re-thinking mdf

Re-thinking MDF

  • December 19, 2017

In an article titled “Is It Time to Re-Think MDF?” author, Alicia Fiorletta, cited recent research revealing:

  • 15% of vendors say more than 25% of funds go unused;
  • 18% of vendors say 15% to 20% goes unused; and
  • 40% of vendors say 1% to 14% goes unused.

Most telling of all, however, is the finding that only 27% of vendors reported that their partners had spent all available MDF funds.

Which means that 73 percent of MDF programs are broken, and that there needs to be some sort of progressive change when it comes to operating MDFs.

In order to make that change we’ve devised our top four best practices to better operate MDF programs:

1. Over-Communicate Your Objective:

Take the time to ensure your partners know what the objectives of your MDF offerings are from your perspective. Taking the time to ensure that all partners are well aware of your program’s existence and what it is means to have a good relationship between brand and reseller. Communication strategies are a cornerstone for any great channel marketing program.

Ensuring you’ve taken the sufficient steps to share the program parameters saves any hard feelings later if you have to decline to participate in any initiatives that don’t serve the goals you had originally articulated. Being transparent and thorough about communicating your needs at the outset prevents relationship-damaging conflicts down the road.

2. Listen and Measure

Building feedback-gathering into your programs shows your partners that you care about their needs and by extension of that, their very survival. Additionally it helps you do a better job allowing you to design future programs based on what is of greatest value to your re-sellers as you have the opportunity to harmonize their needs with your own.

But what happens if the customer is wrong? Maybe you do know better or maybe the customer is right and they are operating in a marketplace that is a distant outlier from the rest of your sales data.   The way to manage these possibilities is to make sure you are measuring your outcomes in real time, gathering data and drawing inferences from it as fast as your claims come in.

3. Pay Fast and Make It Simple

The most common problem with all sales incentives is the failure to pay quickly. Yet there are two main reasons that paying as fast as possible is the way to go.

First the promise of a fast-moving, fast paying program is alluring to claimants. Secondly. fast-paying programs build greater engagement with your resellers: paying out more often means that they are submitting claims more often which means they are connecting with your brand more often.

If you are managing your programs with a sales incentives tool, handling the spike in volume generated by more frequent claims should be a breeze and well worth the increased traction your campaign gets. Many retailers struggle today, competing on price and being forced to discount perfectly good, brand-new product just to win deals on the sales floor – don’t starve your resellers by sitting on those MDF dollars for months after they have laid them out and fulfilled their end.

In addition it is important to make terms and conditions as simple as possible. Simplifying your claims process shows your resellers that you respect their time and resources and that you are actually offering MDF to help them develop their market, not as something you never intend to hand over.

4. Provide Resources

As Fiorletta’s piece points out, brands must “recognize how many of your resellers lack the resources to have a dedicated marketing team.”

Given the value of content marketing in the marketplace and the decreased costs of content creation, you should offer a vast repository of resources in a variety of media that can all be simply repurposed by your partners for whatever types of initiatives they are running.

This is another program segment that benefits enormously from partner-generated needs polling. Create user group-style advisors and ask them frequently what is working and what more you could be offering that would be of use to them.

Gathering digitized feedback has become as simple as writing a word document and sending an email and remember that every time you engage with the partners, you are investing in an important relationship.

Perhaps the harshest truth about resellers is that when all is said and done, the way to win is to look for ways to work with them as closely as possible. The great thing about using an incentives management platform is that a lot of the busywork is taken care of for you by automation, thus freeing you up to continuously improve your offerings.


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