Vendors, distributors and resellers discuss the ins and outs of marketing development funding programmes in a MicroScope virtual roundtable
Mike Bernard, marketing leader of general business and channels at IBM
Angela Leech, channel marketing manager at GFI Software
Rebecca Barnett, marketing manager at Sage mid-market division
Andrew Henderson, commercial director at Lanway
Kerry Drant, marketing manager at SBL
Richard Chapman, business development manager at Magirus
Q. How easy is it to apply for a funded marketing programme?
Andrew Henderson: It depends on the size of reseller business you are involved with and the type of funded marketing you are applying for.
Most major manufacturers have off-the-shelf funded marketing programmes available for small to medium-sized resellers. These are generally managed, delivered and paid for by the manufacturer and are pretty straightforward to apply for and get access to.
The more bespoke campaigns, however, which are funded by the manufacturer but managed by the reseller, are a little more difficult to access but can be more rewarding.
Kerry Drant: It depends on the vendor. Some have lots of paperwork and endless forms to fill in, whereas others make it much easier. It is generally easier in our industry when working through our distribution partners, which get their own MDF pot as well as us.
Angela Leech: Vendors have made it much easier for the channel to apply for funds in recent years by providing online tools via online portals that make the process for partners to access and request funds more effective and much easier.
Partners can often view a vendor’s full programme details quickly and easily and then make informed decisions as to whether to apply – do the campaigns being planned fit within the vendor’s parameters for funding? Will it deliver the desired ROI to the vendor? Does it meet with the vendor’s current sales and marketing objectives?
This makes it much easier for partners to determine if their planned activity fits with that of the vendor and also gives an insight into what level of funding may be made available for a particular activity.
Also, vendors are trying to make the application process quicker and easier by providing such tools as access to MDF balances, online application forms and even providing materials to use in partner marketing campaigns to keep execution time and costs to a minimum and to ensure that all parties are reaching their desired objectives and ROI from leveraging MDF funds.
Mike Bernard: IBM wants to enable more partners to execute marketing programmes, particularly in the mid-market, so this is a big focus for us. We are planning to spend a greater portion of our marketing budgets with partners and we want to make it as easy as possible for our partners to benefit.
We offer marketing funding through three mechanisms: direct from IBM; through our distributors; and through a new marketing service provided by OnChannel.
Eligibility for funding usually depends on status as an IBM business partner, the nature of the business partner’s speciality or focus area, go-to-market capability, and previous history of success. In general, business partners should be a member of PartnerWorld and enabled to report leads back to IBM to demonstrate the effectiveness of the investment.
For many partners the simplest way to access these funds is via the new OnChannel service. OnChannel is a full service marketing agency that will plan, build and execute campaigns on behalf of the business partner and handle the entire claim process within IBM. Funds are also available direct from IBM or through a distributor and require further reporting.
Richard Chapman: These days, application is relatively simple via online systems, but many resellers, particularly smaller, less established ones, are unaware that the funding is available.
We do a number of things to make them aware of the opportunities, such as running marketing workshop events. During the past 12-18 months, increasingly the claims process has become more admin-intensive for all parties, resulting in funding payment delays from the vendor to the reseller.
This has been understandable to a degree, with a squeeze on revenues where there has been closer scrutiny of MDF. However, as a distributor we want to work closely with vendors, making it easier for resellers to justify a business case for MDF funds to get out of recession faster and grow the market.
Rebecca Barnett: Applying for a funded marketing programme is as easy as a vendor makes it. Vendors establish a key set of criteria for admission to their channel enablement scheme, which subsequently defines how resellers qualify for the programme.
For vendors, there is no benefit to complicating this process and it is their obligation to their channel partners to make the admission process as simple as possible.
Q. How many programmes are you involved with and how would you choose which company to partner with?
AH: Lanway is involved with a number of marketing programmes with the major tier one hardware and software vendors. To ensure we get the most out of the activity we need to engage with a vendor that has a good strategic fit with our business and be sure that there is an opportunity for our partnership to achieve profitable growth.
Not to be dismissed, however, is something much simpler – to get the most out of the partnership from an ROI perspective there has to be a good relationship on a more personal level, so the contacts within each business must “get on”.
