel impact as a result of MDF investment.
4. Measure the results – When measuring success, look at quarterly metrics rather than annual. A quarter is enough time in which to gauge whether your MDF program is working, and it allows time to correct anything that might not be working.
Key takeaways for smart MDF decisions
- The task of obtaining MDF requires time and effort, and often manufacturers allocated limited funds, so this marketing must be targeted and focused on a small number of important areas – those that have the highest potential to make a significant revenue contribution, and every dollar is well spent.
- You need an internal team to monitor and manage your program. Ideally, you’ll have separate marketing functions for your direct and indirect sales channels; dedicated channel account managers (CAMs) that work with partners to close sales.
- A tracking system is necessary for monitoring marketing’s contribution to revenue. This can be a comprehensive partner management solution (Partner Relationship Management System, PRM for short) or a dedicated tool for MDF management.Those systems can provide real-time data to manufacturers on the performance of their partners. For partners, it’s a portal through which all their interactions with a manufacturer take place. Because communication through the most effective software can be adjusted to be role-based, where partners will receive messages and data about market development funds for which they qualify and will be easily able to apply for them through their portal. Manufacturers, meanwhile, can use the data available through the system to plan MDF campaigns and measure their effectiveness.
How are you using MDFs in your indirect sales channel? Which kind of tools and systems help you to keep track about all your activities and your budget? What are the most important issues for you? We would be happy to discuss with you.
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