Basics of channel MDF

www.hawkeyechannel.comwww.hawkeyechannel.com

18 November 2009

Vaughn Aust

William Gilsing

The Basics of MDF & Co-Op Programs

www.hawkeyechannel.com

Agenda

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Why joint marketing and sales campaigns?• Why do vendors fund partner marketing and sales campaigns?• What are MDF and co-op funds—and how do they differ?

What are best practices in MDF/co-op programs?• Why do partners not fully utilize MDF and/or co-op funds?• How can you measure the effectiveness of MDF/co-op programs?• What are the best practices of an effective MDF/co-op program?

Why hawkeye’s channelMDF solution?• Why the hawkeye channelMDF solution?• What tools are available to promote the channelMDF solution?

Ag

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© 2009 hawkeye, all rights reserved.


Why do vendors fund partner marketing and sales campaigns?

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Joint campaigns grow business through the channel

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MDF/Co-Op Spend

Nearly 60% of vendors spend at least 5% of their marketing budgets on MDF/co-op programs

Partners contribute 4% of their marketing budgets to MDF/co-op programs

Grow channel

sales

Extend resources &

budget

Build brand awareness

Reach new customers

Generate demand


What are MDF and co-op funds—and how do they differ?

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Funds differ by partner type and objective Market Development Funds (MDF): distributed to partners in advance of sales

• Ideal for partners with a services business model who “push” products through channel; specify brand, develop markets, and grow business

Co-op (Cooperative) Funds: distributed to partners based on % of trailing sales• Ideal for partners who fulfill demand and “pull” products through channel;

do not specify brand or sell services


Service PartnersConsult, Design, Implement

PUSH ABILITY

Mixed ModelTransactions + Services

“VAR”

Fulfillment PartnersTransaction, Volume

PULL REQUIREMENT

From a legal standpoint, vendors must account for the use of funds and abide by anti-trust and other legislation under the Fair Trade Practices Act (FASB) and Robinson-Patman Act. Discrimination may result in 3x damage penalties.

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Why do channel partners not fully utilize MDF/co-op funds?

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By some estimates, as much as 50% of all potential funds go unused

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Why do funds go unused? Unfamiliarity/unaware Complexities, administrative burdens Processes that do not engender trust Long delays in approvals and payment

What do partners want in MDF/co-op programs? Clear processes with simple rules Speedy payments—

30 days or less Online status/tracking and updates Pay claims in cash, not credit Greater flexibility for activities—

trust the partner to know their customers

and how to market to them Vertical-friendly options Solution-friendly options

Partners want to easily apply for funds—and receive payments

quickly

Most partners are involved in more than one program and some in as

many as a dozen; with each program, the administrative burden

grows.

“Simplifying the tool is the best way. I suggest having someone who

knows nothing about marketing or co-op try to work the tool and see what difficulty that person has.”

–Partner


How can you measure the effectiveness of MDF/co-op programs?

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Use solid, consistent metrics to measure performance


Measurement MetricProgram ROI • ROI = Total Gross Profit/Total Cost of Program

• Revenue Per Invested Dollar (RPI) = Revenue Generated by Activity Cost of Activity• Sales $$• Total # Leads Generated

Program Utilization • # of Active MDF Partners Total # of MDF Partners

• # of Partners Using Tool• Total Hits to Site

Claim Activity • Claimed $$$ + Allocated $$$ Beginning $$$ + Adjustment $$$

• Total Claims Submitted• Total # Claims Denied (compliance)

Fund Utilization • Funds Accrued• Funds Expired

• Outstanding Liability• Unclaimed Funds

Prior Approvals • Total Pre-approvals Submitted• Total Pre-approvals Accepted

• Total Denied• Total Currently on Hold

System Efficiency • Total Calls to Channel Mgmt• Response Times on Calls• Total Emails to Channel Mgmt• Response Time on Emails

• Length of Time from Claim Approval to Payout

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What are best practices in MDF/co-op programs?

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Eliminate complexities—and foster relationships of mutual trust


Make programs easy to use• Clear, concise program guidelines that can be

downloaded, printed and saved• Integration with other systems—business

planning tools, collateral builders• Offer pre-approved activities for quick

deployment and pay-outs—”Campaign in a Box”• Easy access to customer support• Streamline documentation

Deliver a collaborative, transparent process• Online tools—to track status of approvals and

payouts• Online account statements—to view available

funds and historical usage data

Be competitive• Be aware of how much your competitors are

paying for similar activities

Industry Benchmarks

Time from claim to payment—

3 weeks

Administrative cost / project—$20-$30 per project

Program cost vs. total value—

Less than 1%

Fund utilization rate—12%-50% industry range

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What are best practices in MDF/co-op programs?

8© 2009 hawkeye, all rights reserved.

Sell the program—to the field and partners alike• Engage channel reps in the process from the start• Demonstrate the value• Increase adoption with training, education, incentives• Proactive, timely, ongoing communication

Close the loop• Require that partners estimate ROI when requesting

approval for projects• Map factors to activities and use consistent values to

facilitate reporting—drop-down and numerical values• Requires that partners review and amend ROI

estimates as a part of the claiming process

Submit project

Estimate ROI

Execute activity

Submit claim

Report on ROI

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Why the hawkeye channelMDF solution?

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Maximize fund utilization—and partner satisfaction


Easily manage funds and approve/deny requests• Highly flexible, automated workflow• Online submission and management

Speed time-to-payment• Electronic funds distribution• Simplified compliance with tax and legal regulations

Easily track and measure program metrics• Single view of program activity status and reports• Complete, visible audit trail through integration of all

functions—Finance, CAM, Partner, and Administrator

Quickly deploy the solution—worldwide • Integration with your existing systems• Multi-languages, multi-currencies, local business rules

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Powered by hawkeye’s proven channelconduit platform


What tools are available to promote the channelMDF solution?

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Integrated tools to generate awareness and demand


Website Data Sheet

White Paper

Channel Fact Sheet

… With more on the way!

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THANK YOU


Basics of channel MDF

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