Market development fund (MDF) programs are a staple of channel marketing programs, yet the top issues facing program administrators are still present. “How do I track ROI?” “What metrics are most helpful?”
While these questions are the same as those your grandfather might have asked, the answers have evolved with the times.
If you don’t have clear, measurable goals for your program, how can you expect to track whether you’ve attained them? The simplest solution to tracking ROI is to assess which presales behaviors you want to promote with your MDF program, or conversely, the behaviors you want to discourage. Today’s progressive channel marketers create sales playbooks their channels can adopt to optimize sales performance. You can adapt those playbooks to meet the needs of the various go-to-market models of your channel and to correspond with objectives you set for them.
Therefore, the next step is to align your activities and MDF investment with that sales play and the mutually beneficial goals you are hoping to attain. This is the basis for tracking ROI: track expenditures against the prescribed sales play, then correlate those expenses with goal attainment. These are your key performance indicators (KPI).
I recommend mapping funded activities, such as lead generation and telemarketing, to the stages in the buyer’s journey. Then you can correlate the activities at the various journey stages with goal achievements. You can do this by monitoring progress along the sales process, such as new opportunities opened or close/win ratios of those deals.
Sales success requires several activity types at each buyer phase, this is especially true with those products that have a complex or long sales cycle. Activities across the buyer's journey should be prescriptive or even provided to your partners through pre-packaged programs. Ideally, you want to monitor your channel’s compliance with usage across the sales cycle. The result is the ability to look at all activities against the goal to see whether the goal was, in fact, achieved or attained. The activities you are trying to promote via your MDF program are not necessarily limited to lead generation, as such you ensure your MDF program enables the correct behaviors through lead qualification, lead nurturing, and near-sales activities as well.
This will help you to assess channel compliance with your prescriptive marketing practices for each initiative.
Most Valuable Metrics
If you structure your MDF program as described above, you will have the ability to track the effectiveness of spending by initiative or sales play. A leading or predictive indicator might be the number of fund requests for that initiative; how much money was actually spent would then be your lagging measure. You could also address program effectiveness by activity type and compliance with your recommended sales play. Ultimately, the final measure would be goal attainment—the essential ROI measure.
Leading Indicator – Predictive, in-process measurements that you can use to influence outcomes. You could establish this through the information you compile in the funding requests.
Lagging Indicator – Results gathered after the fact that you can use to chart progress but not influence the future. In this case you would review MDF claims, opportunities opened, and close/win ratios.
Aligning MDF investments to mutually beneficial goals allows you to find out from your partners at the time of the request how much they plan to sell or achieve according to your KPIs; then, because you can track all of those KPIs, you can now measure the achievements on the backend and attribute them to your partners. Comparing the results will help you set benchmarks, assess performance by geography or partner type, and ultimately establish your own best practices.
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