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How to Attain MDF Proof of Performance

Craig DeWolf

Learn how to properly define your MDF objectives to effectively measure program ROI.

The biggest issue facing marketers is MDF and ROI, and defining your MDF goals is one of the bigger challenges. The way that most MDF programs work is that a brand gets a funding request for an individual activity, and then somehow they’re expected to figure out how that request has contributed to increase sales, which is very hard to do. There are ways to do that, but that's going to be beyond the scope of today's topic.

First you must suspend that former reality and revise your orientation for what really drives ROI and accountability within MDF programs. The traditional paradigm is that if you fund an activity, it should directly correlate with sales attainment, which is a pretty tall order, particular if you have a long sales cycle involved. The new paradigm (that you should be settling into) is that like any other incentive type, MDF should be about influencing behaviors that lead to more sales. Within the process of that is understanding what the behaviors are that lead to more sales, allowing you to track the impact on those behaviors. Now you have the basis of MDF accountability, and essentially you have defined your program objectives and what the associated KPIs are.

This might seem abstract, but let's bring it down into how it can be applied in a real world scenario. First you must align your MDF investments, programs, and fund requests to mutually beneficial goals. Objectives of a particular MDF program should align with your go-to-market plans and go-to-market goals that are packaged to be mutually beneficial to you and your partners.

For example, to ensure that MDF is used to promote new products or solutions, or to help penetrate new markets, be those markets geographic or vertical; Competitive displacement and net new business and accounts are typical kinds of go-to-market objectives that vendors would have, and ideally your MDF program should be an extension of your own go-to-market goals. This now becomes the basis for tracking ROI; align expenses with your business objectives, using some combination of your MDF application and or third-party applications.

So, how does this work? Using your business objectives, such as new product solution introductions or penetrating new markets, there are five key measurable KPIs to use that associate with each objective. These can all be tracked and correlated back to your MDF investment. To do that, you must plan reimbursable activities and align spending against each of those activities, against the sales cycle, or essentially the buyer's journey. Correlate each of those activities with the buyer's journey, against the business goals of achieving each one of those initiatives. This will help you assess channel compliance with your prescriptive marketing practices against each initiative, which could differ by channel segment. This is done through either the business planning or marketing planning process, or even your own MDF application.

Sales success requires several activity types at each buyer phase, and that's especially true with products that have complex or long sales or lead times. Ideal activities that are presented across this buyer's journey should be prescriptive, or in fact, even provided to your partners through pre-packaged programs, and you should be able to monitor their compliance with usage across the sales cycle. And then, rather than attributing any one activity against the outcome, you can look at all of the activities against that goal to see if those goals were, in fact, achieved.

Here’s an example on how this works within our solution: For instance, on a typical fund request form with specific business objectives selections that partners would select in order to put in the fund request, goals and associated KPIs are assigned. What happens when the money was spent? And, what are the activities that will help achieve those overall business goals?

As a marketer, you can review all of the individual activities that were proposed by your channel partners to achieve your business goals. You can assess whether they are the appropriate activities aligned with your sales model and/or whether their goals are realistic within that context. You can also prescribe other edits, revisions, different activities, etc., before approving spend. Giving an understanding of where your money is going to go, what the outcome of that is from a business perspective, as well as what the specific activities are that will help contribute to that, and that can be monitored on an ongoing basis.

Now that we have designed the MDF program to how it should work, what are the common KPIs that we should look at? What would be leading indicators as well as lagging indicators? How do we measure the overall impact of our program? Define what the specific KPIs should be within a given MDF program, they will all be different. To help generalize it when senior management comes to you and asks, "Is our MDF program working?" Now you have the ability to track effectiveness through spending by initiative. A leading indicator might be the number of funds requested against that initiative. The lagging indicator would be how much money was actually spent. You can also address it by activity types and compliance, and measure it by goal attainment, so you can find out from your partners on the request how much they plan to sell or achieve through your KPIs. Now because you are keeping track of those KPIs, you can measure it on the back end and attribute it to the partners: were they able to achieve those goals?

Further, you can break that down and look at who's doing a great job of performing. Not just at the individual partner, but sales territory, regional level, and channel segment levels to see who might be doing better than others. In order to get compliance up, the attainment or usage of your activities versus prescriptive best practices, you should recognize and reward your top performers and regional managers, and or marketing managers, for their successful effort.

You've now answered the question for your management, "How well is our MDF program working?" But as program administrators, you must be able to optimize the operations of your MDF program to make sure that all your partners are engaged. These are not necessarily strategic metrics for operations, but important metrics, nonetheless, that would fall into three categories: The first being program efficiency. Look at request for approval turnaround time - the longer time to turn around, the less satisfied your partners will be with the program, same with claim submission to payment. Look at reasons for rejection, why are claims getting rejected? Why are fund requests getting rejected? With that insight, you know whether you should redesign your program or do better job of educating your partners on the reasons why they are rejected. What are the rejection rates? Out of every fund request or claim, what percentages of them are getting put on hold or rejected? What are the support requests that are coming in from the partner in the field? And, is there a way to mitigate those through either program administrative changes, and or education?

The next category would be program engagement, which are the utilization rates. The utilization rates in this case would be: all of the funds that you have made available, how much is actually getting spent (differing from participation rates), what percentage of your partners are using the program, and what the average claim or request volume is. So, number of incidents, frequency of use by partners, are all engagement metrics between you and your partners. Look at qualitative insights, as if your partners aren't participating, it's important you understand why. You can get this through some combination of field and partner feedback, whether it's through formal surveys or anecdotal information, or the kinds of support requests that you get yourself as program administrators.

Key Takeaways

  • Align your MDF investment to what you feel are the mutually beneficial goals that are going to be important to you and your partners.
  • Promote the use of the individual activities from your channel partners to align with those sales or buying processes, and look at just more than lead generation alone.
  • Assign metrics and KPIs that will help you measure your business attainment, as well as for individual activities. For lead generation components, your metrics for those individual activities could be reach or number of impressions. They should all correlate with your overall business goals, and use those KPIs and KPI attainment to compare outcome between partners, channel segments, and the various sales territories that you have so you can see who's really shining and who's not, so you can take some time for more selective coaching.

About the Author

Craig DeWolf

Craig DeWolf, Perks WW VP, Marketing Enablement, has over 30 years of channel program and trade marketing experience spanning a variety of industries and distribution models including technology and consumer product companies. As Vice President, Marketing Enablement he provides a unique multi-industry perspective gleaned from a background working across agency, supplier, and vendor/manufacturer roles. Craig has engaged with key business partners and worked with a variety of clients on both channel and trade strategies and programs, including: AT&T, Apple, Avaya, Bridgestone Goodrich, Canon USA, Hewlett-Packard, Kraft, Oracle, Panasonic, Timex and Xerox. Immediately before joining Perks Worldwide, Craig held senior roles at Hawk Incentives, Hawkeye Channel, and CCI—a work history that shows his deep understanding of the channel space.

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