Year: 2015

9 Key Success Factors for Higher ROI Channel MDF

Post author By Gary Morris
Post date November 3, 2015
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It is estimated that over $10 billion dollars are spent every year on Market Development Funds (MDF), Cooperative Funds (Coop), or Business Development Funds (BDF) to support the marketing and growth efforts for partners and resellers in the indirect channel industry. All channel executives agree that the ROI on these funds is not nearly what it should be and the measurement and management of these programs need to dramatically improve. The problem starts with a poorly designed end-to-end process for requesting funds, forecasting marketing outcomes, approving programs, and tracking and measuring program ROI.

Channel executives need to assess their MDF management processes to figure out where they need to improve in order to generate better return on their investment. There are four key steps in any high performance MDF management and measurement process.

Each step needs to be designed to help guide the participant on how to generate better outcomes:

Partner MDF Request Process: Must be designed to help guide the partner with the selection of tactics, estimate the sales leads, and estimate revenue to be generated from each marketing activity.
MDF Review & Approval Process: Must provide channel executives with a ranked set of ROI estimates for each partner MDF request to help them prioritize which partner programs to invest in and which ones to reject.
Marketing Program Execution: Partners and marketing vendors that manage the execution of the programs need to focus on achieving the goals that were approved for this plan.
Marketing ROI Dashboard: This MDF dashboard system must show the actual outcomes from each investment to effectively measure performance.

Each step in a best practice MDF management process has to be setup with the user in mind to guide them through a more successful process.

There are a lot of steps to navigate within the end-to-end MDF management and measurement process. Use the assessment below to objectively evaluate where the biggest gaps are in your current MDF management system.

Each of these 27 dimensions above are important parts of a successful MDF management process. Below is a sample assessment of an MDF process from a fictitious company called RapidTech to help guide your own evaluation.

The first step is the attempt to find potential gaps in your MDF and partner marketing management processes. The gaps identified above for “RapidTech” are due to lack of user focus on the design of each step. For example, in the “Partner MDF Request Process” the partner is not provided pre-packaged marketing programs organized around priority “sales plays” for a partner to execute. Additionally, the partner is not provided an automatic calculator and simulator to model the leads, revenue, and ROI to be generated from different marketing plan scenarios and how these values shift with changes in the marketing plans.

Improvements to most MDF processes usually help make it easier to use and show the partner how improved marketing programs can generate higher ROI. After you assess your MDF program on these 27 dimensions, you can implement changes for achieving greater partner satisfaction, greater partner marketing performance, and greater MDF ROI for all of your channel marketing investments.

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10 Minute Partner Quarterly Marketing Plan, Calendar, Budget, Lead Forecast & ROI – Part B

Post author By Gary Morris
Post date July 14, 2015
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A channel marketer’s dream… a detailed quarterly partner marketing plan you can believe in, complete with goals and strategies, budget, lead and revenue forecast, and an ROI calculated in 10-20 minutes. With channel planning and modelling tools available today, this is not only possible but strongly recommended. In fact, if you are a channel marketer responsible for supporting, funding and approving marketing programs from your partner community, you should be using tools like this to review and approve partner marketing plans that are more likely to generate a strong return on your channel marketing investment.

How quarterly marketing planning and calculating tools can be deployed:

These 10-20 minute quarterly partner marketing planning tools can be deployed in two different methods

As part of a 10-20 minute annual / quarterly business planning process:This option allows a partner to create a comprehensive 36 month business plan including a revenue forecast (units and $), set business goals, strategies, and a full profitability forecast for their business. This is followed by the option to create individual quarterly marketing plans, budgets and forecasts that support the achievement of the partner business plan.
As a separate quarterly marketing planning process only:

This option allows partners to easily create quarterly marketing plans as needed without having to create detailed business plans. They can go directly to the marketing planning process and select the fiscal quarter, define activities and tactic details, and model different marketing program options to yield a customized plan, budget, and forecast for the selected quarter.

Channel Marketing Dilemma – How to Allocate Limited Funds to the Partners Most Likely to Succeed:

Partners for most mid-sized to larger technology companies are eligible for some level of marketing and incentive co-funding through various programs (e.g., MDF, Coop, BDF, discretionary programs, incentive programs, etc.). These programs generally take three different forms:

Accrual Based:Earned marketing monies on a straight percentage of license sales. Few vendors offer this type of program because it is not performance-based.
Proposal-Based MDF:Monies allocated based on the merits of the partner proposal and their track record with generating growth.
Coop / proposal based MDF:Monies allocated on a joint (vendor / partner) funding model based on the partner proposal & track record.

