Why is it important for a vendor to offer a Funds Program to its resellers? Let’s take a look at it through the eyes of a vendor.
Typically, a Funds Program consists of two types of funds, Market Development Funds (often shortened to MDF) and Cooperative Marketing Funds (shortened again to Co-op). MDF funds are offered more on a strategic reseller basis and not to every reseller. In addition, with MDF funds, vendors usually ask for a proposal, which may be developed solely by the partner or co-developed with the vendor. Typically, spending would be allocated to items such as training resellers, demo equipment, or marketing activities.
Co-op funds, on the other hand, are accrued by the reseller based on sales and the proceeds are usually spent on lead generation programs such as advertising, direct mail, and road shows. It’s fairly common for vendors to offer Co-op programs to any reseller in their Partner Program and who recommend products as part of a total solution.
Regardless of the type of fund, it is a critical aspect in motivating the channel to resell your products. In addition, it helps you stay competitive in the marketplace because many other vendors do this as well. With a fund program, vendors share in the cost of marketing yet in return, it allows a vendor to guide the market spending behaviors of their resellers and maximize their marketing fund investment.
Many times vendors roll out their initial Funds Program by giving a blanket dollar amount out to certain resellers. Unfortunately, this allows a reseller to spend the money freely and ends up being very difficult to track the ROI with this method. Essentially all that is tracked is the total financial amount spent. More importantly to the vendor executive management is tracking the effectiveness of the spending and whether or not the marketing activity achieved its goals.
Vendors soon realize their Funds Program guidelines need to be updated to reflect spending rules that capture better visibility into their resellers’ campaigns and use of their money. For example, implementing a rule where only a certain percentage of total funds can be spent on advertising and awareness campaigns since tracking ROI with these can be more difficult. This way a larger percentage can be spent on lead generation campaigns or employee training which lends itself better for tracking results. This is where having a Partner Relationship Management (PRM) solution in place to manage your MDF funds can solve a lot of headaches.
A PRM solution provides end-to-end management of the entire funds process including tracking accruals, expiration notifications, priors, claims, proof-of-performance, payments, and approval workflows. By providing complete visibility, it dramatically reduces the administrative burden on your marketing, channel, finance and partner teams. This will provide you with “the big picture” that executives, fund owners, channel managers and partners need to do their jobs.
Let’s Recap the Benefits of Offering Funds to Resellers:
Train Your Partners – Ability for partner to use their MDF funds to pay for training courses for their employees that are essential for them to sell your products.
Promote Products – Ability for partners to earn larger percentage of MDF for certain products you want them to highlight – new products, time of year, etc.
Happy Partners – Keeps partners happy and actively involved in selling your products.
Competitive Advantage - Vendors can use them to get better position in the market so partners promote their products over competitions.
Cost Effective – Using MDF funds is cheaper than hiring more marketing and sales people.
Streamline Resources- Partners help to alleviate administration tasks and paperwork that would be created.
Remember, when it comes to Fund Programs, it’s a win-win for both the vendor and resellers. It’s an ever evolving process.
About our Guest Blogger
Lisa Heydorn, Professional Services Manager at Requisite Software (http://requisite.com), has over 15 years of experience with channel operations in high-tech, telecommunications and manufacturing industries. She is a proven leader with strong skills in project management, customer service, execution, and on-time delivery. At Requisite, Lisa is responsible for the Channel Management solution.