Money Talks

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Partners have access to vendors’ Market Development Funds (MDFs) to, as the term suggests, grow the market and create demand generation.  However, most often than not, these funds are not used as effectively as they should be and partners also grapple with understanding how to acquire a bigger share of the resources. A worldwide channel survey done by ZINFI Technologies, a Unified Channel Management (UCM) innovation provider, revealed that 60 percent of market development funds (MDF) are not used on a quarterly basis. According to the company, the 40 percent of the cases  where the funds are claimed, it is usually by the larger partners who possess the knowledge on navigating the MDF approval process.

Graham Porter, head, Channels, Middle East, Veeam, says that in most schemes, vendors allocate a percentage of their revenues from the previous quarter to distributors, allowing them to do joint marketing with their resellers around a vendor’s offerings.

“While some vendors spend their entire MDF in this manner, others have a two-tier approach where they sell directly to their largest partners and the smaller ones buy from distribution,” he says. “In this case, the majority of the MDF goes to big partners as it becomes a simple reward for the revenue they generate and the training and marketing they are expected to do based on their status level.”

Therefore, with direct access to the vendors and in-depth understanding of the schemes, big partners do get more than their fair share, he says. What about those smaller partners who liaise with distribution?

According to Porter, “MDFs are viewed as a black art to many players in the channel.”

Most partners believe that vendors have the funds available to jointly develop opportunities for their products. “However, it’s hard to see where it is and how you can get to it,” he adds.