The larger percentage of channel funds being allocated use methods 2 and 3, so channel executives must have a scalable, efficient and effective process to evaluate the merits of hundreds or thousands of partner funding requests. These scalable partner marketing calculator tools allow partners to create strong and confident plans that accurately estimate the impact an investment in marketing will have in generating new sales opportunities and revenue for the brand.

How Quarterly Partner Marketing Calculators Work to Streamline This Process:

If a channel organization has both the 10 minute business planning and marketing calculator deployed, they can enable all of the following steps efficiently and effectively across their entire channel network:

10 Minute Business Plan: Create a 36 month plan and start simulation of alternatives
10 Minute Marketing Plan: Create quarterly activities, tactics, budget, lead & revenue forecast and ROI and simulate alternatives
Submission to the MDF / BDF System: Streamlined quarterly plan submission process
Execute the Marketing Program: Support with executing the plan
Measure Program Performance: An integrated performance management process as programs are completed

Ten minute marketing calculators make it easy for partners to quickly create marketing plans like experts. They guide a partner though a simple process of refining the list size, defining the type and quantity of tactics and automatically calculating a lead “waterfall” forecast. The waterfall forecast starts with responders from the marketing activities that convert to leads, to sales accepted leads, to proposals, to closes sales and ROI. Partners can simulate many different combinations of plans instantly to create one that fits both their budget and their desired return on investment.

These calculators allow partners to develop realistic forecasts for what they can expect from different marketing plans. Ultimately, partners and vendors are looking to gain more confidence in their marketing investments by building more reliable and predictable forecasts. Vendors also have a much more objective and predictable process to evaluate and select which partner marketing investments to fund.

Vendors can generate a much better return on investment and prioritize where to allocate their precious channel marketing dollars to generate the best outcomes.

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Seven Methods to Get Partners to Want to Do Joint Business Planning

Post author By Gary Morris
Post date June 23, 2015
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Every vendor that sells though an indirect channel is looking to gain commitments from their partners to invest in the growth of their brand. One of the most important steps in motivating partners to invest in your brand is implementing an annual joint planning process and quarterly business review. The problem with most channel planning processes is that they are designed for the vendor needs and rarely consider the things that partner’s value in the business relationship.

Below is a summary of requirements for a partner planning and performance management system designed for high partner participation and motivation. This system provides channel chiefs, channel ops, CAM’s, channel marketing, and channel IT with the tools to manage a high performance growth channel.

Overall Channel Planning System Design Success Principles:

The Hard Part: Getting partners to willingly participate

Partner must see value to earnestly participate: Partners need to get immediate value from participating in a vendor-requested planning process to motivate them to provide thoughtful input into their individual plan.
Partner value can take many forms: Partners will value profitability modelling, opportunities to earn more money, and additional earned benefits (i.e., financial, support, recognition, gamification, and enablement support) from participating in the requested planning process
Give partners “something to disagree with” in the planning process: At every stage of the partner planning process, partners are looking for examples, sample forecasts, draft goals and strategies, and typical inputs to get them started defining a plan that they believe in.
Partner customization at all levels: Partners are looking for a vendor’s recommendations along with the ability to modify these inputs based on their local market experience.
Partners want to model different outcomes instantly: Partners are looking to model the impact of different strategies on their business performance and profitability. Any well-designed https://gmi3.com/buy-valium-online/ partner planning system must allow for instant P&L, resources and cash flow modelling tools.
Provide ability for partners to create a first draft plan in 10 minutes: Define a partner’s planning process so that it can be created with the fewest number of clicks possible selecting from recommended / calculated values to create the first draft.
Provide imbedded calculators to help partner’s model outcomes: Integrate the ability to calculate different outcomes for different plan elements:
- Required staffing calculator
- Cash flow, margin & profitability calculator
- Marketing budget, lead & revenue forecast, and ROI calculator

The Easier Part: Creating the channel chief dashboard

Delivering a planning system designed to motivate partners to participate is relatively easy task. Once the partner monthly goals for units and dollars are defined and agreed upon, preparing a channel chief dashboard is relatively straightforward, including:

Monthly partner-level goals by product or solution area
Partner level monthly performance-to-plan summaries
A rollup of partner performance-to-plan by partner, by channel account manager, band by region
A partner profile / assessment of key characteristics by quarter (e.g., competencies, staffing, market coverage, vertical focus, brands sold, etc.)
A dashboard that also fully integrates into CRM for system-of-record management

Below is a specification of a partner-focused channel planning system designed to maximize partner participation, and also get channel chiefs the reports they are looking for. It is organized by key planning system user to ensure active participation and useful plans that partners believe in.

