5 Ways to Optimize Your Market Development Funds (MDF)

By: Ellen Linkenhoker
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Market development funds, sometimes called marketing development funds or abbreviated to MDF, have long been a staple of successful channel partner programs. The funds can help partners leverage vendor content, messaging, branding and demand-generation initiatives in their local markets. 

Yet, in a worldwide channel survey by Zinifi, 60 percent of all market development funds go unused every quarter, resulting in lost opportunities for both partners and vendors. Let’s look at how you can avoid being part of that statistic and instead maximize the results of your market development fund program.

What Are Market Development Funds (MDF)?

Market development funds are financial resources allocated by an organization to its channel partners, usually resellers or distributors, to support their marketing and sales efforts. Market development funds are designed to help channel partners promote the brand’s products or services, expand their market reach and generate demand. 

Transforming Market Development Funds to Better Benefit Your Channel Partners & Brand

In recent years, the widespread adoption of channel partner ecosystems is requiring vendors to rethink their market development funds and how they’re used, considering funds’ role in the bigger picture of a channel’s success. 

For example, we’re hearing more clients switch to calling them business development funds instead of marketing development funds. Some are even splitting the funds into two initiatives: partner investment funds for long-term partner success objectives, like business skills and operational efficiencies, and market development funds for short-term objectives like driving more sales.

Related: How channel partner ecosystems can impact your partner programs

5 Ways to Transform Market Development Funds 

1. Make sure the process for using and claiming market development funds is partner-friendly.

Your partners are busy running their businesses and often work with several vendors at the same time. Remove any barriers to partners claiming market development funds and invest in teaching them how to get the most out of them. Regularly evaluate fund eligibility criteria for clarity, and don’t underestimate the value of consistent communication about the process.

2. Look for opportunities to market on behalf of partners.

Jay McBain, chief analyst at Canalys, reported that at least two-thirds of partners want brands to “just do it for me.” We get it: partners are being pulled in many directions and often lack resources for extra marketing tasks. Meanwhile, manufacturers and distributors have access to larger marketing teams. Consider providing marketing concierge services so it’s easier for partners to do business with your brand.

3. Provide channel marketing automation.

Campaigns should be pre-loaded into a channel marketing automation platform so partners can quickly execute campaigns. Platform should be sophisticated enough to provide content in local languages and allow for customization, including co-branding.

4. Focus on demand generation over brand awareness.

Market development fund initiatives focused on branding rarely produce good returns unless a large (or even huge) amount of funding is allocated. Instead of brand awareness, produce measurable results by prioritizing demand with specific sales or lead generation demand goals and defined time windows.

5. Create a regular webinar series for partners to generate leads.

Related to the previous entry, webinars are the most cost-effective way to generate demand while also building partner engagement with your brand. 

To get the most out of a webinar series:

  • Send a direct mailing that infuses gamification tactics, using behavioral science to drive attendance. This could be as simple as a small incentive to stay until the end or attend a certain amount of the series.
  • Break up recorded webinars into shorter, easily digestible videos that can be sent out and shared. Getting more use out of a recorded webinar helps cost efficiency, and most partner portals could benefit from fresh content.

Of course, there are many other ways to innovate market development fund use outside of our suggestions. As you consider your options, we suggest allocating more of your market development fund budget toward partner investment and setting aside the remainder as discretionary budget for other creative marketing programs.

What Makes Sense for Your Market Development Funds?

Every channel is unique, so there’s no one right way to use your market development funds. As you begin looking for immediate ways to shift and maximize their impact, spend some time thinking about where your partners are and what they need. Then, use some of the funds to address those issues. When done well, your partners will know you have their best interests in mind, and they will sell their best for you in return. 

Remember that market development fund programs need to evolve and change over time—they’re never a one-and-done program. The only way you can know how and when to make adjustments is to measure the results of what you’re currently doing.

I urge you to consider how, why and where you spend these dollars. As you analyze every other part of your channel partner program for impact to the bottom line, don’t leave marketing development funds out.

When brands offer partners a simple way to use and claim marketing development funds, partners become more committed to implementing effective marketing activities that result in increased sales.

Gain a new understanding of channel partner ecosystems and how they impact partner marketing initiatives with the Introduction to Channel Partner Ecosystems white paper.

White Paper: Learn How to Map Your Channel Partner Ecosystem
Ellen Linkenhoker
Ellen Linkenhoker

Ellen Linkenhoker is the Channel Partner Solutions Lead for ITA Group. She drives the insights, strategy and evolution of the organization’s channel solution while offering advisement for client engagement and incentive programs. She’s worked as a practitioner in technology, software and service companies as part of the channel and as a vendor. She is an award-winning marketer and navigates all things channel, marketing, incentives and engagement, including pioneering thought leadership on channel partner ecosystems and the partner experience.