KD: We are involved in lots of programmes. It varies depending on our own marketing messaging. We sit down and work out our marketing strategy each quarter and select core vendors we want to work with.
We only work with best-of-breed vendors, but make sure it is also relevant to our target markets and getting the right messages out there. At the moment we are involved with five or six key vendors and work with up to 20 others.
AL: As a vendor, I am currently only involved in the GFI MDF programme, but having worked at both a distributor and a reseller in the past, I have been involved in several different programmes, and for some marketing managers and executives within partners they can be working on up to 30/40 in distribution and 5/10 within resellers’ different MDF programmes from different vendors at any one time. This can become confusing as programmes often differ in their processes, availability and guidelines.
MB: There are many marketing programmes within IBM that offer co-marketing funds. Business partners are an essential sales channel for most IBM product lines and solution areas so most of these make marketing expense available for co-marketing.
Requests for funding are evaluated by IBM, the distributor or OnChannel against an agreed list of priority messages or themes for each budget, and the proposed campaign is analysed for effectiveness of lead generation and closure. If business partners have received previous funding then the results from those campaigns are also taken into account.
RC: As a distributor, we have approximately 50 campaigns every quarter in the UK alone, and the key to success is ‘execution’. Often, the most successful campaigns come from resellers where there is ‘cross-function buy-in’ (marketing, sales, management) in execution, ensuring that the campaign is run/managed effectively and that resulting leads are tracked/closed as appropriate.
Q. What do you see as the benefits in terms of MDF funding within your organisation?
AH: With vendor funding we are able to design and roll out more creative and effective campaigns to a wider audience, something which would be more difficult, if not impossible, without help from the manufacturers. We have seen multiple successes with our “top three” this year, one of which is seeing over 100% growth. We attribute this to the quality of relationship we have and the MDF funding consistently available.
KD: It helps us to create awareness and generate leads by using relevant messaging which ties in with what the vendor is already doing. If customers are seeing consistent messages from us and key vendors it strengthens the impact. It also extends our capabilities in terms of allowing us to do more marketing activities which ultimately benefits both us and the vendor we are working with.
AL: It enables us to provide funding to the channel – our extended salesforce – to drive marketing activity and end-user demand for our products in line with corporate objectives, while at the same time providing the necessary funding to do so for our partners. We can ensure that both ours and the partners’ objectives are aligned, agree ROI measurements to effectively ensure that the activity has been successful and then measure the use of our funds and where they are being used effectively.
We focus on the SME market and a lot of our resellers are SMEs themselves, so to be able to provide the necessary funding to our partners as well as providing marketing resources is key. A lot of our partners may not even have a dedicated marketing resource or a marketing budget to be able to do this themselves, so to be able to provide this to some of our partners is invaluable.
It also aids our partners to be able to execute marketing campaigns they may not have previously been able to due to lack of funds and resources. By selecting the partners we work with we can ensure that they are reaching the desired target markets and verticals and drive awareness and revenues within those areas. We work closely with our partners and funds are granted on a discretionary basis after completing and agreeing a co-marketing plan.
RC: We run more than 200 marketing campaigns in the UK each year. We see what works and does not work so we use this knowledge to advise resellers on the types of business case, messaging and tactics that are likely to yield the best results.
RB: By funding our business partners to contribute to the sales generation process, marketing development programmes remove demand from a resource point of view – becoming less labour intensive for the vendor and reducing the need to self-generate qualified sales opportunities.
Through establishing a shared responsibility for maximising marketing spend, MDFs help to foster more meaningful channel partnerships that yield mutually beneficial results.
Q. How has funding changed over the past five years and has the recession had an impact on it?
AH: The recession has certainly had an impact – freebies, trips abroad and incentives have all been scaled back and reserved for the very few top performers. Ad-hoc funding is now limited, with vendors requesting clear marketing plans with ROI projections before any commitments are made.
With regards to funding in general, we are still experiencing a significant level of contribution, but the manufacturers are seeking a greater level of ROI. Gone are the days when MDF could be bottom-lined without proving where the money had been spent and the growth achieved with the investment.