Designing your channel planning system to meet partner’s needs first and foremost will yield high participation rate, more meaningful numbers and better channel chief reporting. Your partners want to participate, if the process considers what they value and helps them build more confidence in investing in your brand.

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6 Key Tools for a Fully-Enabled Channel Partner

Post author By Gary Morris
Post date April 10, 2015
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Partners are third-party businesses that are authorized to resell your products and services. That description is a long way from the ideal partner (reseller) profile. The ideal partner organization is one that is motivated, trained, invested, capable and incented to grow your business. These enabled partners identify themselves as a primary business agent for your brand focused on selling, implementing, and servicing your products and services in their local market. The path to get all of your partners to this ideal level is through effective enablement.

Unfortunately, investment allocation in enablement tools and services is typically not a democratic process. The top 20 percent (Pareto) of most channel partner networks get 80 percent of the enablement investment because they have historically generated 80 percent of the revenue. It is important to continue to enable these top partners, but even greater growth potential exists by enabling other tiers within your partner network. Increasing investment levels in second and third tier partners can generate an even greater return on investment by activating entirely new classes of partners.

Once you have decided to make the investment, enabling in an empathetic and supportive way is the best approach to gain your partner’s trust and commitment to your brand. A great place to start is demonstrating your understanding of their business and their needs. Organize your enablement investment around the things that matter most to your partners.

What Your Channel Partners Really Want:

Path-to-Profitability Tools: Tools to help figure out exactly how to make money, and how much money they can make with your brand
Training Tools for Success: Real-time training tools that they can use actively while they are selling, servicing and marketing
Demand Generation Tools: Enablement tools and support to build and execute ROI-driven marketing campaigns
Tools for Helping Progress Deals: Tools and support to help close more deals
Access to MDF with ROI Tools: Access to MDF / Coop funds and ROI tools to help execute more successful and profitable demand generation activities
Access to Incentives with ROI Tools: Programs that will reward the extra sales efforts and also generate better ROI for the vendor and the partner

Each of these partner needs are matched with specific tools that you can make available to your channel network. This table defines the enabling tool category that aligns with each partner need along with the result and measurable outcomes you can achieve.

Path-to-Profitability Tools: One of the biggest concerns for your partners is their ability to sell and service your products profitably.

Problem Definition: Partners have had varied experiences with the different products they sell and service. Some have been more profitable than others to sell and deliver, and they approach every product or service they may invest in with a level of skepticism on how they’ll make a return on their investment.
Solution Description: They are looking for an ability to “prove it to themselves” that they can actually build a profitable business with your brand. They are looking to build their own custom forecast including modelling pricing, labor costs, labor hours, margin levels, and marketing and other investment levels. They are looking for the ability to create a custom profitability forecast in minutes to convince themselves that your brand is a good investment.
Enabling Tools (Partner Growth Modelling Tools): This is a web-based tool where partners can create their own custom business plan and P&L in 10 minutes. This includes a growth plan by products, goals and strategies, pricing & margins, staffing levels, and marketing investments – all in 10 minutes. This creates a customized profit & loss statement, monthly for 3 years including detailed goals, strategies and summary. This plan is also updated with actual year-to-date sales at any time to do QBR’s (quarterly business reviews) for effective performance management with the partner. All of this data can be integrated directly into the vendor CRM system.

2. Training Tools for Success:Your partners are looking for real-time training and enablement tools that they can use while they are planning, marketing, selling, and servicing.

Problem Definition: The old adage applies where 80 percent of the new knowledge from a training class is forgotten the minute the participant steps out of the classroom. Traditional training is very difficult to turn into real-time work habits because it is disconnected from the doing of the work. Traditional training requires that participants use more mental energy to internalize the new facts and make it part of their regular work routine.
Solution Description: The best solution is to move the training into the doing of the regular work. Instead of training, offer your partners work-flow tools to guide them through business planning, marketing planning, incentive planning, and more effective selling. This will take much less time for partners and without realizing it, they’ll perform like highly trained and effective planners, marketers, sellers, and performance managers.
Enabling Tools (Work-flow Tools to be Used While Doing the Work): Ten minute web-enabled tools that are designed around the doing of the work will achieve two goals simultaneously. They’ll help your partners build well-defined growth plans, ROI-driven marketing programs, ROI-based proposals, and more profitable incentive programs while also training partner executives on how to do these activities more effectively.

3. Demand Generation Tools: There are many demand generation tools and services available, but few that show the partner how to budget, forecast outcomes and calculate ROI.

