It’s no secret that many organizations have trouble assessing the ROI of their MDF program. The acumen ranges from, “We can measure it, we just don’t think it is being used as effectively as it can be,” to “We don’t have a clue how to measure it.” In a nut shell, most organizations agree that they should do a better job of improving the ROI of their MDF program, but not all organizations start from the same place when considering how to make changes.
Of the statements mentioned in the previous paragraph, “We don’t have a clue how to measure it” is clearly the least desirable. The common characteristic these "clueless" companies share is a real eye opener.
Generally speaking, funds/programs are controlled either by the company’s sales department or marketing department (with buy-in from the other, ideally). What I have noticed is that when the funds are predominated by the sales department, MDF primarily act as a slush fund that account managers use to keep their channel partners happy. In these instances, sales personnel want as few rules as possible associated with the use of the funds or minimal administrative requirements to actually get access to the money. As a result, it is very difficult to get any meaningful information about how the money your company provides achieves mutually beneficial goals. What is more, the little information that is available is not reliable because requestors say whatever they need to complete or approve the transaction.
A perfect example of this is the high percentage of the total MDF investment in a catch-all activity type known as “events.” These events might be anything from customer events to internal training and “team building” sessions. Often these events are nothing more than funded outings to sporting matches or golf courses. A further examination of itemized expenses for these events may include ancillaries such as logoed golf balls and themed-shirts or even ambiguous expenditures like “refreshments” and “facilities.” This is not to say that all events are boondoggles, but a higher percentage of them seem to appear in a sales-controlled MDF program environment. As a whole, spending on events can represent 60%-80% of the total MDF investment. Unless one understands how these events align within a “buyer’s journey” and can ultimately track specific opportunities to these events as an outcome, it can be very difficult to quantify any meaningful ROI.
There are ways to get more control over spending, and events can be a meaningful activity, I don’t mean to imply otherwise. (This will be the subject of a future topic.) However, as companies mature, it is common to see MDF control shift in favor of the marketing departments. Marketing will then try to shift the funds to more mutually beneficial activities that can actually be measured. Those trying to make this transition are in for a real challenge, as it’s going to require management buy-in and a complete change in channel relationship methodology. But the results can be worth the effort.
About the AuthorMore Content by Craig DeWolf