Nearly $10 billion is spent each year in Channel MDF (Market Development Funds) and Co-op Marketing Funds. However, MDF and Co-op programs continue to struggle to generate measurable ROI, leaving channel executives feeling as though they are throwing money away.
Five Reasons Why MDF & Co-op Programs are Broken
1) Lack of Quantifiable Planning:
MDF and Co-op investments are not paired with quantifiable outcome forecasts to estimate leads generated, conversion to opportunities, proposals, and closed revenue.
2) Missing Partner Value Proposition:
Partners often view MDF Co-op programs to not be worth the hassle due to the requirements to deliver leads and uncertainty of vendor cooperative payments.
3) Lack of Clear Path to Partner Profitability:
Lots of partners don’t understand exactly how they’ll make money and are doubtful to invest money and time in brand.
4) Distance Between Spend and Return:
With long sales-cycles, there is frequently a gap between spend and return leading to a more difficult tracking process for MDF/Co-op ROI.
5) Too much Spending on Top of the Sales Funnel and Not Enough on Lower Half:
Partners tend to spend most of their marketing, MDF, and co-op funds on lead/opportunity generation, they have a difficult time pushing these deals through to close and into revenue.
How to Fix Your Ailing MDF/ Co-op Channel Program
Start by setting goals for your MDF/Co-op program that align with each participant’s priorities. Below are some examples of program goals that align with the individual interests:
Measurable ROI
MDF/ Co-op Sponsoring Vendor Program Goals. These programs invest in channel demand and revenue delivery programs where partners have a stake and investment in their success
Sustained Profitability
Partner MDF/ Co-op Program Participant Goals. Partners will confidently invest when they have confidence, they can build a profitable growth business with a brand. An MDF / Co-op program must keep both participants needs in mind if it is going to be successful. Partners don’t want to bother to participate in an MDF / Co-op program unless they are confident that they can build a profitable business, at the same time vendors want to put controls in place to make sure they are generating a return on their investment.
How to Meet Vendor ROI Goals and Partner Profitability Goals
There are 5 characteristics that will make your program and your brand more attractive to your partners, while allowing you to measure and report the success and ROI of your MDF / Co-op investments.
1) Partner Profitability Modelling:
Start by helping your partners understand how they can make more money with their brand. If they see a clear path to profitability, they will be more willing to give the vendor their time, staff, and resources to help grow their business.
2) Partner Marketing Investment and Impact Forecasting Modelling:
Providing partners with the ability to model marketing expenses will give them much more confidence in investing in your business.
3) Forecasted Direct and Derived MDF/ Co-op Impact by Partner:
An ROI forecast for the vendor is a natural byproduct of steps one and two.
4) Forecasted Direct and Derived MDF/ Co-op Impact Across all Partners:
These same partner-level forecasts can be consolidated in partner network forecasts for monitoring overall program performance reporting.
5) Ongoing Performance-to-Plan Measurement and Reporting:
Bi-directional integration with CRM systems (e.g., Salesforce.com) gives vendors and partners the ability to instantly monitor their performance-to-plan, as well as measure marketing’s contribution to revenue.
Read full article at: http://www.successfulchannels.com/5-reasons-mdf-co-op-programs-broken-fix-roi/
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