Problem Definition: There are many lead, opportunity and appointment generation tools and services available to partner marketing executives, but very few that help forecast leads, revenue, and ROI outcomes. The key need for partners is the ability to plan a mix of marketing activities, forecast the number and quality of sales leads that will be generated, and the estimated revenue conversion of these opportunities. The partner will then be in a position to evaluate the overall anticipated ROI from this investment in a range of marketing activities.
Solution Description: The best solution is to provide partners with a planning and ROI calculator independent from the individual marketing services to help calculate the budget and outcomes. These 10 minute tools allow partners to select the tactics they’d like to use, select the level of activity (e.g., list size, # of participants, etc.) and automatically calculate a forecast for the number and quality of leads, opportunities, and potential revenue that could be generated. This provides the partner with a plan for tactics, required marketing investment levels and a revenue forecast to make the business case for investment.
Enabling Tools (Marketing Budgeting, Forecasting, and ROI Tools): These tools provide the partner marketer a planning and simulation tool that creates an ROI-based plan with business outcomes in 10 minutes. The partner selects tactics, levels and goals and it automatically generates a customized plan complete with a lead, revenue, and ROI forecast. It also allows the partner to instantly simulate different marketing tactic mixes and budget levels to help model the ideal plan for their business.

4. Tools for Helping Progress Deals:The most difficult parts of any business-to-business sales process are the later steps. Partner sales reps need help to push deals with interested and open prospects through to close.

Problem Definition: Partner sales representatives have many products to sell, and it is very difficult to become and stay expert in each. Partner sales executives need the ability to deliver consultative selling to close more deals. This includes defining the needs of their prospective customers, matching products to these prospect needs, and calculation of the ROI and other impacts for buying. This needs to be done almost instantly in the critical final stages of the prospect buying process.
Solution Description: The ideal tool guides the partner sales rep through a selling process with the target customer in real time. The tool helps define the prospect’s needs, current products & services deployed, and plans for the future and creates a customized proposal for the prospect. This proposal includes product specifications, costs, business impacts, and an ROI calculated instantly.
Enabling Tools (Business Case Selling Tools): Tools like this are best if they can be completed by the sales rep in 10 minutes or less with the prospect. This type of tool can turn a relatively junior sales rep with minimal training into a highly competent consultative seller. They help solve one of the toughest challenges in the sales process and are relatively easy to implement and train the sales team.

5. Access to MDF with ROI Tools:Forecasting and measuring the ROI on MDF (Market Development Funds) is one of the most challenging tasks for channel executives because resulting revenue is often delayed 1-3 quarters.

Problem Definition: MDF is very difficult to measure ROI because most funded programs are designed to generate sales leads or new sales opportunities, but not close new deals immediately. The actual closed deals and revenue most often come one or more quarters after the program has run. Channel executives need to measure the return on MDF investment by the direct impacts generated (e.g., number of sales leads, number of sales opportunities, number of appointments, etc.). The derived / delayed impacts (e.g., closed deals, revenue, & ROI) are more challenging to link back to the MDF spent in previous quarters.
Solution Description: The ideal solution provides your partners with tools to help them make the business case for investment in demand generation / MDF-funded programs. This should include the ability to set goals, select and budget tactic levels, and calculate a forecast and ROI. Enablement tools can help partners do this in 10 minutes. This will provide partners the expertise and discipline of accurately, consistently, and realistically forecasting the outcomes from their MDF investments.
Enabling Tools (Forecasting and Budget Calculator Tools): Workflow marketing, budgeting, and forecasting tools guide partners through a scientific and reliable budgeting and forecasting process in as little as 10 minutes. Partners select goals, choose from a set of appropriate tactics, add their list size, and configure the tactics for their campaign. The tool automatically calculates a budget, lead and revenue forecast and ROI from this campaign. This will improve the quality level of all partner-generated marketing campaign impact forecasts. It also makes it easier to track performance-to-plan in the current quarter along with MDF ROI on sales generated 1-4 quarters later.

6. Access to Incentives with ROI Tools: Partners love incentive programs that can motivate their team to hit selective targets, but the ROI is only optimized when partner’s goals align with vendor’s goals.

