Why so much MDF budget goes unclaimed, and 2023 is the year to turn it around
Did you know that 60 per cent of all MDF budgets go unused?
The Channel Company, which incudes CRN, Computing, Channel Partner Insight and bChannels, has come together recently to create an end-to-end service to provide more transparent and reliable returns from the IT Channel.
This is the second in a series of blogs explaining some of the biggest challenges facing Channel leaders in 2023 that we will be working with Technology Vendors to overcome, focused on Channel Marketing and MDF budgets.
There's nothing more frustrating than putting time, effort and resources into something to help others, only for them to not even use it. Like slaving in the kitchen over a meal your kids refuse to eat; or writing that 10-page report for your boss to never read and instead ask you to summarise in 30 seconds in a meeting three weeks later.
Marketing development funds (MDF) are no different. If you're a typical tech vendor, there's a good chance that more than half of the money you have set aside at the beginning of the quarter for MDF is still sat there gathering dust three months later - on average, 60 per cent of all MDF funds go unused.
It would be easy to simply blame our partners, shrug our shoulders and leave it at that. But the consequences of such an attitude are very real.
Every penny in that fund is a wasted opportunity to grow your business; many other ventures in business fall away that could have prospered with additional support that these budgets could supply - including other partner programmes that could have run for longer or been better integrated to deliver better ROI.
Let's look at the key reasons why channel partners don't claim MDF funds, and what you can do about it.
They don't know how to get it
If I asked you, right now on the spot, to explain the process to claim MDF funds, could you do it?
I bet it isn't exactly 'user friendly'. Channel partners we speak to at CRN always assert that the processes and systems that are supposed to be in place to help are opaque, laborious and on unfavourable terms.
These are fully functioning, busy companies with an array of things to focus on - customers, products, staff. It's no surprise that many of them give up on the process before they've even started. Not to mention that partners work with 14 vendors on average, so they also have another 13 relationships to maintain.
Now is a good time to assess the obstacles in front of your partners, and either look to simplify the course for 2023, or look to invest in people to coach them in how to make it to the finish line.
They don't know what to do with it
As a big tech company, we're used to the luxuries of business when it comes to sales and marketing. We have substantial teams with the tools, training and time to be effective across the different marketing channels available to us.
However, many of our partners are smaller, newer businesses that lack the skills, resources and time to invest into turning MDF funds into sales-ready leads to deliver to your business.
This is often where vendors can be most useful - by investing in services at the disposal of your partners - either by building creative campaigns and foundational assets that partners can leverage to drive lead generation, or through a team of partner marketing managers to act as a concierge to manage the spending of MDF.
The path of least resistance
Even if your partners are big and mature enough businesses to navigate the last two points, they must be considered against another, more general point: that your channel partners have an array of other vendors out there that all want them to be their favourite, and by extension amplify their brand.
And the bigger the partner, the hotter the competition.
As a result, you'll find that often it is not the best tech solutions out there that succeed in the channel space, but instead the companies that have made it easiest for their channel partners to succeed. So, you should consider how you can make your solutions the most intuitive, simple and expedient offer for your channel partners to take to market.
Why 2023 is crunch time
We've all watched the news recently and know the economy isn't our greatest friend right now. For many technology companies, the purse strings have already tightened; at others, CFOs are being asked to find ways to create leaner businesses. The channel is one of those areas at risk.
Traditionally, MDF funds that have gone unspent have been reclaimed at the end of the year by finance, and then put back into the allocation to use the following year. However, with the current situation in mind, channel leaders should start to expect a 'use it or lose it‘ philosophy to come into play soon - which means that if channel leaders want to make a difference and accelerate revenue, they need to act fast, as the opportunity may not present itself again for a while.