In its simplest form, this is providing marketing contacts within channel partners with advance information in relation to your own marketing campaigns and providing access to marketing materials to enable them to run their own in parallel. Simple, but often poorly executed. In practice, channel partners typically find out about vendor marketing campaigns at around the same time that their customers do. Whilst we all know that planning, budgeting and implementing a marketing campaign can take many days or weeks, vendors most commonly leave their channel partners with insufficient notice to develop their own campaigns and run them concurrently. This is quite simply insane.
Channel partners are often eager to find new ways to communicate with their customers and new messages to communicate to them. If they and you can leverage your collective investment and your collective firepower simultaneously and with a consistent message you have a chance to multiply your return on marketing investment significantly. What it takes to succeed is for vendors to see partner marketing teams and marketing budgets as extensions of their own resources. Create a virtual marketing team or community, protect your confidentiality with NDA’s if necessary but share information about upcoming product launches, promotions, demand generation campaigns and even branding campaigns by whatever means you have available.
The key here though is timely communication and information sharing amongst your channel partner community. On this note, in our experience, vendor databases of channel contacts on average hold less than one marketing contact per eight company records! Remember, you can’t market through companies, only through people!
There are a number of tools on the market along with agencies able to support online co- branded collateral creation and these ensure that when a partner does participate in collaborative marketing, they can adhere to your brand, message and creative look and feel which again serves to maximize impact for the vendor. Subprograms work best when linked to market development fund programs, such that the vendor contributes toward the cost of co-op campaigns as and when they are implemented in adherence with their own guidelines.
We talked about the pro’s and con’s of MDF as a partner incentivization tool in the last chapter. Now let’s look at it as a practical facilitator for collaboration. Channel partner marketing budget’s are geared around promoting the partner and the things that they sell to their own customers. Few channel partners are philanthropists so if they are going to invest any portion of their own budget in promoting a vendor instead of themselves, there will have to be a very good reason or else a financial contribution by the vendor in question.
In the 90?s and the early part of the last decade, MDF became little more than a bribe. Most propped up the balance-sheets of channel partner who came to rely upon it to stay in profit. As margins fell for vendors and the need for greater financial transparency and compliance became more critical, many vendors tightened up the rules of MDF programs or stopped them altogether.
Accrued MDF based upon a fixed percentage of sales can often be seen as an entitlement and can become a contractual obligation for a vendor to provide it. Instead it should be a discretionary fund to which channel partners apply under strict guidelines for part financing of activities deemed likely to generate sales directly or indirectly for the vendor. It should be positioned as unlimited? and a partner should be able to utilize it as often as they wish provided that a number of rules are applied:
- A vendor should look to pay no more than 50% towards any campaign or activity
- Criteria should be laid out under which the 50% will be paid subject to achievement of agreed KPI?s
- Ideally campaigns or activities should be implemented through vendor-aligned agencies through which they (and hence the partner) may enjoy volume discounts thereby minimizing the cost of the initiative to all
- Partners should receive no payment from the vendor until after the activity has been completed
- Partners should demonstrate that they have achieved the prescribed KPI’s and reimbursement should be made accordingly
- ROI should be tangible and measurable
We have worked with vendor’s who have implemented such a scheme to replace an accrual-based model. Their message: “more control but more available funds”. Naturally, if the MDF spent delivered a better ROI than before then, by definition, this meant more sales and hence more marketing budget. In reality, we saw significant reductions in fund redemption’s but a significant improvement in the quality and alignment of partner-led campaigns. Such campaigns were considerably more effective than before leading to better results. A virtuous circle and one which has seen massively increased marketing productivity from the partners and massively decreased vendor costs whilst leaving the channel as a whole happy in the knowledge that unlimited funds are available to them so long as they can demonstrate that they will spend them wisely.
Next week, we’ll look at through-partner marketing and content syndication.