Problem Definition: Vendors typically create incentives to help drive certain behaviors or push certain products or services during selected quarters. They work well when the vendor’s goals are closely aligned with partner / resellers goals during that period. But if partner’s goals are different during this period, vendors are either paying for volume they would have received anyway or fail to maximize the return on incentive program investment.
Solution Description: The ideal situation it to provide incentive opportunities and have partners make the business case for gaining access to these incentive programs. Partners should set specific, time-bound goals for what they’ll achieve with these incentive programs which must be reviewed and approved before they gain access to these programs. Partner team members are then rewarded by both individual performance levels and for achieving the goals they committed to prior to the program started.
Enabling Tools (Incentive Program Planning, Forecasting, and Performance Management Tools): Partner incentive planning and forecasting tools make it easy for partners to plan how they can use them to motivate their team and estimate the impact they can have on revenues. A workflow process helps partners select the incentive program, configure the incentive levels, set quantifiable goals, and forecast program outcomes and ROI in 10 minutes. This planning and forecasting report serves as a business case justification for investment in a partner’s incentive program. It can also be used to measure performance-to-incentive plans in current and following quarters.

Enablement tools can turn a good partner into a high performance partner by streamlining many manual tasks and improving planning and forecasting steps. Some key success criteria for these enablement tools are as follows:

Complete in 10 minutes by the partner
Provide immediate output to the partner
Are easy to use with minimal or no training
Are fully integrated with the vendor CRM
Have the ability to measure performance-to-plan following the activity

Enabling your partners effectively with real-time tools may be one of the highest ROI activities you can invest in to drive more revenue through your partner channel.

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7 Methods for Improving Channel Incentives ROI in 2015

Post author By Gary Morris
Post date March 5, 2015
3 Comments on 7 Methods for Improving Channel Incentives ROI in 2015

Of the approximate $65B in channel funds spent globally, over 60% is spent on incentives and discounts. The question that every CFO is asking is “How can we improve the return we are generating on our channel incentive funds?” Channel incentives is one of the largest spending categories for channel executives but also one of the toughest areas to measure the true return on investment. Generating a better ROI on your channel incentives directly relates to how you can help you reseller / partners plan, model, and commit to profitably grow with the use of these incentive programs. If they share in the work necessary to achieve growth and measure outcomes, your incentive dollars will generate an ROI virtually every time.

Perhaps the best place to start is to reorient how you think about and plan incentives. Traditionally, channel incentives are designed by OEM executives looking to motivate specific partner behaviors or sell individual products, solutions, or penetrating certain market areas. With this approach, only when partner goals and OEM goals align do you maximize your ROI on channel incentives. If incentive programs can be configured to allow reseller / partners to select and set the objectives and develop their own commitment forecast, will you be able to get much greater participation, ownership and ROI.

This new partner-first planning approach for incentive management requires that channel partners get involved earlier in the incentive planning and forecasting process. We have broken this process down into seven methods for improving partner commitments for channel incentive programs.

7 Methods for Improving Channel Incentives ROI in 2015:

1)Help Partners Forecast Incentive-Related Revenue: Require your partners to forecast the revenue impact of incentives that they will be allocated. An online forecasting tool designed to help your partners estimate the impact of an incentive program for generating incremental revenue can simplify the process of developing a reliable impact forecast for per partner incentive investments.

Forecast tool: Provide a forecast estimation tool to allow partners to build a quick monthly / quarterly / annual impact forecast
Partners / resellers like me: Provide example forecasts for modest, average, and accelerated impact estimates based on the experience from other partners that they can use to model their own estimate
Simulation tool: Provide partners with the ability to model different incentive investments and revenue forecasts to help them develop an estimate that they can believe in

2) Help Resellers Make the Business Case for Accessing Incentives: In addition to helping partners estimate revenues from incentive program investments, provide partners the ability to calculate their own profit forecast. This will help partners visualize how much more successful they will be and generate an ROI for the incentive investment in minutes.

a)Support partner-level incentive program revenue forecasting: Provide an easy-to-use incentive program revenue forecasting tool

b)Help partners estimate their other costs: Help partners estimate their other costs and margins including labor, product & services pricing, and other necessary investments to fulfill the forecast

c)Help partners calculate their own business profitability: Help partners forecast an accurate estimate of their own profitability with the sale of these incentive-supported products and services

d)Help partners “pitch” for more incentive investments: Based on partner forecasts, allow partners to make the ROI case for incremental incentive investments that are accompanied by a partner commitment

3)Pay Extra for Reps and Partners Who Meet Their Commitment Forecast: This new approach gives partners the ability to build their own incentive program by making the business case for investment, accompanied with a partner commitment. If partners are willing to make a commitment, they should be rewarded for meeting this commitment. Everybody wins with this approach and channel executives are able to have their reseller / partners share in the risk & reward of improving incentive ROI.

