Co-Op programs, are third parties important?
Why Third Parties are Important to Co-Op Programs?
Successfully improving most businesses requires a delicate blend of people, process and technology. This can be particularly true when it comes to engaging third parties in Co-Op programs. Most of our clients engage us in their Co-Op programs in some manner beyond simply using our technology platform. It’s interesting to contrast the value they receive versus the reasons we see new prospects considering these same services.
It seems almost every prospect these days asks if we offer Co-Op program claims processing services. Most are interested in outsourcing some or all of the administrative functions. Their motivations tend to be driven by a lack of people and a view that these functions can be done by anyone. When we compare these motivations to more mature existing customers you find the reasons for outsourcing the tasks are very different. Before contrasting these motivations let’s look at how a mature customer matured.
Co-Op advertising involves sharing the cost of local marketing with channel partners. MDF stands for Market Development Funds which is often the primary motivation of a funding program. The brand wants to generate local demand and develop a market. They recognize channel partners need funds to do this.
Once programs are implemented it becomes clear the marketing assistance required by channel partners is more than monetary. The lack of marketing resources in the channel makes it hard to spend the money, and even with the best intentions channel partners tend to create marketing that doesn’t conform with brand imaging and/or messaging.
This starts to become a drain on the brand’s creative resources. These resources get drawn into policing channel marketing to gain control over brand identity. Efforts are also expended producing professional marketing channel partners can execute locally. As the brand marketing team gets drawn into these activities the need to supplement staff with third party resources grows.
Now back to the desire to outsource administrative tasks. As we’ve written in other posts, we recommend brands handle all Co-oP program pre-approvals themselves as a best practice. This is important for many reasons including:
- Protecting brand image
- Staying current on strategies and tactics used by channel partners
- Understanding the marketing challenges faced by channel partners
- Last, but not least, knowing what’s working and what isn’t.
So the question becomes:
If brands should stay engaged in Co-Op program pre-approvals, what should they outsource?
As brand resources get immersed and consumed in local marketing, two significant resource needs emerge: creative to develop local marketing and claims processing and auditing.
It’s natural for the brand’s focus to be drawn to creating marketing channel partners can execute locally. This drives a need for creative resources to produce content and templates. Outsourcing some or all of this to a digital agency is a great way to increase marketing bandwidth.
As the brand begins to focus resources on creating local marketing, bandwidth to handle administrative tasks decreases. This is particularly true when it comes to processing Co-Op program claims and audits. If the brand is doing a good job of interacting with channel partners in the pre-approval process outsourcing the claims on the back end might make sense.
Having a third party audit claims/reimbursements is an important check and balance. This should be considered in every Co-Op program, but it is particularly important for any company facing public scrutiny of their financial records. Having a third party audit significantly reduces risk and substantially raises program credibility. As programs mature, the importance of these checks and balance becomes more understood and valued.
A subtler value customers receive comes from tribal knowledge which they get in the form of process best practices. As a vendor, we’ve managed hundreds of MDF and Co-Op programs over time. Our people have learned what works and what doesn’t. Smart, more mature, customers take advantage of this knowledge and use it to get best practices in place.
Mature companies look for vendors who bring people, process, and technology to the table to help get Co-Op programs to the next level. These companies recognize the need for more than bodies to do administrative tasks and look for strategic partners committed to their success. It often takes one or more false starts to recognize the difference between the two, but mature companies know the value.