How to Generate More Partner Revenue Through Market Development Funds

Partnerships are quickly becoming integral to some of the largest companies of the world. In fact, Google Cloud’s CEO, Thomas Kurian,? just announced the company’s goal to have partners attached to 100% of customer engagements. This is one of many examples of how partners are being incorporated into company goals.?

As you can imagine, a company does not simply reach a 100% partner attach rate on opportunities overnight. A recent Accenture study from April, 2021, declares that “to win partner mindshare and for future growth, companies must co-innovate, co-invest and collaborate across the ecosystem.” The key part of that statement is that channel partners must make the financial investments that often cross company boundaries to co-invest in programs for their mutual success.

One of the most popular forms of investments that organizations deploy to their partners is Market Development Funds (MDF).

Market Development Funds are incentives that a vendor provides to its ecosystem partners for driving sales and marketing programs to sell vendors’ products or services.

Marketing support to your partners for their go-to-market strategy and other marketing resources can help in increasing awareness and generating demand for your product. For instance, when a company launches a new product, MDF can enable channel partners to tap directly into their regional customer base and kick-start sales in that specific market.?

Before we dive into how to increase revenue with MDF, let’s list out the benefits and drawbacks (only if deployed incorrectly) of rolling out an MDF program at your firm.

Benefits

• Increase Partner Experience - A mature partner program incorporates and successfully drives a higher partner satisfaction rate by effectively deploying MDF’s.?
• Beat Out Competitors - The business world is starting to realize the value of partnerships. As such, you will experience partners that are also partnered with your competitors. An effective MDF program allows you to separate yourselves from your competitors, drive greater value for your partners, and ultimately lead to more sales with your partners.
• Increase Brand Awareness - Allocating the appropriate MDFs to your partners with solid brand recognition is one of the wisest decisions you can make as a partner leader. Think of it this way, if you currently have 5,000 followers on LinkedIn, and you are partnered with a firm that has 1,000,000 followers on LinkedIn, a single post from the partner will increase your visibility by 200x!

• Increase Creativity - Speaking from personal experience, MDF’s allowed me to think outside the box on what the most effective marketing strategies we can deploy with partners. What works for one partner, may not work with another partner. As such, spending time on defining the strategy for each of your partners will go a long way and lead to greater results all around.?

Drawbacks (If Deployed Incorrectly)

• Misused Funds - One of the most common mistakes with MDF’s is ineffectively tracking how your funds are used with the partner. If you do not proactively manage the fund distribution and implement rules of engagement, partners may take advantage of “free money” and never realize value for the funds. Tools like Workato and Impartner can be used to implement controls around the allocation of funds (i.e., approvals, criteria, etc.)
• No Return on Investment (ROI) - MDF’s are, generally, difficult to obtain approval from your executive teams because it is difficult to track the ROI of a partner marketing event/post/etc. If done incorrectly, I’ve seen it many times where an MDF program is shut down after a year due to not being able to identify a ROI from the funds provided to a partner.

Considerations of MDF Program

Okay, now that you’ve been sold on implementing an MDF program in your organization, you are asking how do I make sure the program is set up for success? As you saw in the points above, structuring your MDF program with the right criteria and data tracking will make you and your partner successful in driving more revenue.

Ideally, market development fund programs help both the vendors and partners achieve optimal return on the funds they’ve invested, and encourage fund usage.

Programmatic Considerations:

• Partner Tiering - Market development funds should be something only select, strategic partners receive. Mature partner organizations generally have partner tiering in place (i.e., Platinum, Gold, etc.), where reaching the highest level in tiering means investing the most time and resources in the partnership. Therefore, the MDF program can be allocated to the partners that invest in you, making it a “prize” for them to achieve.
• MDF Allocation Guidance - Setting boundaries and guidance for your partners on how to use the MDF is critical for a successful program. As I mentioned above, one marketing strategy may mean success for one partner, but failure for another. Therefore, providing your partners with how to use their funds based on their goals and GTM plan will lead to more effective results.?
• Data Management - I cannot state this enough. Make sure you have proper marketing tools (i.e., Marketo, Workspan, etc.) to track the results of your marketing initiatives that come out of MDF. Without tracking, you are unable to prove the ROI to your partners or your internal executive team. This will lead to a failed program and potentially a program that gets removed from your organization.?
• Lead Tracking - Of course, what is an MDF program, without proving the revenue that comes out of the events/initiatives that you create. Making sure you track the leads that come out of the MDF program will be critical to your KPI’s. Think through things like attendees lists (i.e., Webinars, Roadshows, Happy Hours), Request for Demos (i.e., Webinar Links, scanning badges during live events).

Market development funds are one of the most effective growth strategies for a partner organization, if done properly. Hopefully the above information provided you with the proper guidance and considerations for launching your program! If you have any questions or need any additional guidance, do not hesitate to reach out to me on LinkedIn.?