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Relayware Partner Relationship Management

Metrics You Might Miss: MDF Utilization

Posted on April 9, 2014 by Chris Bucholtz

Incentives are tough to get right, and market development funds (MDF) may be the difficult aspect of your incentives to perfect. Not only is it tough to track the impact of MDF allocations, it can be tough to find partners in which to invest MDF dollars.

A study done in 2012 by CompTIA and Baptie & Company indicated that only 21 percent of companies were able to allocate all of their MDF and co-op funds to their partners; 10 percent of those vendors said that 21 percent or more of their funds went unclaimed. Forrester Research was even more pessimistic: in research published in 2012, they estimated that as much as 60 percent of MDF funds go unspent by vendors.

That means that many vendors see the value in MDF and budget for it, but then lack insight into their partners to use that money. It also means that partners may be unaware of how to apply for those dollars via the partner portal.

This lost opportunity is often recognized late – so late, in fact, that many partners complained in an IDC study that often vendors proactively offer MDF late in the quarter, when marketers realize that they’re in a “use it or lose it” situation with their MDF budgets. When partners get money that late, it’s nearly impossible to get a return on it before the end of the quarter, hence the impression that the partner has utilized those funds poorly.

This set of misperceptions and assumptions makes MDF utilization a great area to examine using data. Tracking MDF allocation through automation allows vendors to examine how much of their MDF budget is being allocated, and monitor it regularly, meaning fewer quarters where marketers make a last-minute push to allocate MDF in order to preserve their own budgets. That also means that more MDF is distributed to partners, which ought to result in better results and higher revenues.

Then, you can correlate partner performance to MDF, too – not just the utilization rates of what’s been allocated, but you can correlate partner performance to amount spent and rate of expenditure of MDF by each partner. That means better allocation of funds to the right partners as time progresses.

To learn more about incentives and how to manage them, check out our whitepaper “Motivating Channel Partners in the Cloud Era: Why Process and PRM are More Critical than Ever.” http://www.relayware.com/motivating-channel-partners/