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Relayware Partner Relationship Management

Lost in the Fog: How a Lack of Visibility Hurts vendor MDF Efforts

Posted on February 5, 2014 by Chris Bucholtz

In study after study of customer service, a pattern of diverging opinions emerges – namely, that companies think they deliver great service, while customers think their service is terrible. Smart companies listen to their customers, put their assumptions aside and work to find areas to improve. Not-so-smart companies keep plowing ahead assuming all is well, to their great peril.

What these businesses lack is visibility into their own processes and what their customers’ experiences look like. Gaining that visibility is not impossible, but it does require an investment in thought, manpower and money. However, it’s an investment that results in increased loyalty and, over time, higher revenues.

A lack of visibility is one of the key handicaps for channel programs, too – especially when it comes to incentive programs. When MDF or co-op funding is in play, managers often assign funds based on gut feelings and rudimentary analysis, and chart the effectiveness of these funds in a similar way. The result is a divergent view of MDF and co-op funds, which was borne out by a CompTIA/Baptie & Company study released last year.

One of the questions asked of vendors and partners was this: what percentage of your sales was received in part as a result of MDF and co-op funds? The difference in answers was surprising.

A third of partners said that between five and 20 percent of sales came as a result of MDF or co-op funds. For vendors, the numbers were dramatically different: just nine percent said that MDF had a role in five percent or more of sales.

About half of all vendors – 52 percent – said MDF had an impact on one to four percent of sales. For partners, that number was just 22 percent.

Why are the numbers different? Well part of it can be ascribed to deal size, but part of it is that vendors and partners have different visibility into how incentives impact sales. Unfortunately, most vendors’ visibility stops when the money is provided to the partner. In many more companies, visibility stops even before that, which is indicated by the fact that 79 percent of vendors have MDF and co-op funds that go unclaimed – those vendors simply don’t know where to steer the monies in their budgets. (This causes another frustration for partners: MDF money offered up very late in a quarter by vendors whose marketing departments need to “use it or lose it.” Unfortunately, it’s usually too late for the partners to do anything effective with it that has an impact on that quarter.)

Cutting through the fog requires a holistic method of managing not just the funds but the data on how effective they are at helping partners sell, and then evaluating which partners are best at using those funds. A home-grown approach is bound to have holes, which is why a modern, holistic channel management application is the secret to making the most of your MDF dollars.

For more information download our whitepaper- Motivating Channel Partners in the Cloud Era: Why Process and PRM are More Critical than Ever  or for a closer examination of the issues that affect partner loyalty and engagement, don't miss our webinar on February 20 Register to attend here.  In the meantime, try conducting a poll of your own. Are your partners more or less dependent on incentives than you think they are? Who among your partner uses MDF most effectively? And are you putting all the funds in your budget to real work that has an impact on your business, or are you handing funds out and hoping for the best?