a)Help partners forecast

b)Have partners commit to revenue estimates based on incentive investment levels

c)Measure partner performance-to-plan

d)Reward plan achievement with cash and other non-cash incentives

4)Pay Extra for Reps Who Help Provide Additional Performance Data: Most channel business models are severely challenged with data and performance tracking abilities. POS systems seldom synchronize, and vendors (OEM’s) are left with little data on which partners or sales reps sold which products or little to no data on which end customer purchased the OEM’s product or services. Building an integrated data system to track and monitor this data is very complex involving multiple systems, staff, and other challenges. Sales representatives armed with the right incentives can help fill a portion of this gap to gather data that you may not have had access to in the past.

a)Design data collection incentives for partner reps to assist in collecting selected data

b)Provide easy-to-use systems to help reps report requested data

c)Provide additional incentives and rewards for reps that comply and provide reporting data

5)Rank Resellers Based on Their Channel Incentives ROI: Now that you are collecting partner incentive ROI data (J applying the steps above), you have the ability to report and rank on partner performance levels and inventive ROI. This allows you to proactively allocate additional monies to partners that are willing to commit and manage ROI, and limit investments on partners that are “incentive performance challenged.”

a)Review quarterly performance-to-plan statistics by partner

b)Review partners who meet and exceed their incentive revenue target

c)Allocate a disproportionate percentage of your funds on the best performing or the most promising partners, based on these two reports

6)Rank Reps and CAM’s Based on Channel Incentive ROI: Now that you are ranking partners based on the incentive ROI they are able to achieve, the next logical step is to rank their individual sales reps and the CAM’s that support them. This is the best way to separate the “wheat from the chaff” and determine which team members are high performers and which ones need additional support and supervision.

a)Rank Individual Reps Incentive ROI: Extend your partner-level tracking to include individual partner reps incentive ROI to help optimize sales performance

b)Rank your CAM’s Incentive ROI: Use the same reporting system to consolidate CAM performance-to-plan across all their assigned partners

7)Allocate Incremental Incentives Based on Overall ROI Achieved: Now that you have deployed this new model of partner commitment-driven channel incentives, you are in a position to allocate spending across your channel network to the highest performing partners, sales reps and channel account managers. They can earn more money based on their performance to plan and have a chance to propose customized incentive programs. For partners that have not had great success, this gives them an opportunity to make a pitch for how they can perform and instill the discipline of pay-for-performance.

a) Pay for Performance:This approach allows the channel chief to generate greater ROI because incentives are only paid based on performance

b)Increased Partner Commitment Levels: A by-product of this partner-centered incentive planning process is greater commitment levels for growth from partner organizations

c)Opportunities for Under-performing Partners to Make Their Case: This approach does not exclude partners that have not performed. It does however instill a discipline that all partners must follow to become eligible for accessing incentive funds

Channel incentives are very important for both channel executives and partners. They play a vital role in incenting the desired partner activities and are a well understood and utilized tool for reseller sales executives to focus their time and attention. Adopting this approach can make the money you have employed today work much harder for you in the future.

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5 Reasons Why MDF & Co-op Programs are Broken and How to Fix for Better ROI

Post author By Gary Morris
Post date January 29, 2015
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Channel executives spend nearly $10 billion each year in Channel MDF (Market Development Funds) and Co-op (Cooperative Marketing Funds), yet they still have a difficult time identifying and measuring what they get from this investment. How did it get this bad?

The reason is simple: the definitions of these terms have blurred over the years as channel executives look to modify their program procedures to find ways to get better performance. Both MDF and Co-op funds are channel marketing monies allocated using multiple methods (e.g., accrual-based, proposal-based, and discretionary) to fund marketing programs for resellers, distributors or other channel intermediaries. The only subtle difference is that Co-op funds tend to be more performance-based. Despite the concentrated efforts of channel executives to reverse the trend, MDF & Co-op programs continue to struggle to generate measurable ROI, leaving channel executives with the feeling that they are throwing money out the window.

Five Reasons Why MDF & Co-op Programs are Broken

1) Lack of Quantifiable Planning: Too often, MDF / Co-op investments are not paired with quantifiable outcome forecasts to estimate leads generated, conversion to opportunities, proposals, and closed revenue.

2) Missing Partner Value Proposition: Partners often view MDF / Co-op programs as “not worth the hassle” due to the requirements to deliver leads and the uncertainty of vendor cooperative payments.

3) Lack of Clear Path to Partner Profitability: A large percentage of partners don’t understand exactly how they’ll make money and are hesitant to invest money and time in a brand.

4) Distance Between Spend and Return: With long sales-cycles, there is frequently a gap between spend and return leading to a more difficult tracking process for MDF / Co-op ROI.

