According to the Channel Insider 2009 Market Pulse Report,
53 percent of solution providers believe market development funds
(MDFs) will become harder to get over the next 12 months. In addition,
51 percent expect a decrease in vendors and distributors technical and
presales support.
This isn’t good news for solution providers who are looking to
augment their tight marketing and sales budgets. Before you decide to
ax your marketing plans, consider these tips on how you can earn
greater shares of vendors' MDF and co-op marketing support.
1. Review and Assess MDF Programs. Not every program is right for
every solution provider. Understanding how much a program will pay out
before you invest can save you time and money. If the payout is 5
percent but requirements eat up 10 percent of your business resource,
you’re upside down with the program. The terms and conditions of most
MDF programs can be found on vendors Web site or partner portals. If
you don’t have time to read all the fine print, ask your distributor.
Distributors are well versed in a variety of programs and can assist
you in finding the right program for your business.
2. Complete Certifications. Understand the certification requirements
for the products you choose to offer. The incentives for business
partners who complete training are substantially more than those who do
not. Look for programs that are offered online or where time out of the
office is kept to a minimum. Consider incentives and salary increases
for your sales team members who complete certifications. Do the ROI
calculation, first, since you don’t want to invest a lot of time if
you’re only going to get a minimal return on MDF allocations.
3. Utilize Special Bid and Meet Comp Programs. When it comes down to
winning business, any manufacturer will assist you with the best price
on their product. Be sure to understand the special bid process for the
products you offer and be ready to submit requests before you are in a
bidding war with a competitor.
4. Stack Your Program Offerings. Special bids can often be combined
with rebate programs; upfront discounts cannot. Talk with your channel
account manager, field sales rep or distributor to understand where you
can increase your payouts by taking advantage of unadvertised floor
days, special incentives or stacked program offerings.
5. Do the Math. There is often a difference between manufacturer’s
suggested retail price (MSRP) and what you pay for a product. Do not
automatically assume that you will always sell your product at MSRP and
pocket the difference. Understand the math for your business offerings
and price your products accordingly. Choosing to take inventory on
products that you can purchase at a reduced price can increase your
profits if you are in a position to do so. Conversely, drop shipping
from a distributor to your customer can also allow you to increase your
profits by limiting the space you need for inventory and saving on
shipping.
Review your program findings with your distribution and vendor sales
representatives. Including your representatives as key members of your
business operations team can bring the needed support you are seeking.
Kathleen A. Martin is special projects coordinator for Channel Insider.
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