KD: It seems to be increasingly harder to get hold of and processes are becoming much more defined and regimented. The funds seem to be less and shared out between more vendors. But we work very closely with our core vendors and continue to be a part of their MDF plans.
AL: MDF programmes have changed quite dramatically over the past five years.
Firstly, since the introduction of legal compliance such as Sarbanes-Oxley, vendors have had to have a more stringent and auditable process in place. MDF has to be accounted for in many different ways and must also be auditable, which has tightened up the process considerably. However this can also lead to additional administration and proof of performance metrics that can be cumbersome for some partners.
Secondly, with technology advances a lot of programmes are more automated and made more readily available to partners by leveraging portals and tools that are now almost becoming industry standard.
MB: Over the past five years, co-marketing funding has become a larger percentage of the total IBM marketing budget and the funds have been offered to increasing numbers of business partners. This reflects the importance of the channel to IBM and the increased focus on mid-market clients and solutions. Business partners are able to deliver targeted demand-generating campaigns into key markets and can often deploy campaigns quicker and cheaper than IBM.
The recession has not had a financial impact on the size of the funds. IBM’s continued commitment to funding these programmes demonstrates our willingness to invest in business partners and our determination to succeed in growing IBM’s presence with mid-size companies.
RC: Vendors have become more prescriptive in the types of activity that they will support, often with demand-generation given priority over awareness creation, for example.
During the recession, typically funding has reduced, with a greater emphasis on supporting proven resellers which have demonstrated a strong marketing ROI. Also, increasingly vendors request that activity is carried out with suppliers on their preferred supplier list. The benefit to the vendor of doing this is to have greater visibility of campaign execution, although this may sometimes stifle creative activities that could be undertaken by smaller agencies which may have a more intimate client relationship.
RB: Recession has undoubtedly transformed the way vendors approach marketing development schemes, causing them to think more carefully about the long-term strategic benefit and ROI such initiatives offer their business.
While previously, vendors and resellers were guilty of adopting a somewhat transactional approach to MDFs, they are now increasingly realising the benefit of working in partnership to agree tangible ROI measurements that will better track marketing activity across the channel and contribute to driving end-user demand for the vendor’s products.
Q. Are MDF programmes based on partnerships and are they flexible?
AH: It comes down to the level of relationship you have with the manufacturer. Dealing with the management team or at board level within the manufacturing organisation will ensure that if you deliver the growth in line with your forecasts the MDF will be available along with a certain amount of flexibility.
KD: They are based on partnerships, but also creditability and the ability to demonstrate ROI.
AL: MDF is a key benefit to our partners and we always provide flexibility within the programme as we understand that all of our partners are different and have different requirements from the programme depending on their own internal resources and capabilities.
MB: The key difference between MDF funds and co-marketing expense is that MDF funds are often “earned” by the business partner through achieving sales revenue targets, whereas co-marketing expense is offered at the discretion of the vendor.
MDF funds are often limited to the largest distributors and business partners. For example, IBM offers distributor growth funds (DGF) and PartnerRewards. However, co-marketing expense is potentially open to all business partners.
RB: Resellers are an important and valuable extension of the vendor’s salesforce and it is only through leveraging trusted, mutually beneficial partnerships that this arrangement will yield successful results for both parties. Whether operating MDF or co-op programmes, the success of these is based on creating a flexible and mutually rewarding partnership.
Q. Would closer relationships in the channel, specifically around MDF funding, yield greater opportunities?
AH: Of course. Often the reseller account managers can act as ‘gatekeepers’, shielding the vendor marketing team from the reseller, when in reality building relationships between reseller and vendor principles/back office team would be mutually beneficial.
AL: Yes. I often find that partners may not even be aware of MDF programmes that are available from vendors. By forming closer relationships and developing business plans jointly with partners more opportunities are discovered.
MB: Of course. MDF and co-marketing expense are most effective if they are used to support an agreed joint business plan. A close relationship is required to define that business plan.
RC: Yes, many vendors work on a quarter-by-quarter approach which results in tactical activity as opposed to longer-term, strategic multi-touch programmes. Closer relationships planned over longer periods allow us, as a consultative-led distributor, to develop integrated campaigns with our resellers that build markets and more profitable business.