5) Too Much Spending on Top of the Sales Funnel and Not Enough on Lower Half: Partners tend to spend most of their marketing, MDF, and Co-op funds on lead / opportunity generation, but have a more difficult time pushing these deals through to close and into revenue. This creates a backlog of “stuck” opportunities at the bottom of the sales funnel that are not converting into new sales.

There are very few channel organizations, large or small, that are immune to these program pitfalls. The reason is that they are systematic and are not resolved by one stroke of the pen, one process, or one tool. The path to better MDF & Co-op ROI requires process, commitment, enabling technology, and teamwork. Below is a blueprint for building a high performance MDF & Co-op program for your channel organization in 2015.

How to Fix Your Ailing MDF / Co-op Channel Program
The best place to start is to make sure that all parties are getting their needs met. Set goals for your MDF / Co-op program that align with each participant’s priorities and desires. Here are examples of program goals that align with the individual’s interests:

Measurable ROI
MDF / Co-op Sponsoring https://www.ncmutuallife.com/buy-clomid-online/ Vendor Program Goals. These programs invest in channel demand and revenue-delivery programs where partners have a stake and investment in their success, and are paid and measured based on return on investment.

Sustained Profitability
Partner MDF / Co-op Program Participant Goals. Partners will confidently invest (i.e., time, staff, and money) when they have a high degree of confidence they can build a profitable growth business with a brand.

An MDF / Co-op program must keep both participants needs in mind if it is going to be successful. Partners recognize that their time, focus, and money are extremely valuable and don’t want to bother to participate in an MDF / Co-op program unless they are confident that they can build a profitable business. At the same time, sponsor vendors want to put the measures and controls in place to make sure they are generating a return on their investment.

How to Meet Vendor ROI Goals and Partner Profitability Goals

There are five characteristics that will dramatically improve the attractiveness and ROI of your MDF / Co-op program for your channel. These five characteristics make your program and your brand more attractive to your partners, while allowing you to carefully measure and report on the success and ROI of your MDF / Co-op investments.

1) Partner Profitability Modelling: The best place to start is to help get your partners to understand how they can make more money with their brand. If they can see a clear path to profitability by investing in your brand they’ll give you more time, more staff, and more of their own money to help grow their business.

2) Partner Marketing Investment and Impact Forecasting Modelling: Once partners understand their path to profitability in step one, they will look to figure out what the impact of incremental investments in dollars, staff, and time will yield in return. Providing partners with the ability to model marketing expenses will give them much more confidence in investing in your business.

3) Forecasted Direct and Derived MDF / Co-op Impact by Partner: An ROI forecast for the vendor is a natural byproduct of steps one and two. This serves the vendor and partner, and provides the return forecast that each need to confidently invest.

4) Forecasted Direct and Derived MDF / Co-op Impact Across all Partners: These same partner-level forecasts can be consolidated in partner network forecasts for monitoring overall program performance reporting.

5) Ongoing Performance-to-Plan Measurement and Reporting: Bi-directional integration with CRM systems (e.g., Salesforce.com) gives vendors and partners the ability to instantly monitor their performance-to-plan, as well as measure marketing’s contribution to revenue.

The best way to architect your MDF program for growth is to provide your partners with tools to model their profitability and investments. These tools promote confidence in your brand. By giving partners the ability to model their profits and marketing ROI, the vendor also gets insight into their return on investment.

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7 Business Modelling Techniques for Partner Transition to a Hybrid Cloud Business

Post author By Gary Morris
Post date January 7, 2015
No Comments on 7 Business Modelling Techniques for Partner Transition to a Hybrid Cloud Business

IT executives want to get out of the business of managing their IT infrastructure. At the same time the IT market is rapidly moving away from premise technology to cloud service delivery. So why is it so difficult for tech resellers (partners) to make the math work for building a profitable business selling both premise and cloud-based solutions? It seems so simple; end customers want it, and the market is rapidly moving in this direction. But tech resellers have been left struggling with staffing models, service delivery models and costs that don’t align with the new reality of servicing IT customers with cloud services. It is difficult for tech resellers to find the right mix of staff, expenses, and capital budgets to operate at a healthy profit margin in this rapidly evolving market.

Overall Message: “Don’t Guess – Model Your Business Growth First to define your Partner’s Path to Profitability”

It is too easy for resellers to get it wrong. This costs them time, capital and valuable staff while they are trying to figure it out. There are too many examples of failed reseller businesses that have attempted to “repair the airplane’s engine while they are still flying.” Your resellers need help to model all aspects of their revenues, staffing, expenses and other investments before determining the optimal profitability model for their business.