RB: While monetary funding is undoubtedly critical to driving marketing activity, MDF is but one component of what builds success and, very often, working collaboratively on lead generation can produce far greater, more meaningful sales opportunities than an MDF programme alone.
By ensuring that resellers can proactively contribute to all elements of a marketing campaign, from messaging through to product positioning and execution, vendors can ensure that their campaigns are not only relevant to their channel partners, but that both parties’ corporate objectives are carefully aligned.
Q. Do you receive contractual or discretionary funding opportunities from your vendors?
RC: No. I think the checks and balances have to be there to ensure funds are invested wisely in legitimate activities. However, we should always be mindful of the aim to help our resellers and their customers develop markets, therefore we need to ensure that process and admin do not become the end in itself, rather than the means.
Q. Do you find the whole MDF process painful, in terms of too many hoops to jump through? And which MDF programme do you find the best and why?
AH: No, the whole process is now similar throughout the channel. Providing you have the plan, deliver against it and can provide both proof of activity and ROI its pretty straightforward.
KD: The process can sometimes be time-consuming, especially in terms of submitting plans for a whole quarter and then proving ROI afterwards.
Some campaigns give better results than others, but I don’t believe there are too many hoops to jump through. I wouldn’t give anyone some of our marketing budget if it wasn’t going to give us ROI.
Q. How can vendors (or their suppliers) be more supportive in assisting you to build strategic, consistent, value-added marketing programmes and ensure their execution?
AH: Overall, the level of support we receive is pretty good. However, I would like to see more consistent involvement on the roll-out and delivery of the campaigns from the vendor marketing principles in addition to the reseller account manager.
It would be an additional benefit to see senior management teams within the manufacturing organisations play a more active part in understanding our new business ideas and some of the challenges facing the reseller community first hand.
KD: We are happy with how we work with our vendors and we get the support we need. We always make sure all staff have the training needed to make the campaign as successful as it can be.
RC: My four-step MDF mantra is:
1. There needs to be less focus on what is new and more focus on what customers want to buy;
2. Vendors must be crystal clear and give more information on their marketing goals and umbrella messages;
3. Make it easier and find different ways for resellers to understand and integrate them;
4. Agree funding over a minimum six-month period to be more strategic and enable resellers to make a difference.
RB: Effective channel enablement can sometimes be best achieved through cooperative marketing programmes that give resellers unprecedented access to the brand equity, reach and opportunities inherent to the vendor’s business. By investing time to underpin and understand the unique needs of their channel partners, vendors can provide the tools and expertise they need to further improve their marketing operation.
The Planet Group on marketing development funds
Everyone wants to maximise return on investment from marketing development funds (MDF), but sometimes systems, or lack thereof, hold companies back and partners do not engage.
To maximise ROI from MDF, companies need a complete end-to-end MDF management solution. Intelligent on-line processes for submissions, vendor approvals and fund management establish accountability for all marketing funds allocated to partners.
Fund approval processes should be accelerated so partners can easily enter their marketing plans and requests for MDF. A good MDF module simplifies processing, automatically routing the funding requests to appropriate individuals for approval, and triggers reminders, if necessary, saving you time.
A superior MDF module should also reduce the administrative overhead and the need for constant intervention by channel managers and significantly reduce costs. More time would then be available to review plans with your partners so you can help to focus them on those activities that will provide the best ROI.
All this will enable partners to develop marketing plans based on best practice guidelines, thereby more closely aligning their plans with your objectives. If required, links could also be integrated to co-marketing tools for partner use, based on their profile.
Another reduction in administration is to publish financial commitments and accruals viewed by user role, and unallocated funds managed accordingly. Any solution should balance YTD marketing development funds, totals allocated (accrued), total claims, claims pending and claims paid out. Any subsequent information and reports can be accessed instantly and securely,
24 hours a day, seven days a week.
What every partner wants is a simple process to upload proof of execution so that claims can be validated and payments made promptly. By empowering partners to engage frequently and effectively, and by reimbursing them quickly, true partner collaboration and engagement can be achieved.