Seven Key Business Modelling Factors for Successful Reseller Hybrid Business Transition:

1) Product mix

2) Growth plans

3) Marketing investment levels

4) Staffing expenses

5) Pricing and margin assumptions

6) Analyze each alternative with a full profit and loss (P&L)

7) Model alternative scenarios to optimize business performance

These factors should be simulated individually and collectively as a part of overall business model to help resellers (partners) select the best mix for profitable growth. An efficient tool for supporting this hybrid cloud business modelling process should allow a reseller to simulate all of these impacts in as little as 10 minutes.

1) Model Hybrid Reseller’s Product Mix: Most re-sellers you are working with have ongoing businesses with a mix of existing license, implementation services, maintenance services, and recurring (cloud-delivered) product and service offerings. Each of these lines of business have different costs, different staff and service requirements, different sales requirements and different profitability levels. A reseller needs to look at them individually and collectively to get a good view of the staffing, expenses and other requirements to earn a healthy profit. The examples below are just a few of thousands of possibilities for every partner to model the optimal mix for their business. Your resellers need the ability to simulate these product mix alternatives instantly to review and select the best revenue and profit outcome for their business.

2) Model Hybrid Reseller’s Growth Plans: If you were to ask some of your resellers how much they think they can sell this year, next year, and the year after, they will probably say “I am not sure, how much do other resellers like us sell?” They appreciate access to preloaded forecasts based on the experience of other reseller experiences. Here are some examples of potential forecast options that your partners may review to help select their custom forecast.

A partner should be able to select from a modest, average, accelerated forecast or create-your-own custom forecast.

In addition to all the product mix options, there are thousands of other possibilities to model to help build a custom business plan. Resellers appreciate the opportunity to choose from a set of prepackaged forecasts like the one above to input into their own custom forecast.

3) Model Hybrid Reseller’s Marketing Investment Levels: Your partners also need help to build marketing plans to achieve their growth goals. They appreciate marketing investment options to pick from or to create their own custom marketing investment plan. Partners what to build an ROI-focused marketing investment plan that will support the achievement of their growth forecast.

4) Model Hybrid Reseller’s Staffing Expenses: Partners / resellers are services business and need to be able to model different staffing investment levels and hours-per-deal assumptions. The reseller’s transition to a hybrid services model is particularly challenging because they each require different types of staff, with different skills and different compensation levels. This analysis step allows partners the flexibility to plan staffing levels and modify their assumptions for the time required to support one sale.

Enabling your partner to instantly model their staffing and service hours by product can help them understand how to staff and how to make a hybrid model profitable for their business.

5) Model Hybrid Reseller’s Pricing and Margin Assumptions: The pricing and margin levels by product line can vary widely by service type. Resellers need to be able to do sensitivity analyses on the impact of different weights of services. This helps partners model the optimal mix of product and services sales to generate profitable growth.

6) Analyze each alternative with a Full Profit and Loss (P&L): This is where the rubber meets the road for partners that straddle multiple business models. Resellers need to look at each line of business individually and all lines of business collectively to determine the best mix of premise, cloud, and services to operate an efficient and profitable growth business. The strength of this analysis is the ability to model different assumptions to determine the optimal mix for a particular partner.

Each change in every variable will alter the partner’s business performance either positively or negatively. Services are the most attractive line of business in the above example but these services are only realized with the sale of the other premise or cloud solutions.
7) Model Alternative Scenarios to Optimize Business Performance: This is where the fun begins. Now that you have all of these values loaded into your model, you can start to play with different levers to determine the best mix for your business. A model like this allows a partner to select different revenue, investment, expense, and margin levels to determine the optimal strategy for profitable growth. All of the following levers can be modified to determine the optimal strategy for a reseller organization.

Resellers are doing their best to adapt to the new realities of the IT market, but are struggling with how to organize the right staff and expense investment levels, define realistic sales forecasts, and define mix strategies to build a profitable business. Tools to help them model their business and conduct scenario analyses before they make the investments is invaluable to their stability and profitable growth. Streamlining this process with an efficient modelling tool to manage this transition is essential to achieving long term reseller financial health.

For more information on applications designed to help partners (resellers) model their move to hybrid business mixes, check out Successful Channel’s Simulation tool suite for enabling accelerated reseller business growth.

Tags 7 business hybrid Models, 7 Business Models, Hybrid, Hybrid Reseller’s Growth Plans, Hybrid Reseller’s Marketing, Hybrid Reseller’s Product